protective marking (as appropriate) presentation title - edit in header and footer midst of despair...
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PROTECTIVE MARKING(as appropriate)
Presentation title - edit in Header and Footer
Midst of Despair or Time of Opportunity
Bill Cattanach
November 2015
PROTECTIVE MARKING(as appropriate)Highlighting the significance of the sector
• Offshore Oil & Gas Industry started production nearly 50 years ago
• 470 installations and 35,000 kms of pipelines
• Supports 375,000 jobs• It is one of the UK’s greatest
post war Industrial successes• Industry contributes significant
value to UK Treasury • Has produced over 44 billion
BOE – Potential for further 20+ • UK still more than 50% self
sufficient in oil and gas
PROTECTIVE MARKING(as appropriate)
UKCS challenges
E&P decline Increased costs Sharp drop in price
Jan 2011 August 2015
Brent $/barrel
Economic challenges intensified since the Wood Review
All-time low for exploration and appraisal
Existential crisis on costs, efficiency and margins
Slow down in investment; pressure on profitability
PROTECTIVE MARKING(as appropriate)
About the OGA
Priorities
Rapidly implement
Trusted advisor to Treasury
Industry to urgently take
action
Lead
ersh
ip, C
ultu
re &
be
havi
our
• New independent regulator
• Effective stewardship resources
• New powers, better resourced and funded
• Catalyst for change and facilitator of action
• Encouraging collaboration
Creating the OGA
The OGA has a key role to play in driving action
Role of the OGA
Licence offshore oil & gas
Licence onshore oil & gas
Licence carbon capture & storage
Industry culture
Commercial behaviour
Greater collaboration
Investment in UKCS
Value creation
Industry development
PROTECTIVE MARKING(as appropriate)Decom, supply chain & technology
Ongoing recruitment and collaboration attracting significant interest
Technology, Decommissioning &
Supply Chain
Head of Decommissioning
Angela Seeney
Head of Technology
Head of Supply Chain
Chief Information Officer
• Multi-disciplinary, experienced & diverse
• Recruitment for 13 roles in hand 24 in place
• Early stage planning, campaigns and roadmaps
• Alignment across the value chain & industry
• Strengthening governance, data & processes
Developing the organisation Collaborating
• Across the TDS team and OGA
• With academia, industry & trade associations
• Across relevant government departments
• With key stakeholders & other regulators
• Other investors eg venture capitalists
Bill Cattanach TBCCarlo ProcacciniTBC
PROTECTIVE MARKING(as appropriate)
Core work area boards
Purpose Deliver tangible benefits in support of MER UK and maximising UK value from the oil and gas industry as a whole
Objectives1. Develop a clear strategy and five year plan 2. Create leadership alignment and leverage tripartite action 3. Deliver tangible and quantifiable results
Core work areas
Exploration
Technology
Asset Stewardship
Decommissioning
Regional development & infrastructure
Supply chain & exports
Cost & Efficiency
Skills
Phil Kirk, Chrysaor Ray Riddoch, Nexen Paul Goodfellow, Shell John Pearson, AMEC FW
Paul White, GE Collette Cohen, Centrica Neil Sims, Expro Group TBC
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5
2
6
3
7
4
8
Leadership Industry-led with tripartite support
Frequency Quarterly Support OGA/BIS/UKTI/OGUK
Gunther Newcombe Gunther Newcombe Gunther Newcombe Stephen Marcos-Jones
Angela Seeney Angela Seeney Angela Seeney TBC
Industry lead OGA | BIS/UKTI | OGUK lead
Focused priorities and action
PROTECTIVE MARKING(as appropriate)Supply Chain & Exports Board
Collaboration is key to success
OGAChair & Secretariat
Industry Lead
2 SE/SG
CONSULTANTPOOL
1 ACADEMIA
1 BIS
• Expro Neil Sims • Angela Seeney (Verity Burrows)• Bill Cattanach • Sylvia Buchan
5 OperatorMembers
10 Supply Chain
1 UKTI 1 OGUK
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Promote the supply chain
• World-class supply chain
• £35 billion annual turnover
• 375,000 highly-skilled jobs
Export growth OGA approach
• Service companies vital role
• Deliver efficiency solutions
• Increase competitiveness
Increasing efficiency
• Alliances and campaigns
• Improve project contractors
• Encourage standardisation
Promote a strong supply chain that competes globally
• Five-year strategy and plan
• Sector-based activity approach
• Create visibility of supply chain opportunities
• Work with UKTI and SDI on overseas opportunities
• Support development of workforce expertise
• Working with industry to give supply chain a voice
Clear strategy and prioritiesProject Pathfinder: creating visibility of
opportunities
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Support the supply chain
• Increased visibility of the market
• Address Permafrost –new contract models
• Give supply chain a louder voice
Opportunities
Campaigns• Encouraging operators to work together
• Economies of scale; increased efficiency
• Standardisation; sharing best practice
Driving up to 40% efficiency improvement
Alliancing• Maintain competitive fabrication industry
• Develop new contracting model
• Rebuilding large fabrication capability
Rystad Report
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Decommissioning collaboration
Government
DE
CC
OG
A
OGA E&P Teams
• Cessation of production
• Regional approach
• MER UK compliant
OGA DST Team
• Costs, efficiencies, technologies
• Learning and cooperation
• Optimal models and plans
• Reduce Treasury decom burden
DECC Team
• Funding and security
• Programme approval
• Regulatory compliance
• Environment risk/mitigation
A huge prize: cost and efficiency is key
Collaboration with industry
Right assets; right hands: Treasury led Late Life Extension workshops
Industry cooperation: Benefits from scale; joint campaigns
Standardisation: Equipment sharing, efficiencies & reduce risks
Technology: P&A, current ITF call for 3 key enabling technologies
Supply chain: Develop local/global market, capacity planning, incentives
SNS well plugging and abandonment initiative
Collaboration on 500 wells with up to 40% cost savings
PROTECTIVE MARKING(as appropriate)
Key business challenges that require pan-industry collaboration
Unlock up to 1bn additional resources and $20bn investment through radical reduction in cost and deployment of innovative technologies
Small Pool Development
Generate > £1 bn additional revenue through the radical reduction oftime dedicated to vessel inspection and managing corrosion under insulation
Champion: Total - Philippe GuysLead supplier: Amec FW - Andy Ewens, Support: OGIC - Ian Phillips
Champions: Gas - Centrica Colette Cohen, Oil - Enquest Neil McCulloch Lead supplier: GE - Paul White, Support: NSRI – Gordon Drummond
Integrity and inspection
Technology Themes
Champion: Shell – Paul GoodfellowLead supplier: Baker Hughes - Crawford AndersonSupport: ITF - Paddy O’Brien
Reduce well construction costs by 50% (time-to-depth and flat-time) to allow an extra c. 50 wells to be drilled per year
Well construction
PROTECTIVE MARKING(as appropriate)
1% Improvement in PE delivers 30,000 BOPD
Initial OGA initiatives Production Efficiency
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
• Top 20 oil and gas producersperformance improvement plans
• Constructive approach with high level of transparency & cooperation
• Moving forward with far greater transparency on data, performance and improvement plans
• UK production up 10% last 6 months compared with 2014
Production ImprovingHistorical PE Performance
Pro
du
ctio
n E
ffic
ien
cy
Pro
du
ctio
n (
Mil
lio
n B
OE
PD
)
PE Target
Current Top 20 PE Performance
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OGA Monthly Performance Pack 2015
Geophysical Programme
40,000km of new and legacy data
• The Rockall Trough area is under-explored with just 12 exploration wells since 1980
• A proven working petroleum system with Benbecula discovery in 2000
• Most of the seismic data are pre-1998
Rockall Trough
• New advances in seismic acquisition broadband technology, longer streamer length and advances in processing technology can now improve deeper imaging
• Plan to also acquire data close to shore to transfer critical onshore knowledge
Mid-North Sea High
PROTECTIVE MARKING(as appropriate)
Future can be brightUKCS STILL
HOLDS UP TO
20 BILLION
BOE
• Portfolio of good new projects in pipeline • Considerable Brownfield potential• Over 300 undeveloped discoveries
OPENING UP NEW
FRONTIER
AREAS
•OGA working to stimulate new exploration with extensive seismic completed. •Licensing round in Spring when results are known
NEW APPROA
CHES TO
MANAGING THE BASIN
• New tripartite mechanism with industry, regulator and treasury working in partnership • Treasury have brought forward significant package of investment allowances • Industry working collectively on cost efficiency measures • Basin will need to adjust to lower oil price for foreseeable future