GE Confidential

Competitiveness of Deepwater

TechnologyRoundtable hosted by

International Energy Agency (IEA) Gas & Oil Technology

Collaboration Programme (GOT) and FINEP, Brazil

Rio Oil & Gas Expo, 27 Oct 2016

Supported by

GE Confidential

IEA Gas and Oil Technology Collaboration Programme- Next 10 years of subsea and deepwater(Numbers refer to subsequent slides)

1) The workshop in Rio 8-9 March this year convened major stakeholders to discuss common challenges and visions for the industry.

2) In a series of meetings and telecons, a work group has maintained focus and provided a basis for a joint industry effort towards an interim meeting during Rio Oil and Gas.

3) In the same timeframe, GOT held a workshop on Mature Fields in London where the need for disruptive innovation and Design to Cost was underscored.

4) The pre-salt development in Brazil offers a clear case for radical change: the first 10 major FID’s and CAPEX commitments were made in a $100 environment.

5) The work group discussed a «virtual» oilfield and gasfield to be used as a design basis for the Design to Cost exercise.

6) At $30/bbl oil price, a 300 mmbbl oilfield yields $9Bn gross revenue to cover costs over the lifetime. A design to cost approach could be to allow 50% for OPEX and the rest for CAPEX, to cover Wells, SPS+SURF, and Facilities.

7) From a technology viewpoint, the challenge is to pinpoint the gaps in solutions, systems, equipment, work processes and innovation chain, that stops the industry from cutting cost by 50%.

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«All Electric» is a key enabler that cuts across

most cost items of a deepwater field development

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Where we left after the GOT Workshop,

Rio 8-9 March 2016

• How to sustain at 30$ oil

• (Shale oil will kick in)

• Cost out: 30-40% needed

• Standardization and work processes

only part of the solution

• Technology and new solutions needed

• Faster innovation chain

• Involve supply chain early

• How can we cooperate to meet the

challenge

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GE Confidential

GOT key actions - Conventionals

• Design to cost – Out-of-the-box solutions that make marginal field development feasible @ 30$

• Standardization – subsea, floaters, etc

• Drill & produce @ 3000m WD – New well control rule, reduce BOP weight and payload, all electric, composite risers

• Remote fields 300kms offshore – Subsea compression, subsea gas/CO2 separation and reinjection, all electric subsea to shore

• Robotic drilling, unmanned platforms

• Changing market landscape – newcomers taking over old fields (may need more help)

• The water issue. Enormous amounts of water to be handled

• Light subsea well intervention faster and cheaper

• Help operators build confidence in business cases for CAPEX decisions in late life

Greenfield Brownfield

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GE Confidential

Pre-salt field development- Santos, Campos, Espirito Santo

‘10 2011 2012 2013 2014 2015 2016

Lula Pilot – FPSO Cidade de Angra dos Reis Oct

Sapinhoá Pilot – FPSO Cidade de São Paulo Jan

Lula Nordeste Pilot – FPSO Cidade de Paraty Jun

Lula/Iracema Sul – FPSO Cd. de Mangaratiba Oct

Sapinhoá Norte – FPSO Cidade de Ilhabela Nov

Lula/Iracema Norte – FPSO Cidade de Itaguai Jul

Lula Alto – FPSO Cidade de Maricá Feb

Lula Central – FPSO Cidade de Saquarema Xxx

Lapa – FPSO Cidade de Caraguatatuba Xxx

Route 2 gas p/l (Santos – Cabiúnas Macaé) Feb

MODEC - conv. VLCC, lease, 5 SS P, 100,000

bbl/d oil, 5Mm3/d gas, H2S & CO2 removal, CO2 RI

MODEC - conv. VLCC, lease, 120,000 bbl/d

oil, 150,000 bbl/d total liquid

SBM - conv. VLCC, lease, 150,000 bbl/d

total liquid, 5Mm3/d gas

SBM – newbuild at Brasa, Ilhabela blueprint,

lease, 150,000 bbl/d oil, 5Mm3/d gas

SBM – newbuild at Brasa, lease,

150,000 bbl/d oil, 5Mm3/d gas

SBM – newbuild at Brasa, lease,

150,000 bbl/d oil, 5Mm3/d gas

MODEC - conv. VLCC,

lease, 150,000 bbl/d oil

MODEC - conv. VLCC,

lease, 150,000 bbl/d oil

MODEC – EPCI+T/C,

lease, 100,000 bbl/d oil

80bn boetotal potential

reserves

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GE Confidential

Pre-salt characteristics – Virtual oilfieldReservoir depth: > Heterogeneous carbonates, 4-6km below

seabed

Under layers of rock and salt (2000m or more)

Challenges

• Seismic imaging, interpretation, reservoir characterization

• Borehole stability in salt zone

• Temperature gradient along flowpath

Cost per well – US$ 100-150m or more

Tupi may require 200 wells

Total development cost (CAPEX+OPEX) of Tupi ~US$600bn over lifetime

“Virtual Field”:

The functional specifications and overall description should include

Field size (recoverable reserves – 100-200-300 Million bbls?)

Water depth (3000m?)

Distance to shore (300 km?) Distance to infrastructure?

Metocean conditions

Reservoir depth

Gas or oil field? GOR

Number of wells (Production, Injection)

Recovery method (depletion, pressure maintenance, WI, WAG, …)

H2S content, CO2 content, …

The work group should define a set of imaginary field

developments that pose real challenges to the oil & gas

community –

• 300 mmbbl oil field, stand-alone development

• 100 mmbbl oil field(s), long tieback to hubs or S2B

• (Major) gas field, subsea to beach (S2B)

• Gas field, subsea power to beach (P2B)

3000 m waterdepth, 300 km from shore, $30 breakeven

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GE ConfidentialCost Out – Where? How? Who?

Drilling & Wells

Facilities

Subsea & Flowlines

Subsea processing

Standard X-trees

Interface std’s

All Electric

Simpler

Lighter

No downtime

Higher ROP

Robotics

Automated Drilling

Monobore wells

Standard completions

Standard FPU/FPSO

Robust design

Multi-use, Re-use

Reduce waste – Water, CO2, H2S

MMBoe

BUSD gross CAPEX DW SF FP OPEX

SW 75

DW 150

UDW 300 9 4,5 1,5 1,5 1,5 4,5

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All electric

AE

otherdisruptive

+ innovations

Design to Cost: 3000m wd, 300 km, 300 mmbbl, $30 b/e

AE BOP: remove hydraulics, accum.bottles, failure modes. Enable Real Time monitoring. Weight ↓ 50%

Less BOP weight -> reduced risers and deck load enablinglighter drilling vessels -> Rig rates ↓ 50%

AE Robotic drilling: Higher efficiency, reduced downtime, reduced offshore manning, cost ↓ 50%

Hydraulic 700 t

All Electric 350 t

Wikipedia: A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances.

Subsea Production System

AE SPS: El actuators, remove hydraulics, add boosting & compression, eliminate umbilicals – Cost ↓ 50%

Standard Subsea XT Bulk water

separation and disposal, CO2/H2S handling at source, Cost ↓ 50%

Standard FPSOStandard ProcessCost ↓ 50% -

Or eliminate completely!

Cold Flow -

Cold Flow processing to pipeline spec, hydrate /wax/ corrosion control, single pipeline to shore or hub – Cost ↓ 50%

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