the cost challenge on the ncs - petoro.no cost challenge on the ncs.pdf · radical improvement...
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The cost challenge on the NCS
The Young Energy Conference 2014, Stavanger - 20.11.2014Grethe Moen, CEO, Petoro AS
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Statoil is established
Statoil too big, SDFI takes over half of the assets
Statoil lists on thestock exchange,
Petoro is established
Petoro managesthe SDFI
Statoil Hydro merger, a milestone
1972 1985 1985-2001 2001 2007
2
History of SDFI and PetoroA short lesson in 1 minute
The cost challenge on the NCS
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Share in 34 producing fields
ExplorationNew fielddevelopments
Oil and gas infrastructure
Net Cash FlowOPEXCAPEX Revenue
SDFI – large values at stake for the state
NOK 33 bn NOK 40 bn NOK 197 Bn NOK 125 Bn
Turn
ing
Pet(ro
leum
) into
Oro
The cost challenge on the NCS
International oil companies|
Others
20 bn boe remaining reserves
Share in 179 licenses per31.12.13
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A new oil crisis?
The cost challenge on the NCS4
OpportunityDanger
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From volume to value, the need for higher efficiency emphasized
• Stronger prioritization of capital – directed by need to improve profitability
• Cutting activity reduces value creation opportunities
• Need for increased efficiency in the value chain
• An opportunity!
The cost challenge on the NCS5
?
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Doubling CAPEX is not deliveringproduction growth
6
Source: Petoro
ACTUAL FORECAST
Su
m b
ud
get
per
field
Mil
l N
OK
(n
om
inal)
Pro
du
cti
on
(kb
oed
)
Production oil, NGL, cond Production gas Field developments Production drillingConcept studies OPEX
The cost challenge on the NCS
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Dramatic increase in well costs
• Well costs on fixed installations doubled since 2009
• Well costs on floating units doubled since 2006, levelling off?
• Cost prognosis does not reflect history
7 The cost challenge on the NCS
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Better before - Drilling tasks takes twice as long
Perc
ent
incre
ase in t
ime fro
m 1
992-9
5 t
o 2
008-1
3
8
Source: Petoro
Analysis:
Same fields – same wells
1992-95 versus 2008- 13
Drilling from surface to top reservoir
Selected, representative routine operations
The cost challenge on the NCS
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The cost challenge on the NCS9
Radical approach is required to meet the reserve ambitions on mature fields: 6 fields – 10 fixed installations
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Radical approach is required to meet the reserve ambitions on mature fields: 6 fields – 10 fixed installations
The cost challenge on the NCS10
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Future fields are dominated by smaller reserves – well costs critical for profitability
The cost challenge on the NCS11
Discoveries (per February 2014) in addition to:Johan Sverdrup (315 million Sm³ o.e) + Johan Castberg (86 million Sm³)
Source: OD/ Strategikonferansen 2014, Petoro
49 %
21 %
16 %
9 %5 %
Cost split, subsea development
Boring og kompl.
Havbunnssystem
Rørledning og marineoperasjoner
Topside mod
Prosjektledelse
Approx. 3 mill Sm3 oil: smallest profitable development w/ four well template
Example: Field X (oil, one template w/ 4 wells)
Source: Petoro
Drilling and completion
Pipeline and marine operations
Subsea systems
Project management
Topside modifications
Oil Gas
Reco
vera
ble
reserv
es, m
illi
on
Sm
³ o
.e
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Only long term focus and radical initiatives will deliver radical improvement – «several more stones to turn»…
New areas/ presently less focus:
• Contract incentives to drive efficiency
• One team – operator and supplier equal partners
• New technology to drive efficiency
• Faster technology deployment
12
Technology
OrganizationWork
processes
The cost challenge on the NCS
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Seize the opportunity and involve yourself
• Deliver quality, every time - will build trust
• Be proactive – not reactive
• Dare to challenge the established thinking and to make mistakes
• You and your new ideas are an important part of the solution
The cost challenge on the NCS13
Opportunity
Danger
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Change through co-operation –a long history on NCS
• HSE
• Business driven technology development and fast implementation
• Industry appointed committees and initiatives – NORSOK
• Government appointed committees and initiatives -white papers
• Field specific change processes on the NCS
14 The cost challenge on the NCS