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MMS WorkshopUnlocking Technology and Geologic Challenges in the GoM

January 2008

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Future PaleogenePlay Area ?

Current PaleogenePlay Area

25,000

35,000

N S

Paleogene

Kaskida2006

Jack2004

Stones2005

Cascade2002

Tucker2006

Chinook2003

Mad Dog Deep2005

St Malo2003

Julia2007

Most activity and discoveries are along the

southern extent of the Paleogene Trend

Moving to the North it will be potentially

Deeper, hotter and higher pressure more

difficult seismic imaging, more structurally

complex

MMS Questions: Is this Concept Warranted?Paleogene: A Challenging Opportunity

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Kaskida2006

Jack2004

Stones2005

Cascade2002

Tucker2006

Chinook2003

Mad Dog Deep2005

St Malo2003

Julia2007

Industry has invested in significant acreage positions

Acreage is largely un-drilled but most of it likely to exceed currently challenged Pg conditions

MMS Questions: Is this Concept Warranted?Paleogene: A Challenging Opportunity

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TotalDepth

PompanoPompano MarsMars UrsaUrsaEmpireEmpire

State Bldg.State Bldg.DianaDiana

HooverHoover NaNa KikaKikaHornHornMt nMt nHolsteinHolstein AtlantisAtlantis

Ma dMa dDogDog

ThunderThunderHorseHorse

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

10,000

15,000

20,000

25,000

30,000

Future developments are depicted as possible scenarios based on water depth.

Subsea Technology /New Concepts

Subsea Technology /Subsea Technology /

New ConceptsNew Concepts

Deeper Water /Deeper HorizonsDeeper Water /Deeper Water /Deeper HorizonsDeeper Horizons

SubsurfaceVisualization &

Complexity

SubsurfaceSubsurfaceVisualization &Visualization &

ComplexityComplexity

The Future Portfolio: Technology Drivers

New GenerationRigs

New GenerationNew GenerationRigsRigs

Higher Pressures /Higher Temperatures

Higher Pressures /Higher Pressures /Higher TemperaturesHigher Temperatures

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How would MMS define Technological Challenge?Emerging Technology Themes for the Paleogene

Key Focus Appraisal Areas:

Static - Wells & Advanced Seismic

Dynamic Flow Testing - Rate/Recovery

Appraisal & Development Technology

Advanced seismic techniques,limited capabilities, timeliness

SubsaltSeismic Imaging

Concerns and GapsConditionTheme

Existing Technology6,000 - 9000 ft.Water Depth

Existing Technology20k psi @ reservoir

15k psi @ seafloor

>25-35k ft TVD

Reservoir Depth &Pressure

No ExistingProduction Analogs

+

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Lessee must demonstrate that project requirements are beyondtraditional appraisal /development.

One or more of these 5 technical challenges creates the need forregulatory flexibility:

Quantitative Beyond current industry capability

o HP High Pressure > 15k psi @ seafloor or

> 20k psi @ reservoir

o HT High Temperature > 350 F

o Extreme Depth >25,000 subsea

Qualitative

o Rate/Recovery Challenges Rock & Fluid Properties

o Severe Seismic Imaging Challenges

How would MMS define Technological Challenge?Emerging Technology Themes for the Paleogene

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Viscosity v. Permeability

0

2

4

6

8

10

12

1 10 100 1000 10000

Permeability (mD)

Viscosity

(cp)

Paleogene

Historical DW GoM

Current Producing DW

GoM has ~300x betterproductivity.

There are no production analogs for these conditions!

How would MMS define Technological Challenge?Emerging Technology Themes for the Paleogene

Rate and Recovery

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S

S

R

R

R

R

To address the challengingimaging issues, a Wide

Azimuth Towed Streamer(WATS) survey takes ~ 4years to plan, acquire,process and interpret.

WATS Imaged parts of the Fieldpreviously hidden!

Narrow Azimuth WATS

Salt Salt

BP CONFIDENTIAL

How would MMS define Technological Challenge?Emerging Technology Themes for the Paleogene

Seismic Imaging

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Response to Remaining MMS questions

What other eligibility criteria should be considered?

Discovery made prior to application

Milestones:

Advanced seismic acquisition or

processing

Appraisal wells, sidetracks,

deepenings, whole cores

Dynamic well testing

Technology development

Feasibility study

Preliminary engineering design

Detail engineering design

Prototype testing

Field trial

Equipment commitments

What would tangible/observable

milestones be for technologydevelopment related to a lease?

Detailed Activity Schedule of

investment and activity commitmentsaddressing the technological

challenges

Approved by the MMS and updated

regularly to demonstrate progress Schedule milestones could include,

but not limited to, the planning and

execution of:

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Response to Remaining MMS questions

How long should such a suspension last, and should it berenewable?

On the project level, the length should be covered by the Activity

Schedule

Periodic reviews will address progress toward the technological

challenges Suspension should be renewable/revisable based on results from

activities

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Purpose of White PaperConclusion:Challenges of Unlocking New Provinces in GoM

The MMS and industry have a proven track record of collaboration in successfully

meeting technology challenges in the Gulf of Mexico and can mutually benefit from

a flexible regulatory framework as challenges arise

An orderly appraisal program which considers dynamic testing and technology

development is the key to delivering development.

Decreased cycle time to first oil

Enable technology development that will help unlock the next generation ofresource development for the country.

Enable the pursuit of proper activities on a prioritized schedule without having to

make inefficient drilling and/or premature exit decisions.

Allow for the most efficient allocation of scarce resources in service of technologydevelopment to enable earlier delivery of oil and gas production.

Ensure the activities undertaken are consistent with goals of natural resource

conservation and fulfill the express purpose of the OCS Lands Act