Chris Oynes

Regional DirectorGulf of Mexico OCS Region

Minerals Management Service

Hurricane Recovery Status and Future of the Gulf

MMS

December 13, 2005

Presentation atSPE/NOGS/API/PLANO/Desk and Derrick

DENNISDENNISCINDYCINDY

EMILYEMILY

BRETBRET

2005 HURRICANE SEASON2005 HURRICANE SEASON(To Date)

KATRINAKATRINA

RITARITA

WILMAWILMA

ARLENEARLENE

Percentage of GOM Production Shut-in

0

10

20

30

40

50

60

70

80

90

100

8/26/2005 9/9/2005 9/23/2005 10/7/2005 10/21/2005 11/4/2005 11/18/2005

OIL GAS

KATRINAKATRINA RITARITA

WILMAWILMA

Damaged & Destroyed Platforms

Katrina Rita

Destroyed 47 66

Extensive Damage

20 32

Major Issues in HurricaneMajor Issues in Hurricane

MODU’s adrift are not acceptable19 MODU’s were set adrift from hurricanes

Katrina and RitaSecretary of DOI met with companies Nov. 17

to discuss changes

Other Changes?Other Changes?

Examine structural standardsMud slidesMore reporting?

MMS COOP Operation With the approach of Hurricane Katrina, MMS mobilized its continuity of operations plan (COOP). A small temporary office was created in Houston to monitor the storm damage and direct operations. Most MMS District operations offices were not affected. With the massive damage in New Orleans MMS mobilized first 50 employees and then 150 to conduct continuity of operations in Houston On October 28 MMS reoccupied part of its New Orleans Office and all employees reported back to work The Regional Office with 150 employees remains in Houston while the New Orleans office is rebuilt.

MMS

New Developments in the Gulf of MexicoNew Developments in the Gulf of Mexico

Energy Bill Provisions thatWill Affect Lease Sales

Added a third tier of royalty relief for deep gas drilling in 0 - 200m of water

Added three tiers of royalty relief for deep gas drilling in 200 - 400m of water

Added a royalty relief level in deep water -- 16 mmboe in depths greater than 2000m

GOM Production has been significantly GOM Production has been significantly lowered due to hurricanes in 2004 and 2005lowered due to hurricanes in 2004 and 2005

55

159

225

271

315348 348 337

0

50

100

150

200

250

300

350

400

1995 1998 1999 2000 2001 2002 2003 2004

Millions of Barrels Per Year

Gulf of Mexico Deep Water Oil ProductionGulf of Mexico Deep Water Oil Production

~~~

e.

As of 5/6/05As of 5/6/05MMS

181

560

840

1000

11801320

1420 1420

0

200

400

600

800

1000

1200

1400

1600

1995 1998 1999 2000 2001 2002 2003 2004

Billions of Cubic Feet (BCF) Per Year

Gulf of Mexico Deep Water Gas Gulf of Mexico Deep Water Gas ProductionProduction

~~~

e

As of 5/6/05As of 5/6/05 MMS

New developments suggest a bright future New developments suggest a bright future for the Gulffor the Gulf

MMS

Major New ActivityMajor New Activity

Neptune FieldAtwater Valley 573Neptune FieldAtwater Valley 573

Unocal Knotty HeadGreen Canyon 512

Unocal Knotty HeadGreen Canyon 512

Chevron’s TahitiGreen Canyon 640

Chevron’s TahitiGreen Canyon 640

Jack Test WellWalker Ridge 759

Jack Test WellWalker Ridge 759

MMS

Seismic Noise Remains as an IssueSeismic Noise Remains as an Issue

Sperm Whale Seismic Study – Part II Sperm Whale Seismic Study – Part II (SWSS II)(SWSS II)

Awarded in 2005

Understand sperm whales movements, and feeding and breeding behavior

Characterize industry/ambient noise

Determine acoustic effects on sperm whales

Environmental Study