Focus on Dutch Oil & Gas 2016

(data courtesy of CGG)

Contents

Foreword 4

Executive Summary 6

1 Our challenges. A different attitude towards gas 9

2 Exploration. A mature basin with ample opportunities 13 The DEFAB Area 14

The G and M Blocks 17

Explore multiple targets 18

Prospect statistics 21

Monitoring drilling performance 26

3 Production, reserves and resources. Lower production levels without cost reduction jeopardise the profitability of small fields 31

Reserves and resources 32

Impact of investment level on production and reserves replacement 33

Productionforecastforthesmallfields 36

Profitabilityofthesmallfields 36

4 Infrastructure. Operating in survival-mode 39 Impactofthelowpriceenvironmentonthemarginalprofit 40

The ‘Cessation of Production’ of offshore infrastructure 41

Sensitivityanalysisfortheoffshoreinfrastructure 43

Theresourcesatstake:abestandaworstcasescenario 45

Benchmarking offshore operating costs 46

Efficiencyinoffshoreoperationsreducesopex:theKroonborgstory(courtesyofNAM) 48

5 Decommissioning. Calls for industry-wide cooperation and knowledge sharing 51

DecommissioninglandscapeoftheNetherlands 52

Financialposition 53

Reuseandre-purposingofinfrastructure 54

Newmarginaldevelopments:standardiseddesignsthatarereuse-anddecommissioning-ready 56

EBN’sviewondecommissioning:collaborationwithinandacrosstheindustry 58

6 Research and innovation. Crucial for unlocking the remaining potential of the small fields 59

NewUpstreamGasConsortiumroadmap 60

Salt precipitation 61

IntegratedZechsteinstudyatDurhamUniversity 64

SystemIntegrationOffshoreEnergy 65

TheJurassicSandstonesproject 65

Pluggingwellsbyenhancedformationductility 66

ExploringthesynergieswithGeothermalEnergy 67

Foreword

The future of ‘operate’ is ‘co-operate’

Hope is not a strategy… But without hope,

there is no strategy. That was the headline of

a column by Nathan Meehan, president of the

Society of Petroleum Engineers, in the Journal

of Petroleum Technology. I fully subscribe to

these words. Hope alone cannot take us into

the future, but it can certainly help us face the

future with more confidence.

ViathisissueofFocus,wewishtoinformyouabout

the(recent)developmentsinoursector.Wewill,of

course,alsoreflectonthefinanciallydifficulttimes

we are going through, in which concepts such as cost

savingandefficiencyareplayingadominantrole.

Butwealsodescribetheopportunitieswhich,of

course,areneverthelessstillpresent.Iwillreturn

tothispointlaterinthisforeword.

IamnotofferinganynewinsightwhenIsaythat

ourindustryissailingthroughaheavystorm.The

CAPEX(investments)havebeenatalowlevelfor

some time, and this is having a negative impact on

ourproduction.TheOPEX(operatingexpenses)

arealsounderpressure.Wherecostscanbecut,

theywillbecut.Everytwoyears,inaneffortto

identifythekeyareasforcostsavings,EBNcarries

outabenchmarkstudyofoffshoreoperatingcosts.

Keyareasidentifiedintherecentstudyarethe

shore-basedcosts(headofficesupportandover-

heads,warehousing,etc.),thecontractservicesand

equipmentcosts.Collaborationbetweenoperators

through sharing knowledge and lessons learnt can

alsohelpincreasethecostefficiencyandsafetyof

decommissioningactivities.Inthiscontext,coopera-

tionwherepossiblewillbeakeyissueinthecoming

years.IhopethatinthisissueofFocuswenotonly

paintarealisticpictureofthestateofoursectorbut

alsoexpressacautiousdegreeofoptimismandhope.

Berend Scheffers, Director Technology EBN

4

Whenitcomestodecommissioning,weapplythe

'repurpose,re-use,recycle'principle.Webelieveit

is important to use our existing infrastructure in a

responsibleandsustainablemanner.Iwouldliketo

citetwoexamplesoftheindustry’senergeticefforts

inthisfield.Theforthcomingdecommissioningof

threeENGIEgasproductionplatformsinblockL10

providesanopportunitytofieldtestwhetherreusing

those platforms will have a positive impact on the

environment.Thepurposeofthispilotprojectis

to develop an innovative alternative to dismantling

oilandgasplatforms:onethatwillcontributeto

restoring and enhancing the precious environment

oftheNorthSea.Thisinitiativehasbeentakenup

byENGIEandEBN.Ithinkthis,too,isasuccessful

example of stakeholder engagement, as all the rele-

vantstakeholdershavebeeninvolvedintheproject

fromitsoutset.

Wearecurrentlyalsoinvolvedinaprojectwhichis

investigatingthefeasibilityofgivingoldplatforms

intheNorthSeaanew,sustainablelife.Together

withTNO,SiemensandShellwearelookingatthe

opportunitiesforlinkinguptheoilandgasindustry

intheNorthSeawithoffshorewindfarms.These

arestilltwoseparateworlds,buttheyhavemuchto

offereachother.Atpresentweareinvestigatingthe

opportunitiesthatintegrationcouldbring.Weare,

for example, researching how old platforms and gas

fieldscanbedeployedinaninnovativewaytostore

energy.

I would also like to dwell for a moment on our

changing world and the impact it is having on our

business.TheClimateAgreementconcludedby196

countriesattheClimateConferenceCOP21inParis

hasundoubtedlychangedtheenergylandscape.

For our part, we see the results as a stimulus to

boostsustainability.Theagreementsdefineour

commitmenttokeepglobalwarmingbelow1.5°C

by2100andtoreducenetCO2 emissions to zero

inthesecondhalfofthiscentury.Forus,thefossil

fuelindustry,thisspecificallymeansthatwehave

35yearstomeetthesegoals,toreviseourentire

operation and strategies and to come up with

innovationsthatreflecttheseagreements.Thisisa

hugechallengethatisforcingustochangetheway

wethink.

Therearestillsignificantgainstobemadeinthe

areaofsustainabilitythroughouttheindustry,

includingintheNetherlands.In2015EBNactively

pursuedthesustainabilitytheme.Togetherwith

our partners we will continue to evaluate the

opportunitiesformovingforward.Ourwishisto

developclearpolicy–especiallyintheareaof

decommissioning–inconsultationwithindustry,

andforthispolicytoprominentlyfeaturethe

ambitionofensuringsustainabilityandre-use.

InthisissueofFocusonDutchOilandGaswetry

to show that despite the headwind there are still

plentyofopportunitiestodevelopsmallfields.

Theseopportunitiesdo,however,require(perhaps

morethanever)creativity,innovationandentrepre-

neurship.Ifwecanassurethese,theNorthSeastill

offersmuchdevelopmentpotential.Ihopeyouwill

enjoyreadingthisissue.

5

Executive summary

Focus on Dutch Oil & Gas 2016 provides

you with an overview of the current state of

affairs and remaining prospectivity of the oil

and gas sector in the Netherlands. Finding

the opportunities in low price scenarios

by knowledge sharing, collaboration and

innovation are key items this year. The

following are some of the highlights of

the respective chapters divided in themes:

Exploration, Production, Infrastructure,

Decommissioning and Research and

Innovation

• The Dutch Continental Shelf still holds a vast

potential.TheNorthernOffshoreisthesubject

ofcontinuousstudyanduptonowstructures

havebeenidentifiedcontainingmorethan150

bcmunrisked.Toexploretheseremoteareas

withlimitedinfrastructurecostefficiencyis

vitalspeciallyinalowpriceenvironment.New

leadsarepresentedwhichcanbethesubjectof

multi-targetexplorationcampaigns.

• EBN’sprospectdatabasecontainsupto1300

prospectsandleads.Only25%oftheprospects

areactivelybeingstudiedbyoperators.Mean-

whiletheremaining75%areclassifiedasinactive.

A closer look at these prospects reveals that

thereisstillasignificantgroupwithamedium-to

highPOScontainedmainlyintheRotliegendand

MainBunterformations.Theaverageprospect

sizeisabout1bcm.Themainrisksobservedfor

Rotliegend prospects are seal and reservoir, while

charge seems the major risk for Main Bunter

prospects.

• WithaccesstomostwellresultsEBNisinan

excellent position to monitor operator’s drilling

performance.Closelyreviewing200recently

drilled wells for Reservoir Performance - asses-

sedbycomparingpre-andpost-drilledUR-only

about30%ofthewellsreachedthemidcase

URorbetter.AssessingtheOperationalDrilling

Performance-bycomparingactualwithplanned

drillingtime-revealsthatabout40%ofdrilled

wellsexperiencemorethan125%timeoverrun.

Most of the non-productive-time is the result

ofdrillingeventswherebyunexpectedgeology

playsarole.EBNhastakentheinitiativetocollate

information on these drilling events to compile

adatabase.Moreinformationiscurrentlybeing

gatheredincollaborationwithoperators.

• In2015gaspricesdecreasedtojustbelow20

€ct/m3andhavecontinuedtodecreasein2016

tolevelsbelow15€ct/m3.Asaresultofthislow

priceenvironmentandincombinationwithhigh

operationalcoststheprofitabilityofthesmall

fieldsanditsrelatedinfrastructurecomerapidly

underpressure.

• In2015thetotalproductionfromsmallsfields

(excludingUGS)was22.4bcm(GE)whichcor-

respondstoadeclineofabout7%comparedto

2014.Thereservestotalled143bcmGEin2015

correspondingtoannualdeclineofabout7%.

Reservesreplacementiskeytopartlycounteract

thisdecline.However,in2015thereserves

replacementratiowasonly30%comparedto

anaverageof70%inprecedingyearsevenwith

similarlevelsofinvestment.Addingreserveshas

becomemorecapitalintensive.

• In order to assess the impact of a changing gas

priceenvironmentthedynamicsoftheoffshore

portfolioweremodelledusingEBN’ssimulation

tool Infrasim to estimate the Cessation of Produc-

tion(COP)ofplatformsandmaintrunklines.

6

• Maturatingreserves(i.e.,developingtheremai-

ningportfolio)iscrucialforextendingtheCOP

dateofsomeoftheseplatformsandtrunklines.

Forothers,decommissioningseemsimminent.

• Althoughdecommissioningwilleventually

becomeareality,ifprematurelyremoveditcan

leadtoasubstantiallossofresources(bothvolu-

mesandinfrastructure)andcreateanundesirable

dominoeffect.About100bcmareatriskofbeing

permanentlylostinthecoming5years.

• OffshoreOPEXlevelledin2015.TheUnitOpera-

tingCosts(UOC)alsostabilisedatabout6.5€ct/

Nm³whichisstillsignificantgiventhecurrentgas

prices.

• Thereareplentyofpossibilitiestooptimise

these offshore costs and operations as it was

manifestedinthetwo-dayworkshoponlowcosts

developmentorganisedbyEBN.Thesynergywith

the offshore wind sector was highlighted as well

as the importance of knowledge and experience

sharingacrosstheindustry.

• Inanefforttoidentifythekeyareasforcost

savings,EBNcarriesouteverytwoyearsa

benchmarkstudyofoffshoreoperatingcosts.

Keyareasidentifiedintherecentstudyarethe

shorebasedcosts(headofficessupportand

overheard,warehousing,etc.)andthecontract

servicesandequipmentcosts.

• Collaborationbetweenoperatorsbyknowledge

sharing and taking advantage of the learning

curveisalsobeneficialtoincreasethecosteffi-

ciencyandsafetyofdecommissioningactivities.

AnoptimisationpilotstudyinitiatedbyEBNon

thecollaborationbusinesscasesshowedthat

benefitingfromthelearningcurveandincreasing

the contract size can lead to costs savings of up

to40%whenwellP&Aanddecommissioningof

installationsaredoneincampaigns.

• Reusingtheinstallations(forthesamepurpose)

hasseenonlymarginalfinancialbenefits.Howe-

verithasledtoaconsiderableaccelerationof

fielddevelopment.Repurposingtheinstallations

(e.g.rigs-to-reefs)hasalsoemergedasanimpor-

tantoption.Recentpilotstudieshaveshownthat

platformjacketssupportthemarineecosystemof

richandbiodiversehabitat.

• The actual decommissioning costs of topside and

jacketshavestayedwithinamarginof+10%com-

paredtoprovisions.However,theactualcosts

ofP&Aofwellshaveprovenmorechallenging

withmarginsupto50%comparetoprovisions.

Thisisindicativeoftheunderlyinguncertainty

ofP&Aofwells:thebehaviourofthesubsurface

andincompletenessorinaccuracyofrecordsand

as-builtdrawings.

• Toaddressthis,EBNwillbepushingactivelyto

setupaNationalDecommissioningPlatform

wherebyemphasiswillbeplacedonbuildingan

extensivedatabaseofthesubsurfaceconstruc-

tiondataofthewellsandinstallations.

• Finally,EBNemphasisestherelevanceof

investing in research and innovation, even in low

price scenarios, as it is crucial to unlocking the

remainingpotentialoftheDutchsubsurface.

As such it will continue to invest in JIPs, organi-

singsymposiaandworkshopsonrelevanttopics

asawayofgeneratingvalueandknowledgein

partnership.

7

8

Our challengesA different attitude towards gas

1

9

The onshore activities of the Dutch E & P industry have in recent years increasingly been under pressure.

This is due to the seismic events in Groningen resulting from gas production, the accompanying risks to local

residents, the spin-off repercussions on other developments (such as in Friesland and in The Green Heart) and

also due to the collective resistance to the extraction of shale gas. In addition – this is in general not just pertaining

to onshore activities – gas is considered to be a polluting fossil fuel, which is not supportive to its potential role in

the energy transition.

The prices for oil and gas have dropped dramati-

callythelastyear,theresultinginvestmentlevelis

extremelylowandthedevelopmentsinoilandgas

productionaredryingupfast.Inaddition,alarge

numberofexistingfieldsareapproachingtheendof

their productive life, which also has its effect on the

infrastructure.Yettherearestillplentyofopportu-

nitiesintheNetherlands,bothonlandandatsea,

which–withtheaidofnewtechnology–canbe

developedresponsiblyandoftenprofitably.

Boththegovernmentandtheindustryrecognisethe

importance of careful interaction with all stake-

holdersinvolved.EarlierthisyeartheMinisterof

Economic Affairs presented his vision on stakeholder

management.Hisviewisforallpartiestoremainin

dialoguewitheachotherabouttheirroleinenergy

transition,withfasterandbetterdecision-making

asaresult.Allstakeholderswillbemoreclosely

involvedinprojectsthanpreviously.Inallprobability,

aNationalPlatformforEnergyandtheEnvironment

willbesetupthisyear,withtheaimofimproving

communicationwithandbetweenallpartiesinvolved

inlargeenergyprojects.

The government is also working on a proposal

relatedtothelocalbenefitsandburdens,which

isexpectedtobesubmittedtoparliamentinthe

secondhalfofthisyear.TheE&Psectorisdeve-

lopinga‘stakeholderscodeofconduct'whichpays

attention to issues such as communication with

allpartiesinvolved,theroleofE&Pstakeholders

when planning for projects, and how to handle the

possiblerisksofoilandgasdevelopments.Thiscode

willbereadyearly2017.EBNalsoattachesgreat

importance to open and transparent dialogue with

all stakeholders and other interested parties and,

wherepossible,willcontributeactivelytogetherwith

ourpartners.

Thegasindustryworkstogetherwiththecommon

aimtooptimiseemissionreductionsinallenergy

functionalities and accelerate the transition to a

sustainableenergysystem.Fiveupstreamandmids-

treamcompanies,ofwhichEBN,dosounderthe

flagofGILDE(anacronymderivedfromtheDutch

phrasemeaning‘GasInaLong-termSustainable

Energysystem’).

10

GILDEisallaboutdialogueandoutreach.Intwo

years,GILDEhasfacilitatedanoutsider’slookatthe

gasindustry,leadingtoadrasticchangeinattitude

towardsactivitiesandfuellingourambitionstowards

sustainability.GILDEwillcontinuetoexploreour

added value in this respect and will forge new coaliti-

onstoachievingthesegoals.

Thisencompassesexploringsynergieswithoffshore

windandgeothermalenergy,carboncaptureand

storagetechnology,andgreengasproductionwhilst

advocating reduction of natural gas use in some

marketsandincreaseduseinotherstocontribute

directlytomitigatetheimpactonourenvironment

andplanet.

CLIMATECHANGE

PUBLICACCEPTANCE

Natural gas production

GASPRICES

INTERNAL SECTOR

CHALLENGES

SEISMICEVENTS

PUBLICACCEPTANCE

Natural gas

ACTIVITY LEVELCAPEX

EFFICIENCYMATURING

FIELDSSTAKEHOLDER ENGAGEMENT

DECOMMISSIONING

EXTERNAL INFLUENCES

11

12

ExplorationA mature basin with ample opportunities

2

13

Roadmaps form an important part of the long-term strategy of EBN. The topics addressed in this section result

from activities carried out under the Exploration Roadmap, which focusses on the identification of new oil and gas

occurrences in known plays and under-explored areas. It also looks at cost-effective ways to explore and stimulates

the sharing of knowledge and data between operators. Some of the work done by EBN in previous years has led to

more exploration activities among operators and it is hoped that this trend will continue, as exploration is essential

for replacement of reserves and to assure future supply. Below, the drilling performance of recent years is also

reviewed.

The DEFAB AreaLower carboniferous clastics play

TheLowerCarboniferousclasticsplayhasbeen

provenintheUKContinentalShelf(UKCS),with

fieldsproducingfromNamurianreservoirs,and

theBreaghfielddevelopmentthatproduces

fromViseanclastics.FromwellreviewsEBNhas

concludedthatthisplayisvirtuallyuntestedinthe

DutchNorthernOffshore.TheViseanandNamurian

reservoir rocks are present throughout the DEFAB

studyarea.Thesketchillustratestheelementsofthe

LowerCarboniferousplay.

Reservoirqualitysandsbecomemoreabundantand

thicker from Breagh towards the northeast, and

favourablereservoirpropertiesarenotlimitedsolely

toazoneneartheBasePermianUnconformity

(BPU).

Elements of the Lower Carboniferous play in the Dutch Northern Offshore

EBN2016

14

38/16-01

38/25-01

39/07-1

42/10b-2

42/13-242/13-3

43/02-1

44/02-1 44/06-1

A09-01

A11-01

A14-01A15-01

B10-01

B17-04E02-01E02-02

E06-01

E09-01

E10-01S1

E12-02E12-03

E12-04S2

A16-01

27 28 29 30

3536

37

38

41 42

43

44

46 47 48 494°E

4°E

3°E

3°E

2°E

2°E

1°E

1°E

0°

0°

56°N 56°N

55°N 55°N

54°N 54°N0 10 20 30 40 50 60 70 80 90 1005

Kilometers

Coordinate System: ED 1950 UTM Zone 31NUn

ited

King

dom

The

Neth

erla

nds

Germany

The Netherlands

6-11-2015 14:48:01

LegendLithologies 0 – 100 m below BPU

CoalSandShaly SandShaleMarlCarbonate

Cross SectionDEFAB areaInternational Border

Denmark

Lithological characteristics of the Lower Carboniferous in the interval 0 – 100 m below the Base Permian Unconformity (BPU).

Porosity and permeability measurements from core plugs for the Lower Carboniferous.

Wells used: 42/13-2, 43/02-01 (UK), A14-01, A16-01, E02-01, E06-01, E12-02, E12-03, E12-04-S2 (NL), B10-01 (DE)

Porosity (%)

Per

mea

bili

ty,h

ori

zon

tal(

mD

)

0 2 4 6 8 10 12 14 16 18 20 22

400

100

40

10

4

1

0,4

0,1

0,04

0,01

0,004

0,001

Color byLithology

Carbonate

Coal

Marl

Sand

Shale

Shaly Sand

Shape byStratigraphy

CFCSCFFECFSCCFYDDCCKDCGM

CFFE = Fell Fm

CFSC = Scremerston Fm

CFYD = Yoredale Fm

DCCK= Klaverbank Fm

DCGM = Millstone Grit Fm

15

The most promising source rocks in the northern

partoftheDEFABstudyareaareLowerCarbo-

niferousScremerstoncoals.Wellsshowthatcoal

content increases northwards, with 23 m of coal

foundinwell39/07-1and30minwellA09-01.In

thesouthernpart,chargemayoccurfromLower

Carboniferousbasinalshalesandlaterallyfrom

UpperCarboniferousWestphaliancoals.

Twentystructureshavebeenidentifiedonthe

BPUmap,withatotalP50GIIP(gasinitiallyinplace)

ofabout75bcm(unrisked).Thepresenceofintra

LowerCarboniferoussealswouldprovidelarge

upside,sincemanyadditionalstructuralclosures

wouldbecomeprospective.Someofthemapped

leads are shown in the section ‘Multi-target

exploration’.

The triassic main buntsandstein play

AlthoughtheTriassicMainBuntsandsteinplayis

provenintheNetherlands,only20wellsinthe

DEFABareahavedrilledTriassic.Althoughnone

oftheseprovedhydrocarbons,EBNhasconcluded

fromwellreviewsincombinationwithrecentseismic

that11wellscanbeclassifiedasinvalidtestsofthe

Triassicplay.

Threeplaytypeshavebeenidentified:

1. ‘Classic’leadswithproventypesoftrap,

source,sealandreservoir.

2. Leadswhichmayhavebeensourcedvia

Tertiaryvolcanicdykes,analogoustoTriassic

gasfieldsintheUKSouthernGasBasin

(e.g.Gordon).

3. Leadswithfluvialsandssourcedfromthe

north.EBNiscurrentlyfurtherinvestigating

thelikelihoodofsuchsandsbyanalysing

cuttingsfromkeywellsintheAblocks.

10 km

TWT

(s)

-1.0

-2.0

-3.0

-4.0

-5.0

A09-01NL DE

Elbow Fm./Yoredale Fm. (Lower Carboniferous)(includes NL equivalent of Scremerston Fm)

Upper Old Red Group(Devonian – Lower Carboniferous)

Kyle Limestone Eqv. (Devonian)

SW NE

Zechstein (Permian)

North Sea Group(Palaeogene – Neogene)

Chalk

Triassic

E06-01 (52 m)

E02-02 (49 m)

E02-01 (88 m)

39/07-1(137 m)

42/10b-2 (339 m)

43/02-1(99 m)

38/16-1 (256 m)

44/02-1 (84 m)44/06-1 (503 m)

A09-01 (219 m)

27 28 29 30

3536

37

38

41 42

43

44

46 47 48 494°E

4°E

3°E

3°E

2°E

2°E

1°E

1°E

0°

0°

56°N 56°N

55°N 55°N

54°N 54°N0 10 20 30 40 50 60 70 80 90 1005

Kilometers

Coordinate System: ED 1950 UTM Zone 31N

Unite

d Ki

ngdo

mTh

e Ne

ther

land

s

Germany

The Netherlands

6-11-2015 16:58:42

LegendLithologies lower Asbian (~Scremerston Fm)

CoalSandShaly SandShaleMarlCarbonate

DEFAB areaInternational Border

Denmark

Left: High contrast seismic facies in the Elbow Formation (partial equivalent of the Scremerston formation. The projected position of well A09-01 (30 m coal) is shown. Right: Lithologies in the Lower Asbian (roughly equivalent to the Scremerston Formation))

EBN2016

16

Uptonow,29structureshavebeenidentified,with

P50GIIPrangingfrom1–9bcm,foratotalP50GIIP

of80bcmunrisked.SomeoftheidentifiedTriassic

leads are shown later, in the section ‘Multi-target

exploration’.Theseleadswillbeevaluatedinmore

detailandthehigher-rankingprospectscouldbepart

ofmulti-targetexplorationwellsincombinationwith

prospectsatotherstratigraphiclevels.

The G and M BlocksImproving understanding of the distribution of

the lower cretaceous sandstones

ClosetotheeasternboundaryfaultoftheDutch

CentralGrabenalocallythick‘VlielandSandstone’

(90m)wasdrilledbywellG07-02.EBNisinvestiga-

tingwhetherthissandisindeedofEarlyCretaceous

ageandisanalysingitsrelationshipwiththenearby

faultsand/orsaltactivity.

Top Lower Volpriehausen sandstone depth map with Triassic Leads in the Northern Offshore.

EBN2016

17

ItisgenerallyunderstoodthatEarlyCretaceous

sandsdecreaseinthicknessandreservoirquality

northwards(Jeremiahetal,2000).IftheG07-02

sandisEarlyCretaceousinage,itmayopenupnew

interestinlocalLowerCretaceoussandsthatare

relatedtolocalstructuralhighsgeneratinganearby

sourceoferosionalmaterial.

Explore multiple targetsInthecurrentlowoilpriceenvironment,costeffici-

encyisrequiredinunder-exploredareaswithlimited

infrastructure.Aneffectivewayofreducingcosts

while improving the chance of success is to explore

multiple targets at different stratigraphic levels, and

thereforeEBNisevaluatingseveralplaysinparallel,

de-riskingcommonplayelementsandidentifying

leadsatmultiplelevelsintheDutchNorthern

Offshore.

Lower Cretaceous sandstone thickness, based on well data

only(*). Grey outlines are salt structures.

(* The thickness is often below seismic resolution).

Lower Cretaceous Vlieland subgroup thickness.

Interpretation of the possible extent of the Vlieland

sandstone near G07-02 well G07-02 on the eastern

shoulder of the Dutch Central Graben.

G07-2

?

18

New leads identified by EBN

Carboniferousclosures.

19

Example: multiple targets in block A11

Potential reservoirs are expected at multiple

stratigraphiclevelsintheA11blockrelatedtoa

north–southtrendinggrabeninthisblock:

• EkofiskChalkispresentinlowreliefanticlines.

• LowerGermanicTriassicstratahavebeen

preservedinthenorth–southtrendinggraben,

locatedinstructureswhichformedonbothsides

asaresultofsaltmovement.Thereispotential

fornortherlysourcedTriassicsands;

• A Zechstein salt diapir shows indications of

subaerialexposurewhichmayhaveledtothe

formation of a caprock reservoir consisting of

erosional products, analogous to the G16-A gas

field;

• Zechsteincarbonatebuild-upsdevelopedalong

the margin of the Southern Permian Basin and

werepreservedinthisarea;

• LowerCarboniferousclasticreservoirsare

expectedinthisarea,and4-wayandfault-dip

closurescanbeidentifiedatBPUlevel.

GaschargeisexpectedfrommatureLowerCarbo-

niferous coals in this area, whereas in the ultimate

northernborderareaearlyoilchargemayhave

occurredfromUpperJurassicmarineclays.EBN

will continue to further de-risk the various leads

andstructuresinthearea,toworkupaviable

multi-targetopportunity.

Conceptual plays in block A11 (based on seismic section displayed in the Leads maps)

Lower Cretaceous

Upper Cretaceous

North S ea Group

Upper Triassic

Lower Triassic

Upper Jurassic

Upper Permian

Lower Permian

Upper Carboniferous

S andstone

Migration path

Unconformity

LowerCarboniferousfault-dip closures

Zechsteincarbonate play

Chalk 4-waydip closure

Mini-basin due to sub aerialexposure of saltdome: caprock

and basin infill (example in seismic).

Lower Carboniferous: Base Permian unconformityclosure (see carboniferous poster)

Buntsandstein Truncationtraps (with roll-over? examplein seismic and Triassic poster)

Lower Cretaceous

Upper Cretaceous

North S ea Group

Upper Triassic

Lower Triassic

Upper Jurassic

Upper Permian

Lower Permian

Upper Carboniferous

S andstone

Migration path

Unconformity

LowerCarboniferousfault-dip closures

Zechsteincarbonate play

Chalk 4-waydip closure

Mini-basin due to sub aerialexposure of saltdome: caprock

and basin infill (example in seismic).

Lower Carboniferous: Base Permian unconformityclosure (see carboniferous poster)

Buntsandstein Truncationtraps (with roll-over? examplein seismic and Triassic poster)

20

Prospect statisticsEBNmaintainsaprospectdatabasecontaining

informationonprospectsandleadsasmappedby

alloperators,whichobviouslyincludesvolumes

andrisks.Thedatabasenowcontainssome1300

prospects/leads.Analysisofthisdatasetprovides

someusefulinsights.

Active prospects and leads

OfalltheprospectsandleadsintheEBNprospects

andleadsdatabase,about25%haveanactivestatus,

andarefurtherclassifiedas‘firm’,‘contingent’or

‘understudy’.Meanwhileabout75%haveaninactive

status-meaningtheyarenotbeingactivelylooked

at(‘inactive’),orhavea‘legacy’status–meaning

theprospectshavebeeninterpretedbyaprevious

licenceholderoronolderseismics.

The histogram of the summed expectation of pros-

pects/leadsper(10%)POS(possibilityofsuccess)

classshows,notsurprisingly,thattheinactivegroup

containsmanyprospectswithhigherriskandlower

volumethanthe‘active’group(contingent+firm+

understudy).Interestingly,inthe‘inactive’category

thereisalsoasignificantgroupofprospectswitha

mediumtohighPOS(50-90%).

Distribution of summed expectation per prospect status (source EBN)

Conti ngent

Legacy

Firm

Inacti ve

Under study

EBN2016

Distribution of summed expectation per prospect status and POS class ( source EBN)

0 <x≤ 10 10 <x≤ 20 20 <x≤ 30 30 <x≤ 40 40 <x≤ 50 50 <x≤ 60 60 <x≤ 70 70 <x≤ 80 80 <x≤ 90 90 <x≤ 100

Expe

ctati

on

EBN2016

Conti ngent LegacyFirm Inacti ve Under study

21

Distribution of volumes per stratigraphic

formation

Most prospective volumes remain in the Rotliegend

(about700bcmGE)andMainBunter(about300

bcmGE).Theaverageprospectsizeperformation

(inbcmGE)isshowntogetherwiththenumberof

respectiveprospectsandleads.AlthoughtheRotlie-

gend and Main Bunter host most of the prospective

volumes, the average prospect size is much smaller

(about1bcmGE)thantheotherformations.

ThePOSdistributionisnotevenlyspreadoverthe

variousreservoirs,ascanbeseeninthegraphwhich

displaysthedistributionofprospectivevolumesfor

eachPOSclassandcolouredperstratigraphicfor-

mation,combiningonshoreandoffshore.Specifically,

the Rotliegend prospects and leads dominate the

highPOSrange.

EBN2016

Average prospect size coloured by reservoir (source EBN)

16

14

12

10

8

6

4

2

0North

seaChalk Lower

CretaceousScruff Group

Schieland UpperTriassic

MainBunter

Zechstein Rotliegend(unspecifi ed)

Limburg Dinanti anLimest.

Devonian(and older)

aver

ge s

ize

per f

orm

ati o

n

N=24N=34

N=4N=192

N=92N=682 N=136

N=2

N=8

N=3

N=26N=65

Distribution of summed expectation per POS class per reservoir

0 <x≤ 10 10 <x≤ 20 20 <x≤ 30 30 <x≤ 40 40 <x≤ 50 50 <x≤ 60 60 <x≤ 70 70 <x≤ 80 80 <x≤ 90 90 <x≤ 100

Expe

ctati

on

EBN2016

North SeaChalkLower CretaceousScruff GroupSchielandUpper TriassicMain BunterZechsteinRotliegend (unspecifi ed)LimburgDinanti an Limest.Devonian (and older)

22

Distribution of risk parameters

Ifknown,themainriskhasalsobeencapturedinthis

database.Thepiechartshowsthattheproportionof

expectationvolumesdistributedoverriskparame-

terssuchascharge,depletion,gasquality,reservoir,

sealandstructure.Thesearealmostequallydistri-

butedbetweencharge,seal,structureandreservoir

andshownocleartrends.

Thenextchartdisplaysthemainriskforprospects

only(i.e.excludingleads).FortheBunterprospects,

chargeistypicallyseenasamajorriskin30%ofthe

prospects.ForRotliegendprospects,themainrisks

fortheprospectstendtobesealandreservoir.

EBNwillcontinuetorefineandupdatetheprospect

database.Furtheranalysisoftheprospectivitydata

willbecarriedoutthisyear.

Partition of prospective reserves per main risk (source EBN)

EBN2016

Charge

Gas quality

Depleti on

Reservoir

Seal

Structure

Distribution of summed expectation per main risk (source EBN)

Expe

ctati

on

EBN2016

ChargeDepleti onGas qualityReservoirSealStructure

North sea

Chalk LowerCretaceous

Scruff Group

UpperTriassic

MainBunter

Zechstein Rotliegend(unspecifi ed)

Limburg Dinanti anLimest.

Devonian(and older)

23

Hydrocarbon shows database

DocumentingandvisualisingHCshowsin

wellscanbeapowerfulexplorationtool,

especiallyincombinationwithadditional

productivityindicatorssuchasdrillstem

tests(DSTs),repeatedformationtests(RFTs)

andcoredata(includingsidewalldata).

EBNhasinitiatedaprojectaimingatcompiling

aconsistentHCshowdatabase.Thedatabase

focusses on oil and gas readings derived from

logdataandreports(e.g.mudlogs,composite

logs).TheHCshowsaretiedtothestrati-

graphicframework,asdefinedbyTNO.

For each stratigraphic interval the ‘strongest’

gas and oil reading is documented and

assigned to one of the following classes:

‘noshow’,‘poor’,‘fair’and’good’.Additionally,

severalrelevantattributesarecaptured,such

aslithology,mudweight,mudtypeandalkane

concentration.Furtherinformationonthe

validityofaHCshowisgivenbyDST,RFTand

core data, the results of which are listed

inseparateinputformats.

All data entries are coupled to coordinates,

depthandstratigraphy.Thisallowstheuser

tocomparethedifferentdatatypes,perform

thoroughqualitychecksandinvestigatethe

correlationbetween(un)successfulDSTs

andHCshowclassification.Additionally,the

segregateddataformatscanbecombined

intoasingleGISvisualisationmaptoplote.g.

hydrocarbonshowsperstratigraphicforma-

tion.Currently,about70boreholeshavebeen

analysedintheDutchnorthernoffshore.

Theprojectaimstograduallyexpandsouth-

wards,whichwilleventuallyresultinacover-

ageofallonshoreandoffshoreboreholes.

Thedatabaseisintendedtoassistinexplora-

tionstudiesandit’sexpectedtobemade

publiclyavailable.

24

3rd Geophysical symposium

InFebruary2016atthethirdgeophysical

symposium–‘EchoesfromSeismics’–

organisedjointlybyEBNandENGIE,

severaloperators(ENGIE,Hansa,NAM,

ONE,Sterling,Total)presentedinteresting

case histories on the results of seismic

studiesintheNorthSea.Thetopicsatthis

one-dayeventwerewide-ranging,including

reprocessing efforts, interpreting results

and4Dresults.Inaddition,theresultsof

twotypesofseismicacquisitionnewtothe

Netherlandswereshown.Theyconcerned

Hansa’s‘coiledshooting’acquisitioninthe

G18/H16/M03/N01blocks,andSterling’s

BroadbandacquisitioninF17/F18.Both

wereacquiredin2014andhaveshowna

significantimprovementindataquality.

EBNpresentedtheresultsofthe101

exploration wells drilled in the period

2005–2014,someofwhichhavealso

beenpublishedinthe2012and2014

Focusreports.Towardstheendofthe

day,Wintershallpresentedtheresultsof

underwater acoustic measurements carried

outtovalidateTNO’stheoreticalmodels.

Thedayendedwithapresentationfrom

Rijkswaterstaat,onpolicyonunderwater

acoustic noise and its implementation, with

a view to granting exploration permits in

theNetherlandsandinothercountries.

About65people(including10students)

attendedandthedaywasverywellreceived.

Releasedpresentationshavebeenputon

EBN’swebsite.Topicsarebeingconsidered

forthenextsymposium,whichwillbeheld

in2017.

25

Monitoring drilling performance Withaccesstomostwellresults,EBNisinan

excellent position to monitor operators’ drilling

performance.Manydifferentparametershavebeen

analysed,toallowbenchmarking,e.g.oftechnologies

orplays.Thenumberofdrillingdaysasfunctionof

welldepthforabout200recentlydrilledwellsare

plotted.Thetrendlinesaddedshowtheupperand

lower quartiles in terms of drilling performance,

thusmakingitpossibletocompareaparticularwell

outcomewiththeentirepopulation.Thisinformation

alsomakesiteasytoestimaterigtimesforplanned

wells.

Thelifecycleofdrillingawellcanbereducedtofour

phases:mob–demob;dryholetime;completion&

testing;andsuspendingorpluggingandabandoning.

AtypicalsuccessfulRotliegendwellhasthefollowing

(average)characteristics:

A typical Rotliegend

well in NL

•findshydrocarbons(60%sucessratio)

•hasawellTDat4900mAH

•hasanoutstepof2250m

•lastsabout133days,ofwhich: 17formob-demob&prespud

67days(dryholetime)

35daysforcompletionandtesting

14daysforsuspendingorP&A

Estimation of drilling days as function of well depth

EBN2016

dry hole )me (days)*

Tota

l Dep

th (m

AH)

average performance

26

Inreality,theaveragewelldoesnotexistasoperati-

onshavevariableswithvaryingweightingfactors.

To mention a few:

• Wellcomplexity:outstepandmaximum

inclination

• Different stratigraphic units with

accompanyingchallenges

• Different rigs

• Diverse operators

Twootherperformanceexamplesareelaborated:1)

ReservoirPerformanceand2)OperationalDrilling

Performance.Theresultsaredisplayedusingtraffic

light coding, which at a glance shows the outcome of

after-actionreviews.

Reservoir performance

ReservoirPerformanceisameasuretoclassifyout-

comes of development wells as well as of exploration

wells.Thepost-drillingUltimateRecovery(UR)is

estimated from logs and/or well tests and the results

are compared against the pre-drill parameters as

specifiedinthewellproposal.Typically,lowcase

(LC)andhighcase(HC)arealsospecifiedthere,in

additiontothebasecase(BC).Furtherbreakdowns

canbegenerated,e.g.perplayorperoperator.Poor

performance might trigger portfolio reviews or lead

toamorepro-activeNon-OperatingVenture(NOV)

managementfromEBN’sperspective.

Key facts

• Only1/3ofdrilledwellsachievethemidcase

orbetter

• 1/3ofdrilledwellsliebetweenthemidand

low case

• 1/4willnotdeliveranyreserves

• There is an overall trend of overestimation

ofvolumes.

Reservoir performance

EBN2016

mid case or bett ermid – low caseless than low caseFailure to deliver HCNot known

All wells Explorati on (71 wells) Appraisal / Producti on (128 wells)

27

Operational drilling performance

TheOperationalDrillingPerformanceisassessed

bycomparingactualwithplanneddrillingtime.If

the actual duration is within a certain tolerance

(maximumtimeoverrunof25%comparedto

prognosis),thewellclassifiesasoperationallygood

(ingreen).Timeoverrunfrom125%–150%classifies

asmedium(yellow).Timeoverruninexcessof

150%classifiesaspoor(orange).Failingtoreach

theobjectiveclassifiesasfailure(red).Thepiechart

(Fig.2)showstheproportionofthesecategories.

NonProductiveTime(NPT)isoftentheresultof

GeoDrillingHazards.EBNhastakentheinitiativeto

collateinformationonGeoDrillingEvents(seetext

box).

Key facts

• Maincausesobservedfordeviationfrom

plannedday:

• Geo Drilling Events

• Equipment failure related

• WaitingOnWeather

• Mostwellsstillshowanoveroptimisticbudgeting

Operational drilling performance

EBN2016

less than 125% of approved rig days

125% – 150% of approved rig days

more than 150% of approved rig days

objecti ve not reachedAll wells Explorati on Appraisal / Producti on

28

Drilling safer and cheaper wells by sharing information and setting up best practices

Postdrillingreviewsshowthatasignificant

amountofNPTistheresultofdrillingevents

inwhichunexpectedgeologyplaysakey

role.EBNisdevelopingatooltohelppredict

thesedrillinghazards.Accesstoinformation

on geo drilling events from previous wells

allowstheriskprofileofaplannedwellto

beestablished.Properriskprofileshelpto

design wells that are safer and more cost-ef-

fective.Forthispurpose,hundredsofrecent

wellshavebeenanalysedforGeoDrilling

Events(GDE).Theseareeventsthathave

oftenledtoNPTandwhichhavetheirroot

causein(unexpected)geologicalcomplexi-

ties.Typicalexamplesarestuckpipecaused

bysqueezingformation.Otherevents,such

asakick(suddenincreaseinmudreturns),

are related to overpressures and can lead

toawellcontrolevent.Moreinformation

isbeinggatheredincollaborationwiththe

operators.

De-risking future wells

Cross-plotting parameters from the data-

baseenablescertaintrendstobeidentified.

In this example the GDE’s are plotted as

function of measured depth and stratigraphic

supergroup.Thecolourcodingshowsthe

severityoftheevent:lowinyellow,medium

inorange,highinred.Thesetypesofanalysis

arebasedonhardobservationsinlarge

numbersofwellsandenablede-riskingof

futurewells.

Geo Drilling Events per stratigraphic supergroup

Star

t dep

th (M

D)

Strati graphic Supergroup

0

2000

4000

6000

8000

EBN2016

Color bySeverty L M H

NSNorth Sea

KUUpper

Cretaceous

KLLower

Cretaceous

JWJurrasic

TRTriassic

PZPermian

Zechstein

PRPermian

Rotliegend

CCCaboniferous

29

30

3Production, reserves and resources

Lower production levels without cost reduction jeopardise the profitability of the small fields

31

Both the production and the reserves position of small fields showed a declining trend in previous years even though

the reserves replacement ratio was about 70%. Profit margins remained positive. However, after the collapse of

the gas price in 2015, the profitability of the small fields rapidly comes under pressure. The following reviews the

current production level, the reserves position, the remaining potential, and the impact of a low price scenario.

Reserves and resourcesSince2009EBNhasbeenusingtheSPEPetroleum

ResourceManagementSystem(PRMS)forreporting

itsreservesandresources.Implementationofthe

PRMS has made monitoring and forecasting of

hydrocarbonmaturationandresourcereplacement

more transparent, has standardised the reporting

of reserves and resources and has made it easier to

benchmarktheoperators’portfoliosandperfor-

mance(SPE170885,2014).

In2015,thetotalgasproductionfromallfieldsin

whichEBNparticipateswas52.7bcmGE(Gronin-

genEquivalent),ofwhich22.4bcmGEwasprodu-

cedfromsmallfields.Thelatterarealltheexistingoil

andgasfieldsexceptfortheGroningenfieldandthe

UndergroundGasStorages.EBN’sparticipationin

thesmallfieldsistypically40%.

The2015smallfieldproductiondeclinedapproxi-

mately7%comparedto2014(22.4bcmGE)and

showedadeclineof5%comparedtotheaverage

annualproductionforthepreceding5-yearperiod.

Bytheendof2015,thesmallfields’reserves

totalled143bcmGE,whereasin2012these

were172bcmGE;thiscorrespondstoadecline

ofabout7%peryear.

The PRMS classifi cation of reserves and resources

EBN2016

Disc

over

ed Com

mer

cial

Producti on Resource cat.

Reserves

On producti on 1

Approved for development 2

Justi fi ed for development 3

Sub-

com

mer

cial Conti ngent

Resources

Development pending 4

Development unclarifi ed or on hold 5

Development not viable 6

Unrecoverable

Und

iscov

ered

Prospecti veResources

Prospect 8

Lead 9

Play 10

Unrecoverable

32

Impact of investment level on production and reserves replacementThehistoricaldevelopmentofPRMSvolumesshowsthatthesmallfieldsportfolioisindecline.Thisdecline

canbeattributedmainlytoannualproductionwhichisonlypartlycompensatedbyaddingreserves.Thefigure

illustratestheannualreservesreplacementoftheprecedingyearscomparedtoannualproductionvolumes.In

2015thereplacementratiowasabout30%incontrastwithanaverageofabout70%intheyears2012-2014.

PRM

S re

serv

es a

nd re

sour

ces

(bcm

GE)

1. Fields on producti on

>200

200

54

135

2220

130

14

>200

70

114

22

124

2017

75

92

19

111

1312

>200

61

100

24

117

1830

2. Approved for development

4. Development pending

3. Justi fi ed for development

5. Development unclarifi ed or on hold

6. Development not viable

8, 9, 10 Prospects, leads and plays

2012 2013 2014 2015

700

600

500

400

300

200

100

0

Remaining reserves and resources from small fi elds

EBN2016

Reserves replacement Producti on

Reserves replacement in preceeding years

EBN2016

30

25

20

15

10

5

0

Rese

rves

(bcm

GE)

2012 2013 2014 2015

33

A closer look at the collapse of reserves replacement

showsthatmaturation,i.e.fromthecontingentand

prospectivecategorytothereservescategory,and

theapprovalofnewprojectshavebeenessentialfac-

torscontributingtoreservesreplacement.Another

factor is the reserves revisions of existing projects

whichforamatureportfolioaremainlyinfluenced

bygasprices,i.e.highergaspricesaddreservesby

makingmorevolumeseconomicallyviable.Thiswas

particularlytruein2013whenpricespeakedto25

€ct/Nm³.Conversely,lowergaspricescanleadto

a downward revision of project reserves as it was

thecasein2015.Thelastfactoristhemovementof

reservestotheresourcescategorywhichistypically

theresultofprojectsbeingputon-holdordeemed

noteconomicallyviable.

As shown, maturation and approval of new projects

areessentialtomaintainthesmallfield’sportfolioon

anadequatelevel.Thisinturnrequiresanappropri-

ateinvestmentlevel.Whenplottedtogether,wecan

seethenegativecorrelationtoproductionlevels.

In contrast, even when investment levels remained

ratherstabletheaddedreservesstillshoweda

downwardtrend.Thisisanindicationthatreserve

replacementhasbecomemorecapitalintensive.

Factors aff ecting reserves replacement

Maturati on Reserves added by new projects Reserves te resourcesReserves revision in projects

2012 2013 2014 2015

Rese

rves

(bcm

GE)

30

20

10

0

-10

EBN2016

34

Itisshownthenewlydrilledwells-explorationand

appraisal,andproduction(withEBNparticipation)

insmallfieldsintheperiod2011to2015.Although

thenumbersofE&Aandproductionwellsvaryfrom

yeartoyear,duringthisperiodtheaveragewell

countremainedabout30.

As a consequence of the current low price environ-

ment, an all-time low investment level and amount of

drilledwellsisanticipatedfor2016.

EBN2016

Impact of investment levels on reserves replacement

30

20

10

0

1500

1000

500

02012 2013 2014 2015

Rese

rves

(bcm

GE)

EUR

Mln

Maturati on Reserves added by new projects Producti on Investments (CAPEX-only)

EBN2016

Exploration & Appraisal and Production wells

50

40

30

20

10

0

2012 2013 2014 2015

# w

ells

Explorati on & Appraisal Producti on

35

Production forecast for the small fields

The remaining reserves and resources potential is

stillquitesignificantasillustratedpreviously.Ifthe

currentlyknownportfoliowouldbedevelopedbased

on current drilling and development rates and taking

intoaccountagaspriceof17.5€ct/Nm³theannual

productionlevelby2030couldstillbeabout7bcm

(GE).Thisproductionscenarioislabelled‘businessas

usual’(BAU)andisshowningraph.

Inaddition,ifallpotentialcontributionsfromincre-

ased exploration activities, tight gas development,

maximisingrecoveryfrommaturefieldsandinfra-

structureoptimisationwouldberealised,theannual

small-fieldsgasproductioncouldstillbeabout12.5

bcm(GE)by2030.EBNhaslabelledthisscenarioas

‘upsidepotential’or‘high-case’.

However,thestrongimpactofthegaspriceonthe

BAUscenariobecomesclearwhenconsideringagas

priceof12€ct/Nm³.EBNhaslabelledthisscenario

as ‘low-case’ which would result in a limited annual

productionofabout4bcm(GE)by2030.

Profitability of the small fields Pastrevenues,costsandprofitsassociatedwith

explorationandproductionfromsmallfieldsarenow

plotted.In2015,therealisedaveragegaspricelevel

hasdroppedtojustbelow20€ct/Nm³,incombi-

nationwithanincreaseinthecostlevels.Thecost

levelshavemainlyincreasedbecauseofaccelerated

depreciation which is the result of the low price

environment.Theprofitabilitymarginscomerapidly

underpressure.

Prod

ucti o

n [b

cm/y

] risk

ed b

y PO

S an

d PO

M

50

40

30

20

10

0

Historical and forecasted production

EBN2016

1996

2000

2004

2008

2012

2016

2020

2024

2028

2032

2036

2040

■ 1 Fields on producti on■ 3 Justi fi ed for development■ 5 Development unclarifi ed or on hold■ 8,9,10 Prospects, leads and plays

■ 2 Approved for development■ 4 Development pending■ 6 Development not viable

36

Notes:

• Findingcosts:mainlygeologyandgeophysics

(G&G)costs(includingseismicsurveysanddry

explorationwells);

• Depreciation:onaunit-of-production(UOP)

basis(thiscategoryincludesdepreciationover

successfulexplorationwellsthatareactivated);

• Production costs: including transport, treatment,

currentandnon-currentcosts;

Theestimatedgaspricefor2016isdramatically

lowerandcoulddecreasetoanaveragelevelbelow

15€ct/Nm³.Inthenextchapter,theimpactofthe

low price environment on the marginal operating

profitsisanalysed,includingitspotentialimpacton

theinfrastructurelifetimeandthelossofresources.

Prod

ucti o

n [b

cm/y

] risk

ed b

y PO

S an

d PO

M50

40

30

20

10

0

The BAU scenario: low- and high-case scenario

EBN2016

1996

2000

2004

2008

2012

2016

2020

2024

2028

2032

2036

2040

■ High-case scenario ■ BAU ■ Low-case scenario

EBN2016

Profi t margins of small fi eld production

30

25

20

15

10

5

02012 2013 2014 2015

pric

e (€

ct/N

m3 )

Finding costs Producti on costsDepreciati on Taxes Net profi t

37

38

44. Infrastructure

Operating in survival-mode

39

As of today, only a few platforms have been decommissioned. However, current estimates show that the vast

majority of the platforms are at risk in the coming years. Decommissioning will become a reality for a number

of these platforms. EBN and partners are working together to ensure that the installations are not prematurely

removed and that valuable resources, for both the E&P sector and the Dutch State, are not definitively lost. Lower

operational costs are crucial to mitigate such premature removal. In the following, key areas are highlighted for

costs savings and an example is showcased of how efficiency in offshore operations can lead to important reduction

in operational costs. These and other activities are carried out under the umbrella of EBN’s Infrastructure Roadmap.

Impact of the low price environment on the marginal profit

Thehistoricaltrendofmarginalprofitsofoffshore

productionisanalysed.Thisisdefinedasreve-

nuesminusoperationalcosts(OPEX).Whilethe

productionintheyears2011-2015showedasteady

decline,theopexlevelshaveremainedratherstable.

DividingOPEXbytheproductionresultsintheUnit

OperatingCosts(UOC).TheUOCofoffshoregas

showedasteadyincreaseinrecentyears,buthas

stabilisedin2015.

Notsurprisingly,thegaspriceisamaindriverfor

themarginalprofitasillustratedingraph.Themargi-

nalprofitsarecomparedfortwogaspricescenarios:

EBN2016

Opex vs production of the off shore gas portfolio

25

20

15

10

5

0

1200

1000

800

600

400

200

02011 2012 2013 2014 2015

bcm

EUR

Mln

Producti on OPEX

EBN2016

UOC of off shore gas in the Netherlands

7

6

5

4

3

2

1

02011 2012 2013 2014 2015

€ct/

Nm

3 (G

E)

40

25€ct/Nm³(highcaseandbasedonpricesreached

in2013)and12€ct/Nm³(lowcaseandbasedonpri-

cesearly2016).Forthiscomparisonwehaveapplied

theactualaverageUOCin2015.Weobservethat

themarginalprofitdropsover70%,ifthegasprice

declinesbysome50%.

The ‘Cessation of Production’ of offshore infrastructure

Asoftoday,onlyafewplatformshaveactuallybeen

decommissioned(seeFocusonDutchOilandGas

report2015p39).Theeconomiclifetimeofmostof

theplatformshasbeensuccessfullyextended.EBN’s

simulationandsignallingtoolInfrasimwasemployed

toanalysethedynamicsoftheoffshoreportfolio.

Infrasimincorporatesthefutureproductionflows

through the offshore gas installations and compares

the operational costs per platform with the revenues

generated.Theoperationalcostsperplatformper

yeararebuiltupfromtariffexpenses,directopex

and‘opexsharing’.Therevenuesarebuiltupfrom

thevalueofthegasproducedandanytariffincome.

Intheyearinwhichtheoperationalcostsofa

platformarehigherthantherevenues,i.e.cash

flowbecomesnegative,aCOPoftheplatformis

assumed.Inreality,platformsarenotimmediately

decommissionedoncetheyreachtheassumedCOP

date.However,theCOPyearisanimportantindica-

tor for the remaining lifetime of the installations and

helpsidentifyingthecriticalinfrastructure.Inorder

toillustratethedynamicsoftheoffshoreinfrastruc-

turewehavesimulatedtheCOPdate(year)forthe

following volume and price scenario’s:

Volume scenarios:

• reserves

• reserves+riskedcontingent

• reserves+riskedcontingent+riskedprospective

Itshouldbenotedthatthevolumescenariosexclude

theupsidepotentialasdescribedinchapter3.

Gas price scenario’s:

• 25€ct/Nm3,

• 17.5€ct/Nm3

• 12€ct/Nm3

Theoperationalcosts,OPEX-sharingandtariffsare

basedonthe2015costslevels.Fornewinstallations

we also have assumed this level of operational costs,

opexsharingandtariffs.

Aseriesofmapsshowingthecurrentlyexisting

offshoreplatformsandresultingCOP’swereprodu-

ced.Potentialnewplatforms,althoughincludedin

theruns,arenotplottedinthepictures.Thecolour

ofthebubbleindicatesthe5-yeartimeperiodin

whichtheCOPoftheplatformwouldbereached

forthespecificscenario.Thisisalsoillustratedinpie

chartsforthethreemaintrunklines:theNGT,WGT

andtheNOGAT.Together,thesethreemaintrunk

linesareconnecting119(75,31and13respecti-

vely)ofthetotalof133offshoregasplatforms.

EBN2016

Impact of price level on the marginal profi ts

30

20

10

025 €ct/Nm3 12 €ct/Nm3

€ct/

Nm

3 (G

E)

Unit operati ng costs Marginal profi t

41

Op basis van 25 €ct/Nm3

Op basis van 12 €ct/Nm3

Op basis van 17,5 €ct/Nm3

COP of infrastructure assuming a gas price of 25 €ct/Nm3

COP of infrastructure assuming a gas price of 17.5 €ct/Nm3

COP of infrastructure assuming a gas price of 12 €ct/Nm3

42

Remarkably,thetimeperiodinwhichplatforms

ceaseproductiondoesn’tchangesubstantiallyin

mostscenarios.TheNGTistheoldestandlargest

gatheringpipelinesystemintermsofconnectedfaci-

lities.Alargepartoftheplatformsconnectedtothe

NGTshowaCOPalreadybefore2020forallprice

scenarios.Thelargestsystemintermsofconnected

reservesistheWGTandthistrunklineseemsless

vulnerableinthenearfuture.TheNOGATseemsthe

most sensitive to price variations and to the impact

of the maturation level on the remaining contingent

andprospectiveresources.

Aspreviouslydescribed,theseCOPscenarios

havebeenbasedongasprices25€ct/Nm3,

17.5€ct/Nm3and12€ct/Nm3 and current opex

levels.Theimpactofgaspricechangesandthe

potential loss and/or gain of reserves are further

depicted.Itshowsthatforgaspriceslowerthan

15€ct/Nm3 the loss of reserves accelerates creating

a‘dominoeffect’.

Sensitivity analysis for the offshore infrastructure

Thereservesandnetprofitsfromalloffshore

installations depend on more economic parameters

thanthegaspricealone.Factorscontributingto

the platform performance for a greater or lesser

extent, are:

• operationalplatformexpenditures(whether

ornotsharedwithclientplatforms),

• gasprocessingtariffsandopextobepaidto

host platforms, and

• thetransporttariffstobepaidforusageofthe

maintrunklinesforevacuatingthegastoshore.

Thesensitivityofreserveschangestofluctuations

(±20%)ontheseaspectshasbeenanalysedusinga

basegaspriceof17.5€ct/Nm3.

EBN2016

Impact of gas price on reserves gain/loss

25

20

15

10

5

20 0 -20 -40 -60 -80

Domino eff ect

gas price (€ct/Nm3)

reserves gain or loss (bcm)

43

Developing all contingent and prospective resources

wouldadd31bcmand42bcmrespectivelytothe

reserves.Itshowsthatrelativechangesingasprices

havemoreorlessthesame(butreverse)impactas

thesamerelativechangeintheplatformopex.A

20%highergaspricehasthesameeffectinterms

ofreservesasa20%declineinplatformopex.Thus,

tocounteractanylossofreserves,theplatform’s

opexhastobeloweredbyaboutthesameorderof

magnitudeastherelativechangeingasprice.

Relative changes in the gas prices and platform opex

havealsothesame(reverse)effectontheinfrastruc-

turelife-time.Thelargestpositiveimpactonthe

economic lifetime of the assets is the development

ofresourcesintoreserves.Thetransporttariffs

for evacuating the gas to shore and the processing

tariffstobepaidtotheserviceplatformsseemto

have a minor effect on additional reserves and the

averagedecomyear.

Reserves added or lost

gas price(±20%)

platf orm OPEX(±20%)

main transport linetariff (±20%)

processing tariff s(±20%)

main trunklineOPEX share (±20%)

bcm

Lower

Higher

6

4

2

0

-2

-4

-6

-8

EBN2016

Change in average decom year

gas price(±20%)

platf orm OPEX(±20%)

main transport line

tariff (±20%)

processing tariff s

(±20%)

main trunklineOPEX share

(±20%)

developing cont. resources

developing prosp. resources

chan

ge in

dec

om y

ear

Lower

Higher

4

3

2

1

0

-1

-2

EBN2016

44

The resources at stake: a best and a worst case scenario

Wenowillustratetheresources,volumesandinstal-

lations,thatareatriskassumingabest-caseanda

worst-casescenario.

• Thebestcasescenarioisbasedongasprices

at25€ct/Nm³,thecurrentcostlevels,andall

resourcesarematurated(i.e.reserves+risked

contingent&prospective)

• Theworst-casescenarioisbasedonprolonged

lowgasprices(at12€ct/Nm³),thecurrentcost

levelsandreserves-onlyaredeveloped(matura-

tionhasstopped)

In the worst-case scenario, all installations will reach

aCOPdatebefore2030.However,inthebest-

casescenario,itwilltake25moreyearsforthelast

platformtoreachtheCOPdate.

Thecorrespondingproductionprofilesforthese

scenariosareshowninfollowinggraph.Theworst

case scenario, where no more investments are made

to maturate resources, predicts average decline

ratesof20%perannum.Comparedtothebest-case

scenariowithanaveragedeclinerateof9%per

annum.

EBN2016

Number of installations that reach COP in upcoming years: best and worst case scenario

150

100

50

02016 2024 2032 2040 2048 2056

worst case scenario best case scenario

45

Thecumulativevolumesshowadifferenceofabout

100bcmbetweenthetwoscenarios.Inotherwords,

thesearenotonlytheresourcesatrisk,butalsothe

opportunitiestoworkon.

Benchmarking offshore operating costs

EBNhascollaboratedwithNOGEPAsince1995to

facilitatetheoffshoreoperatingcostsbenchmark

(BOON)forthegas-producingoperators.This

benchmark,whichiscompletedeverytwoyears,

givestheindustryanoverviewofitsperformancein

relationtotheoperatingcosts.Thepiechartshows

themaincostitems.

EBN2016

Production of off shore gas - best and worst case scenario

35

30

25

20

15

10

5

0

2016 2021 2026 2031 2036 2041 2046 2051

bcm

/y

worst case scenario best case scenario

EBN2016

Cumulative production - best and worst case scenario

300

200

100

0

2016 2021 2026 2031 2036 2041 2046 2051

bcm

worst case scenario best case scenario

about 100 bcm

46

Thedetailedinsightsrevealedbythebenchmark

helpoperatorstoanalysewhatactiontotaketocut

operatingcosts.However,moreneedstobedone,

especiallygiventheupwardtrendinUOC.

UsingtheresultsoftheBOONstudyonecanbreak

downtheoperationalcostsintovariouscategories.

Itshouldbenotedthatalloffshoreoperatingcosts

havebeendeflatedonthebasisoftheIHSUpstream

OperatingCostsIndexandtheshore-basedcosts

havebeendeflatedonthebasisoftheDutch

inflationindex.

Thegraphshowsthatdeflatedcostshaverisen

consistentlyfortwocategories:‘contractservices

&equipment’and‘shore-basedcosts’.Onsome

categories, such as offshore manning and logistics,

trendssuggestthatthecostprofilewillbecome

morestable.

EBNbelievesthatstrengtheningthecontactswith

newoffshoreindustriesmayfacilitateoptimisation,

especiallyinthecategory‘contractservices&equip-

mentcosts’.Theoffshorewindindustryhasdemon-

stratedgreatinventivenessbecauseinvestmentsin

thisindustryareonlypossibleatverylowoperating

costs.Ontheotherhand,thisnewindustrycan

learn from the experiences of the offshore oil and

gasindustry.EBNhasencouragedthisbymakingit

possibletoexchangeknowledgeandexperiencesat

thetwo-dayworkshopitorganisedonoffshorelow

costdevelopments(seetextbox).

Off shore operating costs distribution of 2014

EBN2016

Off shore manning

Other off shore costs

Contract services & equipment

Logisti cs (Marine & Helicopter transport)

Shore based costs: head offi ces support and overhead, warehousing etc.

EBN2016

Off shore operating costs: distribution over time

160

140

120

100

80

60

40

20

0Total operati ng

costsOff shoremanning

Contract services& equipment

Other off shorecosts

Logisti cs (marine and helicopter

transport)

Shore-based costs: head-offi ce support

and overheads, warehousing etc.

Nor

mal

ised

defl a

ted

cost

s (2

008=

100)

2008 20122010 2014

47

Previousattemptsbytheoffshoreoilandgasindus-

trytooptimiselogistics,forexampleintheSouthern

NorthSeapool,haveaffectedthelogisticscosts,and

has resulted in the increased use of walk-to-work

vessels rather than helicopters to transport workers

(moreonthisonthe‘Kroonborgstory’).EBNisof

theopinionthatsharingbestpracticeswouldmake

moreimprovementslikethispossible.Forthelonger

term,moredetailedinsightswillbenecessaryin

ordertodefinetheareaswhereimprovements

couldbemade.EBNwillcontinuetocollaborate

closelywiththeindustrytoimprovethisbenchmark

exercise.

Efficiency in offshore operations reduces opex: the Kroonborg story (courtesy of NAM)

Oneyearagotheaward-winning‘WalktoWork’

vesselKroonborgbeganoperationsfortheunman-

nedplatformsinthesouthernNorthSea.Thevessel

supportstheNederlandseAardolieMaatschappij

(NAM)andShellUKintheiroffshoreoperationsin

anefficient,safeandcomfortableway.Alookbackat

thefirstyearofworkingwiththeKroonborgfollows.

Efficient deployment of personnel

Withalengthofalmost80metres,theKroonborgis

notonlyaworkshopandwarehousebutalso

ahotelandameansoftransport.Itprovidesaccom-

modationfor60people,including40technicians

thatcan‘walktowork’viaastablegangwayconnec-

tedtoanadvancedsystemabletocompensatefor

themotionofwavesofupto3.5metreshigh.Before

theKroonborgwasbroughtintoservice,employees

weretransportedbyhelicopterdailytoworkonthe

platforms, with the result that the average travel

timeperpersonperdaywasabout4hours.And

with adverse weather conditions like fog, high winds

orfrost,delayswerecommonplace.Inthepastyear

some12,500transfersofanemployeeoffshorehave

beencarriedoutusingtheKroonborg.Workingwith

theKroonborghasthusincreasedthenumberof

effectiveworkedhoursbyapproximately30%.

Safe lifting of equipment

Themotion-compensatedcraneontheKroonborg

hasprovedthatequipmentcanbeliftedsafely

whenwavesareupto3metreshigh.Withitslifting

capacityof5tonnesandreachof32metres,the

replacementofwindturbinesandsolarpanelson6

platformshasbeenpossible,makingitunnecessary

to use the much more expensive jack-up vessels for

theseoperations.Inthepastyearnearly1,000lifting

operationswereperformedsafely.

A wide range of operations

Besidesstandardmaintenancework,theKroonborg

isalsobeingusedforotheroperations.Foraperiod

oftwoweeksperyearthevesselvisitssome10

platformsforhighlyspecialisedmaintenance,for

exampleofradioequipmentandweatherstations.

Andlastyear,7wellsweresuccessfullystartedup

byinjectingchemicalsathighpressure.Usingthe

mobilecoldstart-upequipment,theKroonborg

cannowsafelystartupawellinamatterofhours,

dispensing with the need to rig up a large unit on the

platform.Thehighcostsofthelatterwouldmake

suchoperationsuneconomicinsomecases.

48

No incidents and few cases of seasickness

TheuniquedesignofKroonborg’sthrusters,which

compensatefortheship’sroll,resultsinverysmooth

sailing at sea and means that after their working

daythe60peopleonboardcanenjoyrelaxingtime

off,whichcontributestoworkingsafelyatsea.The

firstyearofoperationhasbeenincident-freeonthe

Kroonborgitselfandtheplatformsmaintainedby

thevessel.Andonlyonecaseofseasicknesswas

registered.

More gas produced at reduced opex

Thankstotheeffectivemaintenancethathasbeen

possiblebydeployingtheKroonborg,production

fromwellshasincreasedandtheavailabilityofthe

installationshasbeensafeguardedandinsomecases

improved.ThedeploymentoftheKroonborghasled

toconsiderableopexsavings,includingareductionin

personnelcostsofsome40%.

Low-cost development workshop organised by EBN

Anincreasingnumberoffielddevelopmentshavebecomemarginal

orevensub-economic.Althoughtheoperationalexpensesfor

existinginfrastructureremainrelativelystableinabsoluteterms,

becauseofdecliningproductionvolumestheoperatingcostsper

unitofvolumearerising.Inaddition,themaintenanceofexisting

facilitiesisoftenhamperedbylimitedplatformaccommodation

spaceand/orcranecapacity,yetapossiblesolution,theheave

compensationtechnologydevelopedespeciallybytheoffshorewindsector,isstillnotyet

widelyusedinE&Psector.Fromitscloseinvolvementthroughouttheindustry,EBNisaware

oftheaddedvalueofbringingtogethertheoperatorsandserviceindustrytoshareknowledge

andexperienceinordertoidentifyopportunitiestoremedythissituation.Tofacilitatethis,

EBNorganisedatwo-dayworkshopwithpresentationsbyoperatorsandserviceindustries,

andbreakoutsessionsonvarioustopicsintendedtoencourageinnovation.Theworkshop

wasattendedbyatotalof140peoplefrom10operatorsandabout30companiesfromthe

serviceindustry.

Haije Stigter, the ''godfather'' of Kroonborg

49

50

5Decommissioning

Calls for industry-wide cooperation and knowledge sharing

51

Decommissioning landscape of the Netherlands

ForthefirstE&PdrillingactivitiesintheNetherlands

wehavetogobackintimetotheearly1940sfor

land-basedoperationsandthelate1960sforthe

DutchContinentalShelf.Sincethensome2,400

wellshavebeendrilledonshoreandsome1,400

wellsoffshore(allhydrocarbon-related).

Some2,000wellshavebeenpermanentlyabando-

nedtodate,leavingsome1,800wellsmoretobe

permanentlyabandoned.Asmostwellsweredrilled

inthe1980s,theaverageageoftheremainingwells

isabout30yearswhichposesahigheruncertainty

ontheintegrityofthewells.EBNiscallingforspecial

attentiontobepaidtothesuspendedexploration

wellswhichstillhavetobepermanentlyabandoned.

Theregulationsforpermanentabandonmentof

wellsarelaiddownintheMiningRegulations;they

are prescriptive rather than goal setting and do

notcovercertainprocedurescommonintoday’s

wellabandonmentpractices,suchascasingmilling.

StateSupervisionofMines(SSM)hasbeenclosely

involvedwithNOGEPAindevelopingnewguidelines

forwellabandonment,whichareexpectedtobe

publishedshortly.Atpresent,thevariousNorthSea

countries still differ in their approaches to perma-

nentwellabandonment.

ThefirstoffshoreplatformsintheDutchsectorof

theNorthSeawereinstalledin1974byPlacidOil

(nowENGIE)andPennzoil(nowWintershall)and

arestillinoperationaftermorethan40yearsof

service.Thepresentnumberofplatforminstallations

hasgrowntoover150;23platformshavealready

beendecommissioned.TheDutchoffshoreplatform

portfolioisheldbyatotalofnineoperatorsbutis

dominatedinnumbersbyENGIE,NAM,Totaland

Wintershall.

Operator Integrated Satellites

Centrica 2 1

Dana 2 0

ENGIE 12 24

NAM 12 17

ONE 1 1

Petrogas 5 7

TAQA 2 5

Total 9 20

Wintershall 9 170 25 50 75 100km

Legend

CENTRICA PETROGAS DANA ENGIE NAM ONE PETROGAS TAQA TOTAL WINTERSHALL

52

TheratifiedOSPARDecision98/3statesthatall

mininginstallationsaretoberemovedafterservice.

The Minister of Economic Affairs can impose a dead-

lineontheremovaldate,butsofarhasnotdone

so.Theintervalbetweencessationofproduction

andactualsatelliteremovalhasbeenfouryearson

average,withamaximumof12years.

DrillingoftheoffshorewellsinthesouthernNorth

Seawascarriedoutprimarilywithwater-based

drilling muds and cuttings were dumped on the

seabed.Oil-baseddrillingfluidswereintroduced

inthe1960s;disposalofcontaminatedcuttings

wasphasedout,andstoppedin1994.TheOSPAR

Decision2000/3describestheuseofOrganic-Phase

DrillingFluid(OPF)anddisposalofOPFcuttings.

Further,OSPARRecommendation2006/5describes

a management regime for offshore cuttings piles and

OSPAR2002/8Guidelinesprovideoptionsforthe

managementofOPF-contaminatedcuttingsresidue.

Intotal,over3,500kmofpipelineshavebeeninstal-

ledontheDutchContinentalShelf,some200kmof

whichhavebeendecommissionedtodate,meaning

theyhavebeenflushed,cleanedandsecuredtonot

poseanydangertootherusers.Decommissioned

pipelinesarecurrentlystillrequiredtobesurveyed

annuallybytheoperator,eventhoughthejoint

ventureforthelicencehasoftenbeendisbanded.

IntheUK,arisk-basedapproachisbeingapplied

toextendtheintervalsbetweensurveysonthe

basisoftheresultsofconsecutivesurveys.Atsome

pointaterminationoftheaftercareliabilitymaybe

expected.

Financial position The current sum earmarked as a provision for the

decommissioning of all Dutch wells and infrastruc-

tureissome€7billion,most(55%)ofwhichisforthe

offshoresector.Overtimetheprovisionalestimates

ofdecommissioningcostshaverisensteadily(see

FocusonDutchOilandGasreport2015).Given

the current late-life production phase and low prices

thisposesarisk,initiallyforthefinancialsecurity

betweenco-licenseesandultimatelyfortheDutch

Stateaswell.

Surrounding countries have procedures in place

empowering the authorities to guarantee that the

decommissioningliabilitiescanbemet.Atypical

approachisthatsuchsecurityiscalledonwhen

the expected future revenues equal the estimated

decommissioningcost.TheDutchGovernmentis

workingtowardsasystemforthestricterapplication

ofpowerstorequestfinancialsecuritywhichare

providedbyDutchlaw.

OneofthechallengesthatEBNenvisagesisthatthe

provision made for decommissioning of infrastruc-

turemaynotbesufficienttocovertheactualcosts.

To illustrate this, the actual decommissioning costs

forplatformsandforwellshavebeencomparedwith

theprovisions.

53

Intheperiodbetween2011and2015atotalof

5platformshavebeendecommissionedand27

offshorewellshavebeenpluggedandabandoned

(P&A).Thegraphshowstheaggregatedprovisions

andactualscostsforthisperiod.

The provisions made for platform decommissioning

agreesrelativelywellwiththeactualsandwithin

arelativeconstantmarginof+10%.Itseemsthat

decommissioning of topsides and jackets carries less

uncertainty,basedonlimitedexperiencesofar.

However,estimationoftheactualwellP&Acosts

haveproventobemorechallengingandcanbe

outwithamarginofupto+50%.Thevariationsin

actuals vs provisions show no clear trend throughout

theyears(notshownhere).Howeverthismaypoint

toanunderlyinguncertaintywithP&Aofwells:the

behaviorofthesubsurfaceandincompletenessor

inaccuracyofrecordsandas-builtdrawings.

EBNacknowledgesthecomplexityofwellP&Aope-

rations.ThereforeEBNwillbepushingactivelyto

setupaNationalDecommissioningPlatformwhere

amongstothersemphasiswillbeputonbuildingan

extensivedatabaseofthesubsurfaceconstruction

dataofthewellsandinfrastructure.Itisexpected

tobecomplementedwithlessonslearnedandbest

practicesfromtheoperatorsandserviceindustry

acrossthesector.

Reuse and re-purposing of infrastructure

Historical reuse

In total, 3 processing platforms and 21 satellite

platformsontheDutchcontinentalshelfhavebeen

decommissioned to date, the latter after an average

serviceof15years.Fromthesatellitesremoved,

atotalof11topsides(73%)havebeenreused

forotherfielddevelopments,allwithinthesame

affiliates(byWintershall&ENGIE).Thetopsides

weremostlycompletelystrippedfromallprocessing

equipmentandonlythesteelstructuralwassaved,

withtheresultthatthefinancialbenefitwasrelati-

velysmallbut,moreimportantly,fielddevelopment

couldbeacceleratedconsiderably.

EBN2016

Decommissioning cost: actuals vs provisions (2011-2015)

120

100

80

60

40

20

0

€ m

ln (1

00%

)

Actuals (platf orms) Actuals (well P&A)Provisions (platf orms) Provisions (well P&A)

54

Theinstallationswerereusedsolelyforthepurpose

theywereoriginallydesignedfor.Sofar,installations

havenotbeenreusedforotherpurposes.

Future re-purposing: rigs-to-reef pilot,

power-to-gas, reuse

ThestandardpracticeintheGulfofMexico(since

1984inLouisiana,1990inTexas,1999inMissis-

sippi)istodonatethesteeljacketstotheArtificial

ReefingProgrammesindedicateddeepwaterloca-

tions.Over450jackets,amountingtosome10%of

thetotalnumberofinstallations,havebeenreused

forartificialreefsintheGulfofMexico.Following

reefing,theliabilityfortheinstallationistransferred

fromtheoilcompanytotheauthorities.Theimpact

onthemarineecosystemhasbeenverypositive.The

costsavingsaregenerallyequallysharedbetween

theindustryandtheauthorities.

Platforms naturally. Focus on new nature (courtesy of George Wurpel,

MSG Sustainable Strategies)

Being“lessbad”isnogood.ThissloganfromCradle-to-Cradledesigniscertainlyappropriate

forthewaywedealwithoffshoreplatformsthathavereachedtheendoftheireconomiclife.

Forsure,thesestructureswereneverdesignedforapositiveimpactontheirenvironment.

Nevertheless,incontrasttotheoftennegativepublicimage,theplatformjacketssupporta

micro-ecosystemunderwater.Itistherichandbiodiversehabitatthatcanbefoundonhard

structuresandwhichusedtobepartofthenaturalecosystemoftheNorthSea.

Whenitcomestoremovingthesestructures,however,themind-setisonminimizingnegative

impacts,being“lessbad”.Rightlyso,internationallegislationpreventsdumpingandleaving

behindharmfulsubstancesandmaterialsinthesea.Butwhataboutrepurposingthestructures

thatmightdogood?Redesigningoldjacketsfornewnaturecouldbeanoptionforalimited

numberoftheNorthSeaplatforms.Somethingthatmightberelevantnotonlyformatureoil

andgasassets,butalsoforfuturestructuresintheNorthSea.

Togetherwithoperators,EBNhastheoreticallyexploredthistopicforanumberofyears.

Comparison with international rigs-to-reef programs showed that there is potential for similar

initiativesintheNorthSea.Lastyear,ENGIEE&PNederlandB.V.tooktheinitiativetotest

theseideasinpractice.ENGIE,EBNandMSGstartedaprojecttodevelopanalternativeforthe

decommissioningofthreeENGIEplatforms.Togetherwithateamofexpertsandtakingcare

toinvolvescientists,greenNGO’s,governmentsandfisheries,wearedevelopingaplanfora

temporarypilottotransformamininginstallationintoastructureaimedatnatureconservation

andrestoration.Aredesignthatwillbemonitoredandallowsustolearnbydoing.Inthisway,

thepilotcouldbecomeasteppingstoneforamoreresilientNorthSeaaswellasaplatformfor

sustainableinnovation.

55

Thefinancialbenefitsofleavingjacketsinplaceorat

adedicatedreefinglocationareexpectedtobemar-

ginalatbest,butthebenefitstomarinebiodiversity

arebelievedtobesubstantial,ase.g.studiedand

documentedbyJoopCoolenfromtheWageningen

University&ResearchcentreIMARES.

Anotherre-purposingopportunityidentifiedentails

integrating offshore wind parks with the gas infra-

structure,therebyallowinganysurpluselectricity

generatedtobeconvertedthroughelectrolysisinto

hydrogen,oralternativelyintomethane.Thehydro-

genstreamcanthenbefedintothegasinfrastruc-

tureorcouldbetemporarilystoredindepletedgas

reservoirs.Suchintegrationwouldalsoenablethe

offshoreinstallationstobepoweredbywindenergy

directlyfromthewindparkoralternativelyfrom

shore,whichwouldimprovethereliabilityofthe

installationaswellasreducetheemissionsoffshore.

RWEhasinstalledahydrogengeneratorthatfeeds

intothegasgridatIbbenbüren(Germany);thishad

alreadybeentestedonasmallscalefrom2007to

2012onAmelandbyEneco,GasTerraandStedin”.

The conclusion so far is that the existing natural

gasutilitiescaneasilycopewith20%ofthevolume

beingtakenupbyhydrogen.Hydrogen-induced

crackingassociatedwiththeblendingofhydrogenin

theexistingpipelinesystemsremainsanoutstanding

issue.

New marginal developments: standardised designs that are reuse- and decommissioning-ready

Whendevelopingnewfields,especiallythemore

marginalones,itshouldbestandardpracticeto

reuse existing installations or components such as

generatorsets,compressors,turbines,pumps,valves

andvessels.Toencouragethis,areusewebsitecould

56

besetup,wheredetailsaregivenofequipmentthat

isshortlytobedecommissionedandthedatewhen

thisequipmentisexpectedtobecomeavailable.This

could allow a new market to develop, which would

notnecessarilybecorebusinessforthetraditional

operatingcompanies.

Itcanbeexpectedthatreuseanddecommissio-

ning-readinesswillbeintegratedintothedesign

asastandardpractice,alsobecauseoftheshorter

productionprofilesgenerallyassociatedwiththe

smallerfieldsthatarestilltobedeveloped.Aprime

exampleisOranje-NassauEnergie’sstandardised

P11-Eplatformwithareusablemodularjacket

design,whichwillbeinstalledthisyear.

Learnings from the UK's joint well

P&A campaign

TheUKOilandGasAuthorityhasinitiatedajoint

operatorcampaigntoplugandabandon500wells

intheUKsouthernNorthSea.Itisclaimedthat

thecostsavingswillbeashighas40%.Forsuchan

approachtobepossibleintheDutchpartofthe

NorthSeaitwillbenecessarytoclassifythewellsin

suchawaythatsimilar‘cookiecutter’operationscan

beclustered,inordertofullybenefitfromalearning

curve.Amethodfordoingsowillbedevelopedand

agreementwillhavetobereachedonhowtoshare

thesavingsbetweenparticipatingcompanies.The

DutchE&Psectormaybeabletolearnfromthe

experienceofUKcounterparts.

Oranje-Nassau Energie’s standardised P11-E platform with a reusable modular jacket design.

EBN2016

57

EBN’s view on decommissioning: collaboration within and across the industry

Clearly,thegeneralviewisthatcollaboration

betweendifferentoperators(butalsobetween

operatorsandsupplyindustry)willbebeneficial.

Thiscollaborationwillbepossiblebysharingbest

practices and taking advantage of a learning curve, to

increaseefficiencybyrepeatingsimilaroperations.

Also, offering a larger portfolio to the contracting

industrywillgenerallyleadtoalowerdayrate,by

providingsecurityforactivities.

EBNhasinitiatedanoptimisationpilottostudythe

collaborationbusinesscase.Usinggeneralassumpti-

ons on parameters such as gas price, operating costs

and decommissioning costs, it is predicted when

installationswillceasetobeeconomic.Next,afinan-

cial optimisation is used, to select how and when

itisbesttoP&Athewellsanddecommissionthe

installations–individually,oraspartofacampaign.

Asexpected,initialfindingsindicatethatmuchcan

begainedbyP&Awellsanddecommissioninginstal-

lationsincampaigns.Byincreasingthecontractsize

andbenefitingfromalearningcurve,itisexpected

thatsavingsofupto40%canbeachieved,ashas

beenclaimedbyotherstudies(e.g.OGA).

The role of EBN

AspartofthestrategyreviewwhichEBNstarted

early2016,ahigh-levelstrategyhasbeenformulated

onreuseanddecommissioning.Inordertomakethe

valuechainmoresustainableEBNwishestomake

reuseamorecommonpracticethroughouttheE&P

lifecycle.

Withageneral40%workinginterest,EBNbears

themajorburdenofthedecommissioningcost

(ultimatelytheburdenonDutchtaxpayersissome

70%).Becauseofitslargeportfolio,EBNseesa

clearopportunitytofulfilanactivefacilitatingrole

in a national decommissioning working group and as

such participates in the decommissioning working

grouprecentlyinitiatedbyNOGEPA.

58

6Research and innovation

Crucial for unlocking the remaining potential of the small fields

59

Driving innovation forward has become harder but

also more important than ever, given the mounting

challenges the E&P sector faces. EBN is convinced

that investing in research and innovation is key

to unlocking the remaining potential of the Dutch

Continental Shelf and therefore participates in

Joint Industry Projects (JIPs), organises symposia

on relevant topics for the industry. JIPs provide a

way of generating knowledge in partnership, to find

innovative solutions for discovering and developing

more resources, and to collaborate between the

various parties involved in the Dutch and international

E&P sectors. In the following a brief account is

given of various JIPs and initiatives in which EBN

participates and that form part of its activities within

its Roadmaps Mature Fields, Infrastructure, Tight Gas

and Exploration.

New Upstream Gas Consortium roadmap

OneoftheinitiativesinwhichEBNparticipatesis

theTKIGas–partoftheTopsectorEnergy-which

isastrategicR&DprogrammeoftheMinistryof

EconomicAffairs,forinvestingintechnologyfor

upstream gas in order to increase the gas reserves

andproductionlevelsintheNetherlands.EBNhas

participated in this programme since its start in

2012.Recently,anewroadmapwaspreparedfor

thecomingfouryears,inwhichsevenmainthemes

arecentral:1)Basinanalysis,2)Fielddevelopment

andperformance,3)Drillingandcompletion,4)Well

performance,5)Infrastructure,6)Decommissioning,

and7)Health,safetyandenvironment.Severalope-

ratorsactiveintheNetherlandsparticipateinoneor

morethemesintheseprogrammelines.

EBNalsoparticipatesinseveralotherinitiatives.In

theUK,anExplorationTaskForce(ETF)hasbeen

establishedtostimulateexplorationactivitiesinthe

New Upstream Gas Consortium roadmap

EBN2016

UGC Innovati on Roadmap

Upstream Gas 2016-2019

Drilling and completi onDecomissioning and

abandonment

Health, safety and environment

Well performance

Basin analysis

Infrastructure

Field development and performance

60

UKCS.TheETFisaninitiativeoftheOilandGas

AuthorityintheUK.WithintheUKETFseveral

projectshavebeendefined.EBNparticipatesinthe

21CXRM–RegionalPetroleumSystemsAnalysis

ofthePalaeozoicstudy,whichlinksupwellwiththe

DEFABprojectcurrentlybeingimplementedbyEBN

(seethesectiononExploration)–notonlyinterms

ofstratigraphy,butalsobecauseoftheadjacencyof

theUKandNetherlandsblocks.

Salt precipitationThe precipitation of salt in porous reservoir rocks,

particularlyinmaturefields,canimpairthepro-

ductivityandmayevenculminateintotalplugging

andultimatelyintheabandonmentofwells.This

behaviourisattributedtohaliteprecipitationinthe

nearwellboreareaaroundtheperforatedpayzone

orwithinthewellbore,asitisintrinsicallylinkedto

pressuredrop.

Key facts about salt precipitation and

volumes at stake

Since2010,southernNorthSeaoperators(UK,NL

andGER)havesharedtheirexperienceonhalite

precipitation in gas wells at the annual salt precipi-

tationforumorganisedbyEBNinwhichoperators

and consultants share their experiences in mitigating

measuresandhaliteprecipitationmodelling.Some

keyfactshavebeenderived.

• Currentlyabout16%oftheDutchsmallfields

sufferfromsaltprecipitationandthisnumber

keepsincreasingwithtime.

• In71%ofthesefieldsthereservoirpressureis

below150baratthemomentsaltmitigation

measuresareimplemented.

• Almost90%oftheCarboniferousandZechstein

fieldssufferfromsaltprecipitationwhenreser-

voirpressuredropsbelow150bar

• Oftheremainingfieldsonlyabout12%suffer

fromsaltprecipitation.

• Reserves maturation resulting from salt mitiga-

tionmeasuresisexpectedtoaddatleast0.2bcm/

yearbetween2015and2030.

• The expected total gains from implementing salt

mitigationmeasuresaresome2%UR(about8

bcm)ofthetotalsmallfield’sgasreserves.

EBN2016

Salt mitigation techniques applied

Bullhead Batch Wash

38%

Other (Cap string,

DD constraint, reperf, inhibitor)

20%

Free Fall Batch wash

38%

CT Water Wash

14%

16%

Percentageofsmallfields withsaltprecipitationproblems

61

Project aims

Mitigationinproductionoperationsistypically

achieved with regular water washes, which dissolve

the deposited salt and transport it in the water

phase.Thisisdonetorestoretheoriginalperme-

abilityconditionsandsorestoretheproduction

rates.Theprecipitationitself,aswellasthewater

washtreatments(andassociateddowntime),result

insubstantialproductionlosses.Amethodisbeing

sought to predict the amount and location of salt

precipitationandthesubsequenteffectontransport

properties,thepermeabilityandcapillarypressure.

Thispredictioncanbeusedtomodeltheonsetand

speed of production decline, as well as optimise

mitigationstrategies.

TheTKISaltPrecipitationprojectwasinitiated

withthefollowingobjectives:

• Tomodelthephysicalphenomenaatthemicro

pores and understand which parameters

determinethesaltprecipitation.Thesemodels

willprovideinputforalargerscale(macro-scale)

modeldescribingthenearwellboreregion.

Thismacromodelistobevalidatedusing

experimentaldata.

• To develop a software model that incorporates

therelevantphysicswithwhichsaltprecipitation

aswellasdissolution(duringawaterwash)can

bemodelled/predictedinthenearwellbore/per-

foration region as a function of time and location

andforusetooptimiseproductionstrategies.

(Sincewatersoakshavearapideffect/response,

the assumption is that the main precipitation is in

thenearwellboreregionandwithinthefirstfew

metresaroundthewellbore).

Experimental set-up and wellbore model (courtesy of TNO)

62

• Tocarryoutexperimentstostudytheeffectsof

thesaltprecipitationonporosity,graindensity

andpermeabilitytovariousflowmediaasinput

to/verificationofthenumericalmodel.

Theoperatorshavesharedandprovidedfielddata

toTNO.ThepartnersinthisprojectareTotal,

Wintershall,ENGIE,ONEandEBN.

Project learnings and deliverables:

• Asaltprecipitation/dissolutionmodelcalledSALT-

MUXhasbeendeveloped,basedontheDuMuX

simulatorandwasmadeavailableinWindows

format to the partners, for performing parameter

studiesandtohelppredictsaltprecipitation.

• Experimentshavebeendoneonoutcropsamples

inordertoquantifytherelevant(input)para-

metersinthemodel.Findingsshowthatsalt

precipitationreducespermeabilitysignificantly

(seegraph).

• Aparameterstudyhasbeenperformedto

identifythesensitivityoftheresultstovarious

parameters and to improve understanding of the

saltprecipitationmechanisms(includingsaltclog-

gingtimeandlocation)inordertohelpoptimise

mitigatingmeasuresandproduction.

• Afirststephasbeentakenindevelopingasimpli-

fiedanalyticalmodel(inMATLAB)toevaluatethe

scopeforoptimisingwaterwashes.Thiswillallow

operatorsinthefieldtoimproveproductionand

controlandoptimisewaterwashes.

EBN2016

Gas permeability reduction (Real Klink)

1,0

0,9

0,8

0,7

0,6

0,5

0,4

0,3

0,2

0,1

00,8 0,9 1,0

Nor

mal

ized

per

mea

bilit

y (v

irgin

= 1

)

Virgin Brine 5/6 sat limit Brine 2/3 sat limit Super-Saturated Brine

63

Integrated Zechstein study at Durham University

Inrecentyears,theZechsteincarbonatereservoirs

intheSouthernPermianBasin(SPB)haveattracted

growinginterest.Newlyacquiredseismicdatareveal

largecarbonateplatformbuild-upsaroundtheElbow

SpitHigh,withreservoirqualitydepositsprovenbya

numberofwellsintheDutchandUKsectors.From

oilandgasfieldswithZechsteincarbonatereservoirs

itiswellknownthatthequalityandtheproductivity

ofsuchreservoirsarenotoriouslyhardtopredict.

Crucialfactorsthatdeterminetheproductivityofa

Zechsteincarbonatefieldarefaciesanddiagenesis,

butmostimportantisthepresenceoffractures.

Project learnings and applicability

AlongtheUKcoastsouthofNewcastlethere

areanumberofworldclassZechsteincarbonate

outcropswhereitispossibletobetterunderstand

the complicated sequences of the deposits along the

edgesofthehighsintheSPB.AnumberofZechstein

experts have integrated the results of several studies

(sequencestratigraphy,GroundPenetratingRadar

(GPR)measurements,outcropfractureanalysis,

diagenetic processes, comparison of historical

productiondata)ontheseoutcropsandalarge

numberofcoresfromoffsetwells.Thishasmadeit

possibletomoreconfidentlypredictthereservoir

characteristics in different parts of the Zechstein

carbonatebuild-ups.Theinsightswillbeusedin

EBN’sevaluationoftheprospectswithZechstein

carbonatereservoirintheDutchNorthernOffshore.

Theywillalsohelptoimproveunderstandingofthe

productionbehaviourofthenumerousproducing

fieldsintheNetherlands.

64

System Integration Offshore Energy EnergyisbeingsuppliedfromtheNorthSeain

variousways.Inadditiontotheenergysuppliedvia

the infrastructure of the oil and gas sector, offshore

windhasbeengeneratedsince2006.Tidalenergy

hasalsorecentlyreceivedmoreattention,especially

intheframeworkoftheEnergyAgreement.

However,theoffshoresectorfacesseveralchallen-

gesintheshortandlongterm.Abigchallengeis

thetargetofcuttingcostby40%.Costreductions

arenecessarytoenabletheoffshoreindustry

(E&Paswellasoffshorewind)tosustaineconomic

production while economic market conditions are

deteriorating.Systemintegrationandinnovationcan

contributetocostreductionandnewopportunities.

Todate,nointegratedstudyhasbeencarriedoutin

theNetherlandsfocussingonthepotentialadvanta-

gesofsynergiesofsystemsintegrationinoffshore

energygeneration.ThisJIPaimsatinvestigatingthe

advantageoftheoffshoreE&Pindustrycollabora-

ting with the offshore wind sector, with the twin aims

of reducing costs for maintenance and installation

andofmakingoffshoreenergygenerationmore

sustainable.Theprojectisexpectedtobecompleted

bylate2016andthepartnersareSiemens,Shelland

EBN,withTNOastheprojectdeveloper.

The Upper Jurassic Sandstones projectTheFocusproject‘UpperJurassicSandstones:

Detailedsedimentaryfaciesanalysis,correlationand

stratigraphicarchitecturesofhydrocarbon-bearing

shorefacecomplexesintheDutchOffshore’wasa

JIPimplementedbyTNO.Thegoalofthisproject

wastoinvestigatetheUpperJurassicandthe

LowerCretaceousintheeasternpartoftheDutch

offshore, in order to provide new insights into the

regional and local stratigraphic, depositional and

syn-depositionalsettings.Althoughthisstratigraphic

intervalcontainsnumerousknownreservoirs,key

questions remain regarding its depositional environ-

mentsandthepreservationofsandystrata.The

projecthascontributedgreatlytotheunderstanding

oftheUpperJurassicandLowerCretaceousinthe

Dutchoffshorebyprovidingatectono-stratigraphic

frameworkbasedonmodernconceptsofsequence

stratigraphyandsyn-depositionaltectonicmodels.

65

Plugging wells by enhanced formation ductility

Theproject‘Pluggingwellsbyenhancedformation

ductility’beganinthesummerof2015.Theaimof

thisinnovativestudyistodemonstratethefeasibility

ofnewconceptstoacceleratepluggingbynatural

sealingandself-healingmaterialsforwellabandon-

ment.TheresultswillbeveryimportantforEBNand

partners,asEBNstimulatesresearchoncost-effi-

cientandnaturalwaysofreliablewellabandonment.

Sofar,theDutchsubsurfacehasbeengeologically

screened to ascertain which formations have the

potentialtonaturallyself-seal,asshowninthefigure.

Saltcreephasbeenincludedintheproject’sscope

becauselargeZechsteinevaporatesareabundantly

presentintheDutchsubsurface,itsbasicmecha-

nismsarebetterunderstood,theresearchonitis

moreadvancedandithasbeenappliedmoreoften

intheindustry(intheGulfofMexico).Thestructural

settingoftheZechsteinintheDutchsubsurface

isthatitoccursinthicklayers(upto1000metres

thick),itcanformlargesaltdiapirsandsaltfloaters

arealsopresent.Zechsteindepositsoverliemost

ofthereservoirsofRotliegendage.TheZechstein

formation consists of various minerals, those most

pronetoductiledeformationbeinghalite,K-Mgsalts

andcomplexsalts.

Inordertobetterunderstandtheductiledefor-

mationmechanisms,itisusefultoanalyseopera-

tionalfieldexperience:1)highdrillinghazardin

theZechsteinoverburdendrilling;2)drillingand

completionproblemsarisingfromsqueezingshales;

3)wellcompletionproblemscausedbyobstruction

duringcasingrunning;4)casingcollapsecausedby

squeezingsaltsinproductionwells.Wellshavealso

beenreportedtobewrittenoffasaresultofsalt

movement.Inordertoachieveacceptanceofthese

innovative completion techniques, the project has

alsolookedintotheDutchregulations.InNorway

andtheUK,theNORSOKD-010standardand

Jurassic Outcrop in the Boulonnais, France (courtesy of TNO)

EBN2016

66

EBN2016

Typical Dutch stratigraphic column with potential self-sealing formations (courtesy of TNO).

North Sea GroupShales

Vlieland Shale

Aalburg Shale

- Rock salt- Squeezing salts

1000 m

2000 m

3000 m

Terti ary

Ceno

zoic

North Sea

Chalk

Rijnland

Schieland

Zechstein

Rotliegend

Limburg

Zeeland

Altena

GermanicTriassic

Cretaceous

Jurassic

Triassic

Quaternary

Permian

Carboniferous

Mes

ozoi

cPa

leoz

oic

1

2

3

4

Chronology Stati graphy Lithology

theOil&Gasguidelinesacceptshaleasanannular

barrier(outsidethecasing)undercertainbarrier

conditions:impermeable,long-termintegrity,

non-shrinking, ductile, resistance to different

chemicalsandsufficientlyhighminimumstress.In

practice, this means that the operator needs to prove

goodshalepresence,runultrasonicandCBLlogs

and demonstrate that the minimum stress exceeds

the maximum reservoir pressure with gas column to

barrier.Naturalsealingoutsidethecasinghasbeen

acceptedandappliedontheBritishandNorwegian

continentalshelfbyStatoil,Shell,BPandother

operatorssince2009.Theprojectparticipantsare

Total,NAM(andShell)andEBN;theprojectisbeing

implementedbyTNO.

Exploring the synergies with Geothermal Energy

Searching for opportunities in low price scenarios

sometimesmeansthinkingoutsidethebox.Onesuch

opportunitymightbetocombineupstreamoiland

gasactivitieswithgeothermalactivities.TheEnergy

Report(2016)issuedbytheMinistryofEconomic

Affairs emphasises an interesting potential of sus-

tainablegeothermalenergythatcanbedeveloped

fordistrictheatingatlowertemperatures(<100°C)

and also for industrial heating at higher temperatu-

res(100–200°C).Higher-temperatureheatwould

have to come from ultra-deep geothermal projects

(depthsof4–8kilometres)withnewplaysyettobe

developed.

Theactivitiesinthesubsurfacefortheexploration

ofoilandgasandgeothermalenergyarealmost

67

identical.Inaddition,withitsextensivecoverage

of2Dand3Dseismicandover3,000wellsforoil

andgasdevelopment,theNetherlandsalreadyhas

astrongbasisofsubsurfaceThefollowingsketch

summarisessomeofthepotentialsynergiesacross

theprojectlifecycle

InrecentyearsEBNhassupportedanumberof

synergyactivities:co-financingtheacquisitionof

additional well-logging information in the California

GeothermalProject.Andsponsoringtwopostdoc-

toralresearchprojectswiththeTechnicalUniversity

ofDelftaboutthesynergypotentialofgeothermal

energyinstrandedoilandgasfields,andwith

GroningenUniversityaboutgeothermalapplications

inalmostdepletedgasfields.

Anothermoreconcreteexamplehasbeenthe

quickscanexecutedbyEBNandTNOtomakea

preliminary(rough)assessmentofthepotential

ofdoubleplays.Adoubleplayisthebusinesscase

in which the value proposition of oil and gas and

geothermalenergyreducesthecostsbyintegrating

bothconceptsinoneplay.Geothermalenergy

reducesthedryholeriskofoilandgas,becausethe

well is reused for heat and it increases the well’s

possibilityofsuccess.Whenoilandgasarefound

instead of heat, the expected revenues from the oil

and gas augment the lower revenues of geothermal

energy.Whenthislogicwasappliedtotheonshore

prospectivitydatabaseitwasfoundthatunder

standardconditionsandcut-offrates,some7bcm

mightbecomeeconomic,withanupsidepotentialof

upto25bcm.Furthermore,itwouldbepossibleto

developanadditional100MWofgeothermalenergy

(seeVanWeesetal,2015).

Synergy possibilities across the life cycle

EBN2016

Explore Appraise Develop Produce Abandon

Sharing of logging and coringRe-use of oil and gas well for geothermal

Sharing seismic survey, data, data processing

Maturing oil and gas and geothermal prospecti vity

Synergy for R&D in drilling and completi on technology Synergy for cost reducti on, enlarged portf olio eff ects

Sharing of best practi ces of Health, Safety and environment

Consecuti ve or parallel producti on of oil and gas, and heat

68

69

Glossary

70

BAU Business as usual scenario: forecast

scenarioassumingtheE&Pindustry

maintainsitscurrentactivitylevel

BCM BillionCubicMeters

BOON BenchmarkingOpexOffshore

Netherlands

BPU BasePermianUnconformity

CAPEX Capital expenditure

COP Cessation of production date

DEFAB ExplorationstudyoftheD,E.F,A

andBblocks

DCS Dutch Continental Shelf

E&P Exploration and Production

GE Groningen Equivalent

GDE Geo Drilling Events

GILDE AcronymderivedfromtheDutch

phrasemeaning‘GasInaLong-term

SustainableEnergysystem’

GIIP GasInitiallyinplace

JIP JointIndustryProject

NOGEPA NetherlandsOilandGasExplora-

tion and Production Association

NOV Non-operatingVenture

Operator PartycarryingoutE&Pactivitiesin

alicenceonbehalfofpartners

OPEX Operationalexpenditure

OGA UK’sOilandGasAuthority

POS ProbabilityofSuccess:theproba-

bilityoffindinghydrocarbonsina

prospect

PRMS Petroleum Resources Management

System:internationalclassification

systemdescribingthestatus,the

uncertaintyandvolumesofoil

andgasresources,SPE2007with

guidelinesupdatedin2011

P&A PluggedandAbandoned

Small fields Alloilandgasfieldsexceptthe

GroningenfieldandtheUnder-

ground Gas Storages

SPE SocietyofPetroleumEngineers

SSM State Supervision of Mines

Tight gas Gasinreservoirswithinsufficient

permeabilityforthegastoflow

naturallyineconomicratestothe

wellbore

TKI TopconsortiumforKnowledgeand

Innovation

TNO NetherlandsOrganizationfor

AppliedScientificResearch

UR Ultimaterecovery

UOC UnitOperatingCosts

UKCS UKContinentalShelf

71

About EBN

EBNB.V.isactiveinexploration,production,

storage and trading of natural gas and oil and is the

numberonepartnerforoilandgascompaniesin

theNetherlands.Togetherwithnationalandinter-

nationaloilandgascompanies,EBNinvestsinthe

exploration for and production of oil and natural gas,

aswellasgasstoragefacilitiesintheNetherlands.

Theinterestintheseactivitiesamountstobetween

40%to50%.EBNalsoadvisestheDutchgovern-

ment on the mining climate and on new opportuni-

tiesformakinguseoftheDutchsubsurface.

72

Nationalandinternationaloilandgascompanies,

the licence holders, take the initiative in the area of

development, exploration and production of gas and

oil.EBNinvests,facilitatesandsharesknowledge.

EBNhasalsointerestsinoffshoregascollection

pipelines, onshore underground gas storage and a

40%interestingastradingcompanyGasTerraB.V.

Theprofitsgeneratedbytheseactivitiesarepaidin

fulltotheDutchState,representedbytheMinistry

ofEconomicAffairs,soleshareholder.EBNishead-

quarteredinUtrecht,theNetherlands.

Visitwww.ebn.nlformoreinformation

References

• BenchmarkOpexOffshoreNederland,

BOON-2012.EBN.

• Kreft,E.,Godderij,R.,Scheffers.,B.,EBN.

SPE-ATCE2014.SPE170885,Thevaluesadded

offiveyearsSPE-PRMS.

• VanWees,J.D.,Kramers,L,Mijnlieff,H.,DeJong,

S.,Scheffers,B.[2015]GeothermalandHydro-

carbonExploration:TheDoublePlaysynergy.

ProceedingsWorldGeothermalCongress2015

Acknowledgements

Wewouldliketothankthefollowingorganisations

fortheircontributionstothisreport:

-NederlandseAardolieMaatschappijB.V.

-MSGSustainableStrategies

-ENGIEE&PNederlandB.V.

-WintershallNoordzeeB.V.

-TotalE&PNederlandB.V.

-Oranje-NassauEnergie

-TNO

The information and conclusions contained in this

reportrepresentthecollectiveviewofEBN,notthat

ofanyindividual.Anyinformationandconclusion

provided in this document are for reference purpo-

sesonly;theyarenotintendednorshouldbeused

asasubstituteforprofessionaladviceorjudgement

inanygivencircumstance.EBNdoesnotguarantee

theadequacy,accuracy,timelinessorcompleteness

ofthereportscontent.EBNthereforedisclaimsany

and all warranties and representations concerning

said content, expressed or implied, including and

warrantiesoffitnessforaparticularpurposeoruse.

Eveline Rosendaal

Exploration

eveline.rosendaal@ebn.nl

Guido Hoetz

Drilling Performance

Monitoring

guido.hoetz@ebn.nl

Raymond Godderij

Reserves and Resources

raymond.godderij@ebn.nl

Eric Kreft

Production and

Infrastructure

eric.kreft@ebn.nl

Renee Stoeller

Decommissioning

renee.stoeller@ebn.nl

For further questions, please ask our experts:

73

74

75

EBN B.V.Daalsesingel 1

3511SVUtrecht

Phone:+31(0)302339001

Mail:ebn.mail@ebn.nl

©2016EBNAnypartofthispublicationmaybe

copied,reproducedordistributedwithoutthe

permissionofEBN,providedthatthematerials

arenotcopied,reproducedordistributedfor

commercialgainandprovidedthatEBNiscredited

as the source on all copies, reproductions and

distributionsofthematerial.