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www.agr-ps.com Ian Burdis Vice-President – Well Management Strategies and Practices to realise the maximum potential of NOC’s and IOC’s
www.agr-ps.com
Ian Burdis
Vice-President – Well Management
Strategies and Practices to realise
the maximum potential of NOC’s
and IOC’s
www.agr-ps.com
• Oil Price rise trend over past
12 months
• Implies rising production
demand shortfall not
affected by western
recession.
• Decline rate of oil
production without
including new IOR – EOR
or drilling:: 3.4%
• All models indicate peak
already reached or will be
by 2015
2
Peak Oil Production – decline?
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0
1
2
3
4
5
6
7
8
9
10
2010 2011 2012 2013 2014 2015
Mpob
Extra Daily Production per annum
Extra Daily Production vs 2009
Continued demand...
20
30
40
50
60
70
80
90
100
Global Oil Demand
OECD
Non OECD
TotalHydrocarbon demand driven from non-OECD countries
Large incremental daily Hydrocarbon supply increases required
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The End of Easy Oil...
• Hydrocarbon demand driven from non-OECD countries
• NOC supply via
• Increased domestic & international expansion activity
• New areas technically & geographically
• Gas, HPHT, Offshore
• IOC supply via
• Harsher, more remote environments
• Deepwater, HPHT
• Unconventional
• Gas
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Changing Operator Environment
• Proportion of world hydrocarbon reserves:
• Under NOC auspices – increasing – 85%
• Under IOC auspices – decreasing
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Changing Operator Environment
• NOC: Similar, but many differences:
• Models
• Objectives: Resource Nationalism
• Access to finance
• Access to hydrocarbon assets
• Varied Technical capability
• Level of dependence on IOC
• Mobility of product
• IOC: Similar, traditional
• Differ in scale
• Large : access to $
• Small : less access
• High Capability
• Extend product offering:
• Transport of product
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Changing Operator Environment
• Used to be conservative, but now much more varied & fragmented than 20 years ago
• Much IOC consolidation
• Many small independents appearing globally
• Service Majors playing an expanded role
• Huge planned increases in business
• Eg. Iraq, other Middle East, Brazil
• All players require degree of flexibility because of variation in demand for services
• Resource access is an issue for all players
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Changing Contractor Environment
• In an expanding business environment the drive for skills and experienced resources is constant and competition is fierce
• Many companies introduced outsourcing in a drive to reduce overheads. & access resources Outsourced services have typically included IT, Accounting, HR, Facilities engineering, design & construction, Reservoir management & Facilities operations management
• Many companies embarked on a search for alternative commercial models for reservoir & well delivery.
• The benefits of outsourcing are seen as:-• Access to capacity, supplementary or discrete
• Access to specialist skills/experience
• Cost effective access to shared software and products
• Flexibility in scale, discipline and duration
• Lower overheads
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Changing Contractor Environment
• Used to be linked to the provision of hardware and related technology, but now much more varied, fragmented than 20 years ago
• Service Majors playing an expanded role
• Work direct for NOC
• Providing bundled “all service packages”
• Increase in local Service Companies
• A new service offering has emerged, non related to the provision of hardware
• 35 companies now providing well management services in UK, Norway, N America, S America, Africa, ME & Asia/Pacific
• eg. 67% of all mobile drilling in N Sea in 2008 conducted by outsourced well management companies
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Well Project Management Company
• Has similar scale of human resources to many IOC
• former IOC, Service Major staff, high level international experience
• has no equipment assets
• Can do all that an IOC can do
• except funding, HC sale or PSC, as has no subsurface assets
• Solid safety and operational track record
• Full project management:
• G&G, Drilling & Production technology
• SCM, Logistics, Security, HSEQ
• Flexible commercial model, designed to fit every application
• Fee based remuneration
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Traditional NOC Model
NOC
Drilling Services30-35 Contracts Drilling Rig Logistics & Materials
• eg. Malaysia, India, Kingdom Saudi Arabia
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NOC – IOC - Service Major Model
NOC
IOC
Drilling Services30-35 Contracts Drilling Rig Logistics & Materials
Service Major
• eg Iraq
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NOC –Service Major Model
NOC
Drilling Services30-35 Contracts Drilling Rig Logistics & Materials
Service Major
• eg Mexico, Algeria, Saudi Arabia (in part)
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Areas of Dramatic Change: Over Short Time Period
• Still volatile although general activity trend is upwards• Activity level increase
• Volume• Increased rig and well count• Resource shortage
• Technical level• Subsurface:
• Improved seismic acquisition and interpretation • Drilling and Completion:
• Vertical post-hole well to Maximum Reservoir Contact• Harsher environments
• HPHT, Abrasive, Deepwater, remote• Field Development Plans to include IOR Techniques to deliver higher
production
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NOC / WPM Contract Model
WPM
Drilling Services30-35 Contracts Drilling Rig Logistics & Materials
NOC
• Widely used by Independents & some NOCs
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Established Processes
• Established Policies and Procedures
• Well construction, HS&E
• Procurement: MSAs
• Well Delivery Process
• Codified
• Step-by-step approach to well design
• Milestones and deliverables
• Project management skills & process
• Probabilistic Well Construction Software
• Understanding and managing risk
• Time and cost estimation
• Drilling & Subsurface Training
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Performance as a Result of Planning & Execution
• Well Project Management (WPM) Company • Front-End Engineering• Well Delivery Process• Risk Modelling• Tendering• Profit centre
• Rig• Selection• Procurement• Relationships with many land, JU, HD JU, semi, DS &
DW drilling contractors • Personnel assurance• Down-hole tools & services employed • Performance driven
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Performance – Downhole Technologies
• Well Project Management (WPM) Company • does not have any hardware, only substantial know-how• works with all service companies to deliver the most value for clients
at the best price• Service companies design and own the technology
• is fully impartial, as not linked to any service company, drilling company; profit derived only from WPM
• is fully cognisant of all industry technology• is fully cognisant of all forms of drilling:
• Deep• Extended Reach• Offshore & Deepwater• Underbalance• Geosteering / Maximum Reservoir Contact
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Value Delivery - Benefits of Alternative Approach
• Independence of Well Project Management company• not allied to any rig contractor or service company
• Includes reservoir management, G&G capability & Facilities engineering
• Seamless/invisible integration of WPM into client or partner organisation
• Can be used as independent verification • Remuneration:
• Fee Based, not:• $ / bbl or $ / TCF• Time based rental of service equipment
• Aligned with cost and performance objectives of client
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Outsourced Well Project Management - Benefits
• Lessons Learned from other geographic areas & other operations• Fast Learning curve
• Portability & flexibility • Repeatability• Fully cognisant of:
• all latest service company technologies & practices• drilling contractors, day rates, rig specifications, access,
relationships • Ability to train client personnel through established material• Contracting competence & experience
• track record• integration of bundled services where appropriate to client &
project
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Outsourced Well Project Management - Concerns
As a new phenomenon (< 10 years)• Lack of visibility in the industry• Nomenclature: WPM, Project Management = Facilities?• Mainly confined to Western Countries
• N Sea, GOM, Australia etc• Procurement Protocols
• Most NOC’s do not even include WPM as an ITT line item • Confused with Body Shop analogy• Variance in Quality product offering:
• Process, Procedure, Systems • Loss of control. WPM client stays in control, not “turnkey”
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Conclusions
• Worldwide demand for hydrocarbons is still increasing• Supply from traditional reservoirs & sources has peaked• New supplies will come from new geographies & environments
presenting new challenges• NOCs are expanding their area of influence and activity• The demand for resources and capacity with the right skills and
experience is high• Operator & Contractor environments and inter-relationships are
changing. Alternate, flexible solutions are required• New technical and commercial solutions, product offerings and
services are available in the market • Out-sourced well project management is now a credible and
mature alternative solution to meet changing NOC needs
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AGR – Our Role in delivering value….– Benefits to Features
Fox guarding the henhouse
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Service Major: • Earns $ from equipment rental
• This revenue >> PM Revenue
• So Service Major :
• Will – supply as much equipment , for as long as possible
• Will not – replace it’s own equipment by competitor
Oil Major: • Earns $;s / bbl from PSC
• This revenue >> PM Revenue
• So Oil Major :
• Will – engage in joint supply of oil (gas), for as long as possible
• Extend term
• Will not – do anything that shortens term, training, share global best practice
Independent WPM: Shepherd guarding the flock
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AGR PS Recent Track Record
• AGR PS – has successfully managed drilling of > 400 wells in 10 years• AGR PS – low profile outside NW Europe, US, Asia-Pacific (3 regions)• AGR PS is a comparatively new company• AGR PS business model, while new for NOCs, is extensive elsewhere
