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The cost challenge on the NCS The Young Energy Conference 2014, Stavanger - 20.11.2014 Grethe Moen, CEO, Petoro AS
The cost challenge on the NCS
The Young Energy Conference 2014, Stavanger - 20.11.2014Grethe Moen, CEO, Petoro AS
Statoil is established
Statoil too big, SDFI takes over half of the assets
Statoil lists on thestock exchange,
Petoro is established
Petoro managesthe SDFI
Statoil Hydro merger, a milestone
1972 1985 1985-2001 2001 2007
2
History of SDFI and PetoroA short lesson in 1 minute
The cost challenge on the NCS
Share in 34 producing fields
ExplorationNew fielddevelopments
Oil and gas infrastructure
Net Cash FlowOPEXCAPEX Revenue
SDFI – large values at stake for the state
NOK 33 bn NOK 40 bn NOK 197 Bn NOK 125 Bn
Turn
ing
Pet(ro
leum
) into
Oro
The cost challenge on the NCS
International oil companies|
Others
20 bn boe remaining reserves
Share in 179 licenses per31.12.13
A new oil crisis?
The cost challenge on the NCS4
OpportunityDanger
From volume to value, the need for higher efficiency emphasized
• Stronger prioritization of capital – directed by need to improve profitability
• Cutting activity reduces value creation opportunities
• Need for increased efficiency in the value chain
• An opportunity!
The cost challenge on the NCS5
?
Doubling CAPEX is not deliveringproduction growth
6
Source: Petoro
ACTUAL FORECAST
Su
m b
ud
get
per
field
Mil
l N
OK
(n
om
inal)
Pro
du
cti
on
(kb
oed
)
Production oil, NGL, cond Production gas Field developments Production drillingConcept studies OPEX
The cost challenge on the NCS
Dramatic increase in well costs
• Well costs on fixed installations doubled since 2009
• Well costs on floating units doubled since 2006, levelling off?
• Cost prognosis does not reflect history
7 The cost challenge on the NCS
Better before - Drilling tasks takes twice as long
Perc
ent
incre
ase in t
ime fro
m 1
992-9
5 t
o 2
008-1
3
8
Source: Petoro
Analysis:
Same fields – same wells
1992-95 versus 2008- 13
Drilling from surface to top reservoir
Selected, representative routine operations
The cost challenge on the NCS
The cost challenge on the NCS9
Radical approach is required to meet the reserve ambitions on mature fields: 6 fields – 10 fixed installations
Radical approach is required to meet the reserve ambitions on mature fields: 6 fields – 10 fixed installations
The cost challenge on the NCS10
Future fields are dominated by smaller reserves – well costs critical for profitability
The cost challenge on the NCS11
Discoveries (per February 2014) in addition to:Johan Sverdrup (315 million Sm³ o.e) + Johan Castberg (86 million Sm³)
Source: OD/ Strategikonferansen 2014, Petoro
49 %
21 %
16 %
9 %5 %
Cost split, subsea development
Boring og kompl.
Havbunnssystem
Rørledning og marineoperasjoner
Topside mod
Prosjektledelse
Approx. 3 mill Sm3 oil: smallest profitable development w/ four well template
Example: Field X (oil, one template w/ 4 wells)
Source: Petoro
Drilling and completion
Pipeline and marine operations
Subsea systems
Project management
Topside modifications
Oil Gas
Reco
vera
ble
reserv
es, m
illi
on
Sm
³ o
.e
Only long term focus and radical initiatives will deliver radical improvement – «several more stones to turn»…
New areas/ presently less focus:
• Contract incentives to drive efficiency
• One team – operator and supplier equal partners
• New technology to drive efficiency
• Faster technology deployment
12
Technology
OrganizationWork
processes
The cost challenge on the NCS
Seize the opportunity and involve yourself
• Deliver quality, every time - will build trust
• Be proactive – not reactive
• Dare to challenge the established thinking and to make mistakes
• You and your new ideas are an important part of the solution
The cost challenge on the NCS13
Opportunity
Danger
Change through co-operation –a long history on NCS
• HSE
• Business driven technology development and fast implementation
• Industry appointed committees and initiatives – NORSOK
• Government appointed committees and initiatives -white papers
• Field specific change processes on the NCS
14 The cost challenge on the NCS
