UKOOA Activity survey 2002 EAG/09/02

11th November 2002

UKOOA/DTI Industry activity survey 2002

Presentation to EAG 11th November 2002

Ray Hall-EAG

UKOOA Activity survey 2002

11th November 2002

UKOOA 2002 Survey- Context! In August 2002 a joint DTI/UKOOA survey was launched to gather

data on all identified projects across the UKCS.

" Identifies all projects in Operators portfolio ranging from fields in production to Possible developments.

" Copies of all data send to DTI

" Prof Alex Kemp engaged to aggregate data.

" Exploration & Appraisal activity excluded

! Data presented on Risked basis

" Probable & Possible Projects slipped according to probability

Probability Years delaybelow 20% 420% to 39% 340%-59% 260% to 79% 1above 80% (no delay) 0

UKOOA Activity survey 2002

11th November 2002

Project distribution

Number of fields/projects

Oct 2002 Survey

Oct 2001 Survey

Sept 2000 Survey

Sanctioned 260 248 257Incremental 144 96 97Probable 51 64 65Possible 33 84 56Total 488 492 475

Fewer Probable & Possible projects but more projects in mature fields

UKOOA Activity survey 2002

11th November 2002

Exploration success

! Impact of new exploration success since last survey

! Three new fields

"Represent 46 mmboe

# Of this 23 mmboe is oil

UKOOA Activity survey 2002

11th November 2002

Changes to Possible project portfolio

84 -1 -47

-10-12 6

13 33

-60

-40

-20

0

20

40

60

80

100

2001

Possibles

Now sancti

oned

Remove

dMove

d to Pro

bable

Moved to

Incre

mental

Probables

nowPoss

iblesNew

entra

nts20

02Poss

iblesNum

ber o

f Pro

ject

s

UKOOA Activity survey 2002

11th November 2002

Production

UKOOA Activity survey 2002

11th November 2002

-500

1,0001,500

2,0002,500

3,0003,500

4,0004,500

5,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Mbo

epd

2002 survey2001 survey

Oil & gas production forecast

Production lower by 374 million boe

Little change to 2010 production

UKOOA Activity survey 2002

11th November 2002

UKCS production to 2020

-500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

Mbo

epd

2002 survey

2001 survey

Production lower by 412 mmboe

UKOOA Activity survey 2002

11th November 2002

-

1,000

2,000

3,000

4,000

5,000

6,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Prod

uctio

nm

boep

d

2002 survey2001 survey2000 survey

Significant production fall since year 2000

2001-2010 production billion boe2000 survey=13.9 2001 survey=13.22002 survey =12.9

UKOOA Activity survey 2002

11th November 2002

-

500

1,000

1,500

2,000

2,500

3,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Oil

prod

uctio

nm

bpd

Possible ProbableIncrementalSanctioned

Oil production

No change in 2001-2010 oil production

UKOOA Activity survey 2002

11th November 2002

Gas production

!Significant fall compared to 2001 survey

!2002-10 production lower by some 2.2 TCF

-

2,000

4,000

6,000

8,000

10,000

12,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Gas

mill

ion

scfp

d

2001 survey2002 survey

-

2,000

4,000

6,000

8,000

10,000

12,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Gas

pro

duct

ion

mm

scfp

d

Possible ProbableIncrementalSanctioned

UKOOA Activity survey 2002

11th November 2002

Gas production changes 2001 to 2002

-

2,000

4,000

6,000

8,000

10,000

12,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Gas

Mill

ion

scfp

d

2001 survey2002 survey

-200400600800

1,0001,2001,4001,6001,8002,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Gas

Mill

ion

scfp

d

2002 survey2001 survey

Incremental

Sanctioned

-500-500

1,0001,5002,0002,500

3,0003,5004,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010G

as m

illio

nsc

fpd

2001 survey

2002 survey

Probable & Possible

UKOOA Activity survey 2002

11th November 2002

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Prod

uctio

nm

boep

d

Possible ProbableIncrementalSanctioned

Oil & Gas Production- elements

PILOT Vision

Intermediate target

307 mboepd gap

667 mboepd gap

Missing elements:•Exploration•Undeveloped discoveries•Brown fields

UKOOA Activity survey 2002

11th November 2002

Reference- PILOT Vision assessment March 2002

20th March 2002

EAG presentation to PILOT

-

5001,0001,500

2,000

2,500

3,000

3,5004,000

4,500

5,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Mbo

epd

ExplorationTechnical reservesPossibleProbableBrown fieldsIncrementalSanctioned

EAG Central case projection

PlLOT Vision

Target 2005

!Gap to Vision made up from

" Exploration,

"Brown fields

"Technical reserves

!Now more difficult

"Low Exploration

"Fewer new projects

!More reliant on Brown fields

UKOOA Activity survey 2002

11th November 2002

UKCS production by area

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Mbo

epd

WOSNNSCNSMFIrish seaSNS

UKOOA Activity survey 2002

11th November 2002

Probable & Possible developments by area

-100-100200300400

500600700800900

1,00020

01

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Mbo

epd

WoSNNSCNSMFIrish Sea SNS

UKOOA Activity survey 2002

11th November 2002

Incremental projects by area

-100

-

100

200

300

400

500

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Mbo

epd

WoSNNSCNSMFIrish Sea SNS

UKOOA Activity survey 2002

11th November 2002

UKCS production by tax regime

-500

1,0001,5002,0002,5003,0003,5004,0004,500

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

Mbo

epd

Post 1993Post 1982Pre 1982CT,SCT

PRT,CT,SCT

Royalty,PRT,CT,SCT

UKOOA Activity survey 2002

11th November 2002

Costs

UKOOA Activity survey 2002

11th November 2002

-

1,000

2,000

3,000

4,000

5,000

£ m

illio

n re

al

2002 survey2001 survey

2002 survey 3,614 3,971 3,361 2,881 2,801 2,370 1,814 1,114 612 567

2001 survey 3,810 3,631 3,248 2,911 2,908 1,815 1,118 817 583 458

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Capex comparison

Capex 2002-2006 increased by £0.9 billionCapex 2003-2007 increased by £1.2 billion

2003 spend likely to be below 2002 levels

UKOOA Activity survey 2002

11th November 2002

Capex build up

Probable spend may slip- few projects sanctioned since Budget

-

1,000

2,000

3,000

4,000

5,000

£ m

illio

n re

al

Possible ProbableIncrementalSanctioned

Possible - - - 0 68 329 492 366 187 321 Probable 13 183 629 881 1,314 1,165 714 425 136 19 Incremental 1 12 653 745 709 539 377 166 138 92 Sanctioned 3,599 3,776 2,078 1,255 710 337 231 158 152 136

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UKOOA Activity survey 2002

11th November 2002

Capex by type

-500

1,0001,5002,0002,5003,0003,5004,0004,500

£ m

illio

n re

al

Other capexDrilling

Other capex 1,698 1,834 1,596 1,380 1,503 1,252 822 491 276 402

Drilling 1,916 2,137 1,765 1,501 1,298 1,118 992 624 336 165

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UKOOA Activity survey 2002

11th November 2002

Capex by area

-500

1,0001,5002,0002,5003,0003,5004,0004,500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

£ m

illio

n re

al

SNS Irish seaMF CNSNNS WOS

UKOOA Activity survey 2002

11th November 2002

UKCS capex by Tax vintage

-

1,000

2,000

3,000

4,000

5,000

£ m

illio

n re

al

Post 1993Post 1982Pre 1982

Post 1993 2,256 2,647 2,383 1,928 1,834 1,750 1,416 890 426 399

Post 1982 621 711 448 486 454 284 185 103 85 80

Pre 1982 726 602 516 444 473 310 180 121 101 88

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UKOOA Activity survey 2002

11th November 2002

Operating costs

!Opex decline not matching production decline

!Opex/boe:

"2001= $4.1

"2010= $4.9

-500

1,0001,5002,0002,5003,0003,5004,0004,500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

£ m

illio

n re

al

Possible ProbableIncrementalSanctioned

-500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

£ m

illio

n re

al

Tariffswell opexGeneral opex

UKOOA Activity survey 2002

11th November 2002

Opex comparison

-

5001,000

1,500

2,0002,500

3,000

3,5004,000

4,500

£ m

illio

n re

al

2002 survey

2001 survey

2002 survey 4,162 4,278 4,121 3,982 3,900 3,617 3,471 3,323 3,081 2,766

2001 survey 4,172 4,279 4,002 3,913 3,782 3,594 3,421 3,157 2,993 2,804

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UKOOA Activity survey 2002

11th November 2002

UKCS Opex/boe

2.00

2.503.00

3.504.00

4.505.00

5.50

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Ope

x/bo

e

2000 survey2001 survey2002 survey

UKOOA Activity survey 2002

11th November 2002

Unrisked data

UKOOA Activity survey 2002

11th November 2002

Unrisked UKCS Production

-

1,000

2,000

3,000

4,000

5,000

6,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Prod

uctio

nm

boep

d

2002 survey

2001 survey

Production lower by 520 mmboe

UKOOA Activity survey 2002

11th November 2002

Unrisked capex

Capex 2002-2006 increased by £1.5 billionCapex 2003-2007 increased by £2.5 billion

-

1,000

2,000

3,000

4,000

5,000

£ m

illio

n re

al

2002 survey

2001 survey

2002 survey 3,671 4,034 4,170 3,991 2,977 1,827 1,336 668 531 314

2001 survey 3,976 4,471 4,599 3,196 1,965 1,258 822 576 320 163

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UKOOA Activity survey 2002

11th November 2002

Unrisked capex build-up

-

1,000

2,000

3,000

4,000

5,000

£ m

illio

n re

al

Possible ProbableIncrementalSanctioned

Possible - 15 306 553 357 113 252 291 218 72 Probable 71 231 1,132 1,438 1,201 838 476 52 24 15 Incremental 1 12 653 745 709 539 377 166 138 92 Sanctioned 3,599 3,776 2,078 1,255 710 337 231 158 152 136

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UKOOA Activity survey 2002

11th November 2002

UKOOA Survey- Statistics (2002 Survey)

Field Category No of Fields Reserves Million boe Capex £ millions

Sanctioned fields 260 (248) 10788 (9798) 9256 (4807)

Incremental 144 (96) 1643 (1756) 3568 (3384)

Probable fields 51 (64) 2218 (2745) 5498 (6729)

Possible fields 33 (84) 933 (1669) 2391 (3491)

Total 2002-2040 488 (492) 15581 (15969) 20714 (18412)

Data from 1/1/2002Figures in brackets denote 2001 survey data

UKOOA Activity survey 2002

11th November 2002

Remaining reserves from 1/1/2002

5,969

919 1,216 683

4,819

7241,003

250-

2,000

4,000

6,000

8,000

10,000

12,000

Sanctioned Incremental Probable Possible

Res

erve

s m

illio

n bo

e Oil Gas

UKOOA Activity survey 2002

11th November 2002

Sanctioned activity Production

Capex

Capex up by £4.6 billion

Cost of £4.2 ($6.3/boe)

Production increased by 1088 mmboe to 2020

-

1,000

2,000

3,000

4,000

5,000

6,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Prod

uctio

nm

boep

d

2002 survey2001 survey

-

5001,000

1,5002,000

2,500

3,0003,500

4,000

£ m

illio

n re

al

2002 survey

2001 survey

2002 survey 3,599 3,776 2,078 1,255 710 337 231 158 152 136

2001 survey 3,472 2,029 894 457 377 215 149 115 77 61

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

UKOOA Activity survey 2002

11th November 2002

Removal costs- Cumulative expenditure

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

£ m

illio

n re

al

2002 survey

2001 survey

Cumulative costs increased by £500 million to £8.7 billion

UKOOA Activity survey 2002

11th November 2002

Messages! Industry struggling to sustain production

" Production to 2010 lower by over 374 mm boe compared to 2001 survey# Gas production some 2.2 TCF lower- Oil production unchanged

! PILOT Targets more difficult to achieve" No progress in closing gap to 2010 production- further away in 2005

! Rising costs and operability challenges" Expect higher capex, but

# In combination with falling production trend is unsustainable ! Probable and Possible field portfolios significantly reduced (64 projects)

" Reserve contribution lower by over 1.3 billion boe# Fields sanctioned not being replaced by new discoveries or

acceleration of technical reserves." Incremental projects (Brown field activity) of greater importance

! High oil price sustaining development activity- so far