UK EXPLORATION WHERE NEXT? OIL & GAS UK BREAKFAST 8 DECEMBER 2015

Transcription

1 UK EXPLORATION WHERE NEXT? OIL & GAS UK BREAKFAST 8 DECEMBER 2015

2 Introduction Phil Kirk MD Chrysaor Co-Chair & Industry Lead MER UK Exploration Board Board member Oil & Gas UK Active member OGIA What does UK exploration look like at the moment? What needs doing? Where next? Co-founder Chrysaor in activity Mustard 205/27-3 discovery & appraisal sidetrack 3D survey South Solan basin 3D reprocessing over West Solan & East Solan basins 2

3 Exploration Sector Strategy - Looking back to the Wood Review The objective of the exploration strategy should be to revitalise exploration, thereby ensuring that the totality of the economically recoverable oil and gas resources from the UKCS both in existing and new plays are fully explored, appraised and exploited in a timely manner consistent with existing and potential new infrastructure. This should be facilitated by efficient access to well and seismic data, an appropriately tailored licensing regime, and encouraging appropriate data sharing within the regional development plans. Measures should also be taken to promote UKCS exploration opportunities internationally. UKCS Maximising Recovery Review: Final Report Sir Ian Wood February 2014 Government should urgently assess the potential to stimulate exploration. The UK must regain its position as an attractive destination for exploration funds from large & small companies alike, and faces a real challenge to compete against international opportunities. 3

4 The to do list Identifying & finding the yet-to-find volumes Access to technical data & knowledge sharing Rigorous and timely generation of drill ready prospects Prospect inventory prioritisation Cost control & efficiency of the UKCS Access to infrastructure Fit for purpose regulation & licensing UK promotion & improving our reputation There are a number of key issues that must be addressed to ensure UKCS exploration achieves a sustainable level of success and to help replace production decline, secure infrastructure and jobs All are needed to deliver scarce global capital for UK exploration investment Rebalancing the fiscal equation to deliver MERUK 4

5 What s the prize? Or indeed does anyone know? Estimates of yet-to-find commercial resource vary hugely YTF resource is a function of known geology, economics and historical success rates and expectations The unknown unknowns are harder to quantify The advance of technology and the effect of a change in mind-set and increased cooperation will only be positive 5

6 Access to data & knowledge sharing Explore deeper plays Produce consistent data base ORCADIAN BASIN 21CXRM Moray Firth CNS Post Well Analysis De -risk new plays Stimulate further analysis Encourage acquisition IRISH SEA MID NORTH SEA Regional Petroleum Systems Analysis of the Offshore Palaeozoic - Focus on the Devonian & the Carboniferous Facilitate commercial success 6

7 Government Funded Seismic a first for the UK 20,000 km of high-quality 2D data acquired 80 well ties Total data package of 40,000 km to be released in 1Q 2016 Rockall New Legacy Traded Ireland 8,896 km 5,000 km 5,000 km Mid North Sea High New 10,849 km Legacy 10,000 km Processed Rockall & MNSH seismic data, pre-stack time migrated, in workstation format (field tapes if requested at cost) WesternGeco legacy data Database of released well data & OGA report Gravity and magnetic maps Provisionally 5,000km of Irish seismic data with key Irish tie wells Palaeozoic Study for participants or to purchase pre 29 th Round 7

8 Where are all the wells? 2010 to date Moose pasture? c.150 UK offshore exploration wells and sidetracks 2010 to date Very few frontier wells but some were at an eye watering cost Perception of low success rate Or known unknowns? Around 60% of what we need to be drilling Areas need prioritising - Mature & Frontier 8

9 2015 has been a good year for UK exploration 60% success rate 250+mmboe Average discovery size 30mmboe Source: Wood Mackenzie & PK Estimated well costs << 40mm Appraisal volumes of previous discoveries not historically reported Need more activity wells, seismic & prospecting Source: Wood Mackenzie & PK 9

10 How many wells & where the minimum! Infrastructure led HPHT/New Play Frontier #Wells Mid 2C CoSc Cost per well mmboe 30% < 20mm 6+ 50mmboe 20% < 40mm mmboe 15% < 50mm E&A wells must be delivered cheaper with no compromise on safety or the environment Must use all available technology to understand the risk and chance of geological success Could deliver c.400mmboe at a well cost of 1billion Balance of production replacement can come from fallow type discoveries More cash will be needed for seismic & appraisal Regulators, HMT, operators & our supply chain must use best efforts to ensure the commercial chance of success is maximized: Costs Efficiency Access to infrastructure Regulation Fiscal 10

11 Access to infrastructure, Costs Reduction & Efficiency OGA, HMT and industry must work together to keep & develop the infrastructure the UKCS needs Source: Hannon Westwood We might not need every platform, pipeline or terminal We must be cost effective and open for business The unknown unknown might lie close to infrastructure 11

12 Regulation & Licensing Licensing terms are key to attracting investors and the right capital We must work with OGA to ensure future rounds are successful and encourage the right blend of players Three main regulators will need to work very hard to coordinate Need to avoid conflicting approaches Licensing terms fit for purpose? Frontier Mature Promote Right to roam Other Regulation HSEx vs DECC EDU vs OGA Must enable activity not block unless absolutely necessary Exploration capital is global we must ensure dollars and equipment can be deployed quickly 12

13 A fair share for exploration? Given the risk, the urgency, the lack of global capital is the fiscal take a fair share and the right way to maximize the full economic benefit for the UK from future exploration? 13

14 Mustard 205/27-3 Oil Discovery The only 2015 Atlantic Margin exploration well Chrysaor 50% Origo 25% INEOS Breagh 25% (L1-DEA UK) 14