Opening address: Yang Berhormat Pehin Orang Kaya Seri Kerna Dato Seri Setia Dr Hj Abu Bakar Apong, Minister of Education

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1 Opening address: BSP Technical Innovations: The Story of Champion By Dr Grahaeme Henderson, Managing Director, Brunei Shell Petroleum Think Big National Technology Forum 2010 Yang Berhormat Pehin Orang Kaya Seri Kerna Dato Seri Setia Dr Hj Abu Bakar Apong, Minister of Education Yang Mulia Dato Paduka Timothy Ong, Acting Chairman of BEDB Senior government officials, distinguished guests ladies and gentlemen Thank you for inviting me here today to deliver the Opening Address at the Think Big National Technology Forum Last year at this Conference, I explored the broader theme of Technology as a Building Block for the Next Generation. Today, I want to take this further to show you the application of technology to the everyday work in Brunei Shell Petroleum or BSP. To do this, I will tell you a story; it is the story of BSP s Champion Field. This story will demonstrate how technical innovations have unlocked economic opportunities for Brunei. We are immensely proud of BSP being the economic engine of Brunei accounting for more than half of the Nation s GDP, the majority of export earnings and more private sector jobs than any other company. These achievements have only been possible by taking bold moves to advance technology often before any other oil and gas producer in the world. Today, I will be focusing on how technology works to maximize the value of two types of asset: Firstly, how we use technology to generate value from our oil and gas assets at Champion Secondly, how we use technology to improve the performance of our people working on Champion and other fields Let me start by telling you a little about the Champion Field. It is just 60 kms offshore North East from here in 45 metres of water. In fact, you can see Champion from the Empire Hotel. The Field was discovered in 1970 and has a capacity of more than half a billion barrels of oil, making it the largest field in Brunei. To date we have drilled 300 wells from some 40 different offshore platforms to access just a fifth of the total oil and gas capacity. This intensive development has been necessary because Champion s geology is incredibly complex. The oil and gas is held in more than 500 individual reservoir traps making access a huge technical and therefore economic challenge. To give you a comparison, some fields of a similar volume in Europe have fewer than 10 reservoirs. 1

2 The Champion field is a large structure the traps are stacked vertically in many compartments, with hydrocarbons present from 500m to 3km beneath the sea bed as you can see in this graphic. In addition to the large number of reservoirs, there is great geological variation between them. The most prolific reservoir sands were formed several million years ago in a beach setting similar to today s coastal regions of Brunei. Production from Champion in the first decade after discovery was relatively straightforward, with wells being drilled to reach the most accessible deposits of oil and gas, which flowed with the naturally occurring underground pressure to the surface. However, by 1984, with the underground pressure starting to decline, it was necessary to inject sea water into the reservoir to raise the pressure enough to move the oil towards the production wells. Over the next 25 years, we extended our expertise and knowledge of water-flooding techniques and can now leverage this to really accelerate Champion s development. This will include tripling the volume of treated seawater pumped into the fields to substantially increase production. This major project will require 13 new platforms and supporting infrastructure, including a new treated-seawater injection plant, and an upgrade of the power plant. With more than three-quarters of all BSP expenditure going to Bruneian firms, you can see how this project will boost economic activity across the country. Our drive to recover oil and gas from Champion will not stop with water injection. We are already trialing the injection of chemicals and gas into reservoirs to increase recovery at onshore fields in Brunei. These techniques may well be applied offshore to Champion in the decades ahead. Adjacent to the main Champion field is Champion West, which is even more geologically complex. It has hundreds of smaller traps of oil and gas along a sequence of highly variable sand and shale more than a kilometre long. It would not have been economically viable for us to access these reservoirs with traditional methods we would need literally hundreds of wells. It was the technological breakthrough of flexible snake wells by BSP engineers - which allowed us to tap into many hard-to-reach reservoirs from just one well. You can see the snake well principle in the image behind me. This is truly game-changing technology and is now used across BSP and around the world to improve reservoir access. We have also pioneered new platforms and smart field technologies to improve production at Champion West. 2

3 This smartness is achieved by having an unmanned, remote controlled platform at Champion which has digital sensors to the seabed to send real time data to engineers working 70 kilometres away at our offices in Seria. The team can analyse and integrate all of the information as it comes in, and also control the valves on the snake wells underneath the seabed to optimize production. This is the same technology that is used by Formula 1 motor vehicles, where real time data is collected as the car zooms around the track allowing adjustments to be made to maximise the performance. Shell s close partnership with Ferrari was used to good effect here. Champion West remains one of the most advanced platforms in the world and accounts for 30% of BSP s oil and gas production. The support structure or jacket and the above water facilities were all built at our Kuala Belait construction yard. This ensures that we keep the expertise in Brunei and can extend this further with time, and also ensures that we maximise the revenue and jobs in Brunei with extensive involvement of local contractors and suppliers. The techniques we learned from building the Champion West facilities have been replicated on the platforms we built for Mampak and Bugan last year, and also for our new Selankir Iron Duke platform, which sailed earlier this month after a record breaking 12-month construction period. These BSP projects have resulted in a massive acceleration of local contractor knowledge and capabilities in platform construction, installation and maintenance with more than 30 Bruneian vendors involved in each project right across the supply chain. In fact, some of the firms involved now compete internationally thanks to the capabilities they have developed through BSP projects. You can see the hugely positive knock-on effect that these technology breakthroughs have had not only in BSP production but also in the generation of the capabilities, skills and jobs. This is vital for building and sustaining a thriving oil and gas sector in Brunei. Equally important as the technology we use to maximise oil and gas production is the technology we use to help us improve the performance of our people who are, of course, our most important asset. There is no doubt that digital technologies have transformed the every day working lives of individuals. Even greater value is generated when technology helps those individuals work together. At BSP, we have developed Collaborative Work Environments which bring together integrated teams of people who have different expertise, but need to work closely as one unit. Surface, Subsurface and Operations staff in different locations can work on the same information to improve the quality and speed of decision-making. The physical distances do 3

4 not matter and we can link in experts from Shell s worldwide operation, to maximise the very best for Brunei. These diverse teams can now spend the whole day in visual contact, accessing the same real-time data to jointly make critical decisions and solve problems. The time taken to identify and then resolve issues can be dramatically reduced, because the right people and the right knowledge are in place immediately. This approach has delivered tangible benefits for Champion and other BSP fields, because it reduces down-time and costs This style of working also puts a face on issues, creating a strong team culture where more people can contribute and feel valued. A further benefit is a decrease in staff travel time which, reduces safety exposure, travel costs and helps our people maintain a positive balance between work and home life. The productivity and capabilities of our people have also been enhanced by the wide range of new software applications, many of which have been developed here in Brunei to cover critical operations such as corrosion management and facility safety. Many of these applications have been adopted by the Shell Group globally. The scale of telecommunications and computing at BSP demonstrates just how fundamentally important it is to our operations. We have more than 1700 square metres of data centre capacity, microwave links for more than 300kms and more than 30 kms of fibre optic cable High-powered computing capabilities have also unlocked brilliant opportunities for our geologists, who now have a much greater level of detail on the subsurface environment. Similarly, there have been major advances in visualisation and modelling techniques, which allow our engineers to identify the areas of greatest commercial potential. Time and again, it is the combination of great talent and state-of-the-art technology that unlocks economic opportunities. For example, we have leased one of the world s most advanced drillships, the Frontier Phoenix, to explore for oil and gas in Brunei s promising deepwater fields. This amazing vessel remains perfectly positioned, while drilling in water depths of up to 1000m. It does this by using nine large thrusters and satellite positioning to dynamically keep over the same spot on the seabed. Advanced digital sensing equipment on the Frontier Phoenix also allows BSP engineers to see and understand exactly what is happening inside the reservoir this in turn accelerates the discovery process. Since the first commercial discovery of oil in Brunei more than 80 years ago, we have built a track record as a company of firsts, leading the global industry in many technical areas. 4

5 There is a great tradition here of breaking down technical barriers. This has been key to establishing BSP as one of Asia s major energy companies, with production of more than 370,000 barrels of oil and gas equivalent every single day. Continued investment in our people and leading-edge technologies will be even more important in the years ahead, as BSP takes on even bigger challenges with the move into deeper water, and even more complex reservoirs in shallow water and onshore. We are fortunate indeed that the BSP staff and our partners not only Think Big about technology but also work very hard to apply it to fields like Champion - day-in, day-out - to sustain production and economic success for Brunei. They do this work with great pride and dedication. Distinguished guests, ladies and gentlemen - let s applaud the achievements of the thousands of people in BSP, in our supply chain and in our stakeholder community who invent, apply and embrace technology to the benefit of the Nation. We need them more than ever. Thank you 5