The Role of E&P Technologies Dr. Donald Paul Vice-President and Chief Technology Officer Chevron Corporation Trends in Oil Supply and Demand and Potential for Peaking of Conventional Oil Production Washington DC October 2005
Outline The E&P Resource Factory Price and Cost The Ecology of E&P Technology Oil Field Productivity The Next Trillion Barrels Technology Opportunities and Challenges 2
E&P Resource Factory Current Resources P1 Exploration Major Capital Projects Base P2-3 P4-6 New Resources 2005 2014 Production Factory Reservoir Management Factory Exploration Factory 3
Price WTI in constant 2005 $/BBL 80 60 40 20 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 4
Production Costs U.S. dollars per BBL $12 - $10 - $8 - $6 - $4 - $2 - $0-1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Source: A.G. Edwards and Sons, Inc. 5
Finding and Development costs (F&D) U.S. dollars per BBL 25-20 - High cost 15-10 - 5-0 - Mean F&D cost per barrel Low cost 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Source: Goldman Sachs Commodity Research 6
The Ecology of E&P Technology Long-term investments; long-lived assets Technologies exist in the context of complex work processes and supply chains Integration is paramount Repeatability / scalability / reliability / safety are critical Substitution predominates; displacement is rare Concentrated R&D structure Highest level of digital intensity of any industry Cost-plus business model for technology suppliers 7
Oil Field Productivity Reliability and uptime De-bottlenecking operations over time Energy efficiency Optimization and automation Capital efficiency and drilling costs Revitalizing reservoirs and improving ultimate recovery 8
The Next Trillion Barrels Frontier exploration P4 / P5 / P6 conversion Enhanced oil recovery Unconventional reservoir development 9
Undiscovered Resources Undiscovered Total Petroleum (MMBOE) 0 1000 1000-5000 5000-20,000 20,000 50,000 50,000 200,000 Source: USGS, 2000 ChevronTexaco 2004 10
Technology Opportunities and Challenges Advancing Core E&P Technologies Leveraging Major Technology Trends Meeting the Challenges 11
Advancing Core E&P Technologies Basin-scale 3D imaging and modeling Integrated subsurface workflows Fully-controllable intelligent well systems Advanced reservoir management and interactions Distributed production and processing infrastructure Field-scale integration and automation the oil field as a factory Live video camera and feed from rig 12
3D Imaging and Modeling of Entire Depositional Systems 13
1,000.00 100.00 10.00 1.00 5% 10% 25% 50% 75% 90% 95% Next-Generation E&P Technology: Integrated Workflows Poststack Prestack Seismic Imaging Interpretation & Earth Modeling Well Design & Simulation Reservoir Characterization Reservoir Simulation MMBOOIP Workflow integrates ~ 1000 technical applications: proprietary + JV development + vendor supplied 14
Next-Generation Reservoir Simulation Increased geological realism and representation of uncertainty Increased realism and dynamics for wells Improved physics and chemistry Designed for integration with real-time production systems Designed for new and future computing environments 15
Distributed Production Infrastructure Heavy Oil Recovery and Processing FPSO Deepwater Seafloor Processing Gas-to-Liquids 16
Oil field Productivity: The Oil Field as a Factory 17
Leveraging Major Technology Trends Universal digitization, sensing, and connectivity Advanced materials and processing technologies Human-digital relationships 18
Meeting the Challenges The Digital Tidal Wave Organizational Capacity CO2 Capture and Sequestration 19
Digital Intensity in Exploration and Development 200 3D Seismic Cubes = 400 TB+ 2 TB / cube raw data 100 GB / cube processed 500 Oil Field Simulation Models = 50 TB + 100-million-cell earth model 2-million-cell simulation model 20
The Digital Tidal Wave 1000 - Active Chevron technical data storage in terabytes (TB) 100-10 - 1-1997 1998 1999 2000 2001 2002 2003 2004 2005 21
Organizational Capacity: The Big Crew Change Current Average Age of U.S. Workforce by Job Group Operations Support Process / Production Operators (Skilled) Instrumentation / Electrical Maintenance Crafts HSE Professionals Engineering / Geosciences Analysts or Technologists Geoscientists Engineers 34 36 38 40 42 44 46 48 Years The global E&P workforce is much younger 22
CO2 Capture and Sequestration Both a challenge and an opportunity 23
Summary Points The remaining resource base is very large... F&D costs, technology advancement, and environmental management are the issues Many opportunity areas for technology advancement... leveraged on major trends outside of oil and gas Growing organizational capacity is a challenge 24