gom outlook energy summit 2004 greg guidry exploration manager – gom nearfield shell exploration...
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GOM Outlook
Energy Summit 2004
Greg GuidryExploration Manager – GOM Nearfield
Shell Exploration and Production Company
October 22, 2004
Royal Dutch / Shell Group of Companies
Disclaimer
This presentation contains forward-looking statements that are subject to risk factors
associated with the oil, gas, power, chemicals and renewables businesses. It is believed
that the expectations reflected in these statements are reasonable, but may be affected by a
variety of variables which could cause actual results or trends to differ materially,
including, but not limited to: price fluctuations, actual demand, currency fluctuations,
drilling and production results, reserve estimates, loss of market, industry competition,
environmental risks, physical risks, the risks of doing business in developing countries,
legislative, fiscal and regulatory developments including potential litigation and regulatory
effects arising from recategorisation of reserves, economic and financial market conditions
in various countries and regions, political risks, project delay or advancement, approvals
and cost estimates.
Royal Dutch / Shell Group of Companies
Gulf of Mexico Business Environment
ARegulatory• Currently 3 annual Lease Sales• Competitive bidding/auction• 5-10 year leases• Access issue +/- 50% off limits
Commercial• Hyper- competitive – 70 plus Operators• 3 mile sq. leases drive complex JV’s• Tax royality – stable terms
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Gulf of Mexico - Exploration Frontlines
Paradigm - “No sand beyond the shelf edge”
Ram Powell (1985) – 1st discovery, Auger (1987) – 1st DW Hub, Mars (1989) – Giant Field
Declining field sizes in discovered plays
New Play Models - Atlantis (1998), Thunder Horse (1999) – Giant Fields
New Plays - Frontier areas with technical challenges Great White (2002) – opens Perdido play
1983
1990
1995
2000
2003
Deep Shelf Gas
Shell
BP
Amoco
Exxon
CVX
BHP
Auger
Ram Powell
Mars
Brutus
Atlantis
Mad Dog
Thunder Horse
DianaHoover
Great White
Tahiti Holstein
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Gulf of Mexico – Creaming Curves
Deepwater Gulf of Mexico 2002: America’s Expanding Frontier – OCS Report MM 2002-021
Royal Dutch / Shell Group of Companies
Gulf of Mexico Deepwater resource added by Industry
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Dis
co
very
Vo
lum
es
(mln
bo
e)
Industry Deepwater GoM >1500' (source MMS)
Transition to new playsTransition to new plays
Success in amplitude playSuccess in amplitude play
Capture the satellitesCapture the satellites
Shell Share 6 bln boe – 40%Shell Share 6 bln boe – 40%
Royal Dutch / Shell Group of Companies
Gulf of Mexico Plays
Conventional Amplitudes(above salt)
Conventional Amplitudes(above salt)
New/Emerging plays(largely sub-salt)
New/Emerging plays(largely sub-salt)
Mineral Management Service 2004 estimate:
- Shelf ultimate recovery 65 bln boe Yet-to-find - 15 bln boe (Deep Shelf - Gas)- Deepwater ultimate recovery 71 bln boe Yet-to-find - 56 bln boe
Mineral Management Service 2004 estimate:
- Shelf ultimate recovery 65 bln boe Yet-to-find - 15 bln boe (Deep Shelf - Gas)- Deepwater ultimate recovery 71 bln boe Yet-to-find - 56 bln boe
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Significant Gulf of Mexico Wells in 2004
ShellJoseph
NewfieldWC 77
El PasoRich Mtn.
McMoRanHurricane
LLOGEI 113B
ChevTexPoblano
McMoRanDeep Tern
MillenniumEI 190
ExxonW. Blackbeard
SpinnakerMinute ManMillennium
EC 299
Kerr McGeeChilkoot
Kerr McGeeTiconderoga
ShellCaesar
BPMad Dog Deep
UnocalSequoia
SpinnakerJed
ShellCheyenne
DominionW. Raptor
DominionThunderhawk
AmeradaWembley
ShellBoreas
BPDas Bump
UnocalSt. Malo
ChevTexJackExxon
Hadrian
UnocalSardinia
BPDiamondback
ShellGreat White
UnocalTobago
ChevTexSilver Tip
DevonBig Bend
Kerr McGeeEssex
LegendP & A
Drilling
Discovery
Planned
GP040139.PPT DAF 10/13/04
Royal Dutch / Shell Group of Companies
2004-5 Expiry2006 Expiry2007 Expiry2008 Expiry
GOM Lease Expiry Outlook
2,400 leases expire from 2005 through 2008 – 600/yr vs 250/yr historical avg.
Perdido Paleogene
Miocene
Deep Shelf Gas
East. GOM
Forecasted 5th Gen Rig Requirements
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35
40
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
2004 2005 2006
Rig
s
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35
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Additional Short Term Demand
Known Term Projects
Currently Contracted Rigs
Rig Supply
Currently Contracted Rigs
Known Term Projects
Additional
Short Term Demand
Ultra - Deepwater Rig Requirements
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Big Cats planned for 2005 and 2006
Nigeria 2005: 42006: 2
Brazil 2005: 22006: 3
GoM 2005: 52006: 5
UK 2005: 12006: 2
Egypt 2005: 2
Norway 2005: 22006: 3
Denmark2005: 1
Brunei 2005: 12006: 1
Malaysia 2005: 12006: 3
2005-06 GOM Plan
•25% of global Big Cats
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Host: 6340 ft
SS: 7600 ft
GOM Development Milestones – A Step Change
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Shell Hubs
Mars
Mars Basin
New Orleans
130 miles
Shell HubsShell Hubs
Shell Satellites
Ursa
Place a Mars TLP photo in this chart – left side
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Mars Field - “Just In Time” Expansions
1993 Original Design
100 kbbl/d
1999
170 kbbl/d
2000
200 kbbl/d
2001
220 kbbl/d
1998
140 kbbl/d
Production record
209,000 bbl/d (1/1/03)
230 mmcf/d (9/20/01)
Total Gross Oil Production
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200
'96 '97 '98 '99 '00 '01 '02
kbb
l/d
Actuals
Original forecast
Royal Dutch / Shell Group of Companies
Major Projects – Shell Gas & PowerLNG – Gulf Landing Terminal•38 miles offshore Louisiana•A concrete, gravity-based structure, which will be floated to the site and lowered to rest on the seafloor in about 55 feet of water. •The facility will include a berth for mooring LNG carriers, LNG storage and regasification facilities, and pipelines to connect with existing natural gas pipeline systems in the Gulf of Mexico. •Gas output will be delivered into as many as five major interstate pipelines serving Louisiana and parts of the US Southeast, Midwest, Northeast and Mid-Atlantic.
Real Time Operations Center - New Orleans
Canada
Rocky Mountains
Houston & S. Texas
MoroccoEgypt
N.O.
Venezuela
BrazilNigeria
EPE Europe SakhalinCanada
Rocky Mountains
Houston & S. Texas
MoroccoEgypt
N.O.
Canada
Rocky Mountains
Houston & S. Texas
MoroccoEgypt
N.O.
Venezuela
BrazilNigeria
EPE Europe Sakhalin
Venezuela
BrazilNigeria
EPE Europe Sakhalin
Current Contracts
Potential Future Opportunities
Achievements:
• 17% reduction in trouble time during 2003
• RTOC savings exceeds investment
• Global Reach
Vision:
• Provide State-of-the-art well visualization
• Efficiently drill and complete wells
• Achieve lowest unit technical cost (UTC)
Royal Dutch / Shell Group of Companies
Access: Key to the North American Energy Potential
Federal Lands Open to Energy Leasing
Federal Lands Closed to Future Energy Leasing
Offshore Planning Areas Closed to Future Energy Leasing
OCS Planning Areas
Eastern Gulf: 24 Tcf & 4 BBOEastern Gulf: 24 Tcf & 4 BBO
Atlantic Coast: 28 Tcf + 2 BBOAtlantic Coast: 28 Tcf + 2 BBO
Pacific Coast: 19 Tcf + 11 BBOPacific Coast: 19 Tcf + 11 BBO
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Eastern Gulf of Mexico
Clinton (1998)Moratorium
Sale 181Actual
Access Challenges
• NIMBY
• Industry image
• NGO opposition
• Education
• Political support
• Environmental concerns
Sale 181Proposed
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Engaging stakeholders
Education and research
Health and Safety
Technology Minimizing our impact
Environment
Sustainability in the Offshore
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Access: Key to the North American Energy Potential
Environment• Shift to unconventional • Demand growth downgraded• Supply growth difficult• Short term spare capacity• Frontier supply – LNG faces major hurdles
Alaska 300 Tcf
Canadian North225 Tcf
Canadian Rockies250 Tcf
U.S. Rockies 300 Tcf
Gulf of Mexico300 Tcf
Source: NPC Draft Report 11/16/99GRI Baseline Projection 2000
Challenges• NIMBY & industry image• NGO’s and education on access
U.S. Gas Supply is migrating to more remote, technically challenging sources
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CheyenneCheyenne
Great WhiteGreat White
DB2DB2
FrontierFrontier
Ram Powell G Ram Powell G JosephJoseph
TahitiTahiti
Near Field E&ANear Field E&A
AppraisalAppraisal
CoulombCoulomb
New HubNew Hub
PlesiosaurusPlesiosaurus
DeimosDeimos
2004 Exploration – Gulf of Mexico
EPW Prospects > 200 mln boe
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2000 2002 2004m
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oe
TobagoTobago
Royal Dutch / Shell Group of Companies
Major Projects - Nakika
• First deepwater semi-sub host for Shell
• Deepest permanent moored semi-sub
• World’s largest pipe in pipe risers
• First gas lift risers in the GoM
• First electrically heated flowlines/risers
• One dual frac pac SMART well
• Three triple frac pac SMART wells
• Excellent ramp-up & up-time
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Public Policy
Issues:
•Domestic energy second largest contributor to Federal Treasury· Access to off-limit areas of the U.S. is good for the country and Louisiana
• MMS has been a great steward of our offshore resources · Coastal states competitiveness with OCS, especially in regard to Shelf Deep Gas
· GOM getting squeezed with no access on the Mexico and Florida flanks
• Canada, Mexico and U.S. cooperation on cross border resource · Provides growth and stability for each countries economy and citizens
• Technology key to unlocking plays & reducing footprint
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Public Policy
What can we do?
• Grass-roots programs in the coastal states.
• Provide input into the MMS’s next 5-year plan (’07-’12) this winter
• Revenue sharing options with coastal states that support responsible
development.
• Stakeholder engagement strategy
• Congressional and Executive Moratoria changes when Public Opinion
changes.