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Exploration in the Energy Transition
Nick Richardson
Head of Exploration & New Ventures 11th December 2019
Overview
State of Play
Energy Transition
Key Messages
Exploration Activity
Progressive Regulation: MER UK Strategy
Role of the OGA
Investment
and Action
Encouraging
Collaboration
Effective
Stewardship
OGA Approach
Sanctions Information & Samples
Dispute Resolution Meetings Powers
MER UK Strategy – Binding Obligations & Safeguards
Maximising Economic Recovery is Consistent with Energy Transition
More Flexible Licences
Central Obligation: “Relevant persons must take
the steps necessary to secure that the maximum
value of economically recoverable petroleum is
recovered from the strata beneath UK waters.”
Maximising
domestic gas
production as
important
transition fuel
OGA current role in Energy Transition
Licensing of carbon
storage and advice
prior to
decommissioning
Consistency of
offshore flaring and
venting regime with
government policy
Understanding offshore
energy integration,
including electrification
& hubs
Supporting diverse
range of supply
chain options
Enhanced Oil
Recovery
Emissions benefits
from increased
operating efficiency
and extended assets
life
OGA fully supports energy transition as set out in our policy
Publication of energy transition policy position in June 2019
1.54
1.42 1.42
1.57
1.63 1.63
1.7060%
64% 65%
71%73% 74% 75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
2.00
2012 2013 2014 2015 2016 2017 2018
Production
efficiency
Production rate(million boe/d)
0
2
4
6
8
10
12
0
5
10
15
20
25
2012 2013 2014 2015 2016 2017 2018
Operating
costs
Costs now settled at
sustainable level?
UOC (£/boe, 2018 prices) [RHS]
OPEX (£ billion, 2018 prices) [LHS)
Major turnaround in performance
E&A
Discovered Resources (mmboe)
E&A Wells
Finding Cost ($/boe)
Over 0.5 billion boe
discovered since 2014
2018 - 115% reserves
replacement
0
20
40
60
80
100
120
140
2012 2013 2014 2015 2016 2017 2018
97%
9%
115%
60%
1%
UKCS Performance Highlights
157
48
83
115
64
131
239
0
50
100
150
200
250
300
0
10
20
30
40
50
60
2012 2013 2014 2015 2016 2017 2018
Private Equity/
Infrastructure Funds
Other
Utilities
Small Cap
Mid Cap
Large Cap/
Supermajor
Average Daily Production
25,000 boe/d
current production changed
hands past 5 years35%
Operator shares of infrastructure
based on throughput
2014Production
2018Production
Changing Face of Ownership
Major changes and many past barriers to investment removed
2014 2018
UKCS Oil and Gas Projections
Recent discoveries and future exploration make up approx. 1.0 bn boe of projection
Resource Progression
Remaining High Impact Prospectivity demonstrated by Glengorm Discovery
Play-Level
Yet-To-Find
Prospective
Resources
Top 50
Prospect-
Level
Opportunities Some Drill-
Ready
The National Data Repository
9Data is freely available to anyone in the world – not just the UK
OGA Digital Platform Users
10Freely available to all
Science thrives on the open
exchange of information and ideas,
and I commend the Oil and Gas
Authority for making a wealth of valuable data freely available”.Professor George Boyne, Principal, University of Aberdeen
Results to be published via NDR and DISKOS
Northern North Sea – Machine Learning
Overlooked Pay ProjectService providers:
Project Deliverables:
• Comparison and analysis of various ML techniques
• Ranked list of ‘overlooked pay’ opportunities in order of confidence
• Clean conditioned dataset to add to NDR
Status:
• Projects nearing completion over next months
• Reporting to Steering Committee prior to Publication of Results
• Close-Out Workshop planned for 4th June 2020 at OGTC
Future Licensing Rounds will continue to be supported through data releases
32nd Offshore Licensing Round
Supporting Data
• Southern North Sea Megamerge
• CNS & NNS Rock Physics Catalogue
• UKCS Petroleum Systems Project – Year 1
• >2,200 wells with joined Digital Well Logs
• UKCS-wide Gravity Inversion products
• Regional Thermal History Reports (AFTA &
VR)
• UKCS Satellite Seeps Database
• Spatial database of relinquished prospects &
leads
• Plus, many other previously released products
including Regional Maps and Undeveloped
Discovery Montages, Relinquishment Reports,
etc.
Data providers:
Relinquishment
ReportsSector wide insights
Field quality index
Reco
ve
ry f
acto
r Operator X
Acquisition
Processing
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Operator X
Operator X
Data & Insights
The OGA publishes data and insights through its OpenData webpage and the NDR
Production
Dashboard
NDR
Recovery Factor
Benchmarking
Seismic
Compliance
E&A Well Data
OGA will continue to exercise its powers to release data
https://data-ogauthority.opendata.arcgis.com/pages/e-a-wells
• The OGA is entitled to disclose
certain summary wellbore
information as soon as it has
obtained it
• This information is defined in
“The Oil and Gas Authority
(Offshore Petroleum)
(Disclosure of Protected
Material after Specified
Period) Regulations 2018”
• Information can be made
available for all wells drilled
since Start 2018
• The OGA will make this
information available through an
interactive map on its webpage,
to be periodically updated.
Exploration ActivityThe OGA has provided substantial incentives and data packages to support licensing rounds and
help stimulate interest, including:
Exploration success rates
No.Exploration
Wells
TechnicalSuccessRate %
Technical finding cost
$/boe
Technical Volume mmboe
2014 13 69 9 83
2015 15 53 5 115
2016 11 45 5 64
2017 15 47 3.5 131
2018 7 43 1 239
Plenty of exploration opportunities - injection of pace needed around resource progression
Exploration & Appraisal Drilling
Improved exploration well count compared to 2018
Chimera
Glendronach
Rowallan
Glengorm (2018)
Jasmine Merida
Aspen
Lifjellet
WickMabel
Frigg (planned)
Blackrock
Cragganmore
Lyon
Howick
Warwick Deep
Lincoln Crestal
Warwick West Solar (planned)
Bigfoot
Pip
Liberator (x2)
SerenityExploration wells
Appraisal wells
2019
Verbier
Isabella
Colter
Harvey
Tolmount East
Andromeda
Darach
Operators commitment required to deliver wells within planned schedule
2019Q1
CN
SN
NS
SN
S / E
ISW
oS
Q1 Q2 Q4Q3Howick
Glendronach
Wick
Rowallan
Verbier
Solar
2019Q1
CN
SN
NS
SN
S / E
ISW
oS
Q1 Q2 Q4Q3
E&A Well Slippage
FORECAST ACTUAL
20 E, 17 A 18 E, 11 A (Provisional)Well spuds in year:
Warwick Lincoln Warwick
Blackrock Lyon Cragganmore
Bigfoot Pip Chimera
Frigg
Liberator Serenity Liberator
Mabel
Colter
Deep
Jasmine Merida
Isabella
Lifjellet
Darach
Harvey
Aspen
Andromeda
Tolmount E
Glengorm Discovery: P1806 Relinquishment Report
Long-Recognised Prospect Finally Drilled, with Success
▪ HPHT discovery in Central Graben at
5,000m depth
▪ 22/21c-13 encountered 37m net gas
and condensate pay in high quality U.
Jurassic reservoir with excellent
properties
▪ Recoverable resources are estimated
close to 250 mmboe
▪ Further drilling and testing will be
carried out to appraise resources and
the productivity of the reservoir
▪ P2215: CNOOC 50% (Op), Total
25%, Euroil 25%
▪ Located on the P2215 licence in
water depth of ca.80 meters
Isabella Prospect
2019 Prospect, Currently being Drilled
▪ P1820, Block 30/11a, 30/12d
▪ Located SE of the J-block fields in the Central Graben, 40 km
south of Elgin-Franklin
▪ HPHT gas condensate prospect with Triassic reservoir target
▪ Combined structural and stratigraphic trap against the Jane
Diapir
▪ Well drilling, spudded on 13th October 2019
▪ P1820: Total 30% (Op), Neptune 50%, Ithaca 10%, Euroil 10%
Jane Diapir
Seismic section through
the Isabella prospect
UK NO
P1820
IsabellaIsabella prospect
Edinburgh Prospect: P2039 Relinquishment Report▪ HPHT prospect forming the SE of the
Josephine-Ridge in the Central Graben
▪ Combination salt- and fault-seal trap,
Jurassic and Triassic targets at 4000+ m
▪ Block 30/14b, adjacent to Norway
▪ Current licence P2401: DNO* 45%,
Shell (Op) 40%, Spirit 15%
Edinburgh
BCU structure
Likely 2021 Well
E&A Well Activity - Forecast
In 2019, operators need to deliver on their plans and commitments
2019 2020 2021Q1 Q2 Q4Q3
CN
SN
NS
SN
S / E
ISW
oS
Q1 Q2 Q4Q3Q1 Q2 Q4Q3
Well spuds in year: 18 E, 11 A (Provisional) 17 E, 15 A (Forecast)
In 2020, Operators need to deliver on their plans and commitments
14 E, 8 A (Forecast)
Howick
Glendronach
Wick
Rowallan
Verbier
Warwick Lincoln Warwick
Bigfoot Pip Chimera
Liberator Serenity Liberator
Mabel
Colter
Deep
Jasmine Merida
Isabella
Lifjellet
Darach
Harvey
Aspen
Andromeda
Tolmount E
Blackrock Lyon Cragganmore
Debate more polarised than ever – quality dialogue and evidence based action required
Energy transition | the case for change
0
150
Oil demand Oil production
Oil demand (BEIS 2018
UEP Reference Scenario
Oil production (OGA
Mar 2019 projection
UK Oil demand and production UK Gas demand and production
1970
1970
2035
2035
150
0
Gas demand Gas production
Gas demand (BEIS 2018
UEP Reference Scenario
Gas production (OGA Mar
2019 projection
MER UK
Energy
security
Strong
supply chain,
exporting
globally
Anchor
skills in UK
Diversification,
transition to
net zero 2050
Licensing and permitting authority for
carbon storage – OGA issued first
licence Dec 18
Taking forward key action points:
overview of infrastructure assets
and clearer re-use policy
Maintain the carbon storage licence
public register
Engaging with CCUS project
developers
Consider re-use as part of the OGA
Cessation of Production process
consultee to OPRED, on operators’
decommissioning plans
Guiding project developers and
applicants through OGA process
Exploring the role of CO2 EOR
OGA role
Working
collaboratively
with government
and industry
Energy transition | OGA current role
Working collaboratively with
government and industry
Licensing and permitting
authority for carbon storage –
OGA issued first licence Dec 18
Consider re-use as part of
the OGA Cessation of Production
process
Promoting role of CO2 EOR
Carbon Capture and Storage
2019 important year for CCUS with action plan underway
Positive steps in BEIS policy development
<$0.5 boe to support CCS transport
and storage to offset UKCS
production emissions(5% of the reduction in operating costs achieved
since 2014)
OGA CCS role
large scale
(12 MtCO2 per
year) CCS
projects
in 2050
78GtCO2
6 to15 75-175MtCO2
CCC
estimate of
annual
require-
ment in
2050
total UKCS
CO2 storage
resource
estimate
UKCS Energy Integration project
• Funded by £1m grant
• Led by OGA, in collaboration with
BEIS Crown Estate and Ofgem
• Quantify and help unlock UKCS
energy integration opportunities
• CCS enabler for energy transition –
leverage O&G infrastructure
• Potential integrating multiple sources:
renewables, O&G, and H2
• Oil and gas companies and supply
chain will play a critical role in delivery
OGA Energy Integration Project well underway
Activity Schematic
Platform Electrification
Reduce costs and emissions
Gas-to-Wire
Power from gas offshore,
Transmitted to shore
CO2 transport and storage
Re-use of infrastructure and fields
Power-to-Gas
Offshore windfarms
produce hydrogen
North Sea Wind Power Hub
Large scale hydrogen production
Key Messages
Understanding the subsurface
remains key to future activity across
the UKCS
Regulatory changes made to
improve data access and
availability
Flexible, but Robust Regulation
combined with Stewardship are
improving activity levels
OGA has an important and
increasing role to play in Energy
Transition