Click to edit Master title style

Click to edit Master subtitle style© OGA 2019This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such

responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number

09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF

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