Weatherford International LtdASME Gas Lift Workshop

Stuart FergusonSenior Vice President – Reservoir & ProductionChief Technology Officer

February 2008

Oil Industry Ageing –Consequences and Opportunities

2

Oil & Gas E&P Expenditures$ millions

$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

US Canada Rest of World

Source : Lehman Bros. (Dec 2007)

3Source : The Energy Journal (Jan 2005)

Mature Province Decline Rates

Source : EOG Resources (Dec 2006)

Effect of UK Field Vintage on Annual Mean Decline Rate

0

2

4

6

8

10

12

14

16

18

1960s 1970s 1980s 1990s 2000s

Dec

line

rate

(%/y

r)

US Natural Gas Production Decline Rate History

15

17

19

21

23

25

27

29

31

33

35

1991 1996 2001 2006E

Dec

line

rate

(%/y

r)

4

Impact of Technology on Decline Rate

Moderation of UK Field Decline Rate by Incremental Investment

0

2

4

6

8

10

12

14

16

18

1960s 1970s 1980s 1990s 2000s

Dec

line

rate

redu

ctio

n (%

)

Source : The Energy Journal (Jan 2005)

Investment includes:

Enhanced oil recoveryArtificial liftInfill drilling

and excludes:

Safety systemsRefurbishmentMaintenance

5

Case Study – Forties Field, UK

Source : UK Department of Trade & Industry

Forties Field Production History(Oil Equivalent Basis)

-30%

-20%

-10%

0%

10%

20%

30%

1979 1984 1989 1994 1999 2004

Ann

ual P

rodu

ctio

n C

hang

e

Infill Drilling

Gas Lift

Plateau End

6

Water – The Unwanted Growth Story

US 48 OnshoreProduction (2002)

WorldwideProduction (1999)

1.1 bn bbl

13 bn bbl

24 bn bbl

77 bn bbl

Crude OilWater

Sources of Water Production:

Aquifer water breakthroughInjection water breakthroughCBM de-watering

Impact of Water Production:

Impaired productivityCorrosionScale build-upSanding and erosionArtificial liftWater handling constraintsWater disposal

Cost of Water Production:

$100 bn+ annually?

Source : US Department of Energy

7

Scales of Production Optimization

Impact Detected

Single Wells Hours

Production Process Weeks - Months

Full Field Months - Years

8

Single Well Optimization of a US Onshore Field

2

4

6

8

10

12

Ann

ual F

ailu

re C

ost p

er W

ell (

$K)

1995 1996 1997 1998 1999 2000 2001 2002Year

Basic AutomationSoftware Implemented

OptimisationSoftware

Implemented

9

Automated Well Installations

NOTE : Weatherford estimates, 2007

North AmericaNorth America80,00080,000

South AmericaSouth America9,0009,000

Africa & EuropeAfrica & Europe1,0001,000

Middle EastMiddle East6,0006,000

Far EastFar East4,0004,000

10

Production Process Optimization

100s

of w

ells

10s

of m

anifo

lds

MultipleProcessTrains

GAS

OIL

WATER

GAS / POWER

11

Benefits of Production Process Optimization

Description Benefits

Venezuela 250 gas-lifted wells Up to 7% production increase$36 million/year financial gain$800 million/year potential prize

Location

UK North Sea(30 platform wells)

Gas-lifted oil field 10% production increase withno CAPEX

21% production increase with budget CAPEX

Middle East(260 land wells)

Four gas-lifted fields 2% production increase3% operating cost reduction

12

Conclusions

Well decline rates are accelerating

Investment reduces field decline rates

Water production is a major issue

Automation of production operationsremains a great opportunity