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How Partners, Collaboration and Experience Combine to Deliver the
Cheviot Field Development
Paul Armitage, Alpha Petroleum Resources
May 2019
The information presented herein is provided for discussion purposes only and is being furnished by Alpha Petroleum Resources Limited (“Alpha Petroleum” or “APR”), an English limited company whose registered office is at 4th Floor Friary Court, 13-21 High Street, Guildford, Surrey, England, GU1 3DL.
This document is confidential and may not be copied or distributed by the recipient without the prior written permission of Alpha Petroleum. The recipient and its professional advisers, by accepting delivery of this presentation, agree to keep confidential all matters contained herein and to return this presentation promptly upon request. None of Alpha Petroleum and its partners, members, employees, officers, directors, agents and representatives shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on a statement or as a result of any omission in this presentation or in any future communications in connection with this presentation and any such liabilities are expressly disclaimed.
No reliance may be placed for any purpose whatsoever on the information contained in this presentation or on its completeness. Information in this presentation has been derived from sources that have not been independently verified and no representation or warranty, expressed or implied, is made as to the accuracy or completeness of the information or opinions contained within this presentation. This presentation is for discussion purposes only and should be considered incomplete without, and should be used solely in conjunction with, the oral briefing provided by Alpha Petroleum. Recipients of this presentation should not construe the contents of this presentation as constituting legal, tax, financial or other advice.
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Important Notice
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• Development Overview
• Cheviot (Emerald) Field History
• Technological Advances to Unlock Value
• Development Plan: Project Approach to Unlock Value
• Summary
Outline
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4
Cheviot Development Highlights
• Conventional oil field with medium water depth of 150m
• Geologically de-risked given past appraisal and production
history
• Higher level of subsurface certainty
• Significant reserves & resources with first oil in 2021
• New approach to development
• Re-deployment of the Varg FPSO; minimal changes/upgrades
• Standard equipment design in an attractive services cost
environment
• Result is $38/bbl full cycle oil breakeven and $16/bbl operating
cost
Alpha’s approach has established a unique development opportunity in the UK North Sea
Cheviot Location Map
• Northern North Sea – 2/10b, 2/15a and 3/11b awarded to Alpha (100%) in 21st Round (Oct 2003). Block 3/6a awarded to Alpha (100%) in 29th Round (Jan 2017)
• 56 miles East of Shetland Islands
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Cheviot Timeline and Alpha Approach
Overall Alpha philosophy for the Cheviot development
• Abundance of subsurface data that which allowed Alpha to refine its analysis
• Remaining uncertainties are quantified; manage associated risk through learning the lessons of Emerald development
• Extensive study work based on integration of all data
• Lessons learned are then applied through the deployment of new technology
₋ 3D seismic
₋ Ability to drill long horizontal wells 6
Timeline
1975 1985 1990 1995 2000 2005 2010 2015 2021
Cheviot
first oil
Development
concept selected
& FEED awarded
Extensive study
work
3D seismic
survey
acquired &
processed
Petroleum
Equity acquired
ATP Oil & Gas
(UK) Limited
Production
ceases; field
abandoned &
acreage relinquished
Emerald first
production
Polymer gel
treatments
Tracer
survey
Appraisal
drilling (5 wells)
2/10a -4
discovers
Emerald field
Seismic
re-processed
Detailed Petrel model and
history matched Eclipse model
Varg FPSO
exclusivity
agreement
signed
Cheviot
license
award
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Well 2/15-1 was not
actually the field discovery
well, but the first well in
the oil leg
Sand thickness around 50 ft
Clean sand with high net pay
Excellent reservoir quality
(approx. 30% porosity)
Lower water saturation
Typical Emerald Well Log
Emerald Field Development (1987–1992)
Original Emerald field development
• Emerald field development plan was submitted in 1987
• The development plan was based on classical reservoir engineering view of waterflood:
– “Buckley-Leverett” type displacement
– Water injection into oil leg
– Sealing basement
– 2,000 ft reservoir penetration at producers
– It was focused on main oil fairway
• Field development carried out by Midland and Scottish Resources in 1989-1992 and was characterised by:
– Subsea wells
– FPU (converted semi-submersible into a floating production unit)
– FSO (converted tanker into a floating storage and
offloading unit)
– 55,000 blpd fluid handling capacity
– 60,000 bpd sea water injection capacity
– Gas was flared
Ali Baba semi-submersible
Ailsa Craig FSO
Tove Knutsen tanker
Emerald field
Emerald Field Development (1987–1992)
Original Emerald field development
• Emerald field development plan was submitted in 1987
• The development plan was based on classical reservoir engineering view of waterflood:
– “Buckley-Leverett” type displacement
– Water injection into oil leg
– Sealing basement
– 2,000 ft reservoir penetration at producers
– It was focused on main oil fairway
• Field development carried out by Midland and Scottish Resources in 1989-1992 and was characterised by:
– Subsea wells
– FPU (converted semi-submersible into a floating production unit)
– FSO (converted tanker into a floating storage and
offloading unit)
– 55,000 blpd fluid handling capacity
– 60,000 bpd sea water injection capacity
– Gas was flared
Ali Baba semi-submersible
Ailsa Craig FSO
Tove Knutsen tanker
Emerald field
Data Available at Emerald Field Abandonment (1996)
10
Extensive available dataset
7 wells monitored
6 in-field exploration & appraisal wells
5 near field E&A wells
20 development wells/sidetracks- late 80’s to
early 90’s
9 wells
Conventional log suites,
no image logs
Logs
4 years
production
history
Tracer
& salinity
data
CoreWells
6 in-field & 2 near field wells – c400 ft total Emerald core
5 infield & 3 near field wells –415 ft total Precambrian
basement core
3 in-field wells – 204 ft total Devonian core
Seismic Across Cheviot
• Emerald Development Based on 2D Seismic
• TGS Nopec 3D Spec survey 2000
• Field Specific 3D Western Regent Survey 2004
• Reprocessed 2016
– Improved imaging of faults
– Direct image of top reservoir (up to a point)
11
3D seismic 3D seismic and reprocessing
Development Wells
12
• Baker Hughes has been selected to provide Directional, Geo-
steering and Reservoir Navigation technology
• Use of modern technology provides a better understanding of
the drilling envelope (well stability, stress caging, torque and
drag)
• Reservoir sections of 1500 – 5000 ft
• Standalone sandscreen completions
18 wells: (13P + Peel + 2WI + 2GI)
Circles @ approx 1, 2, 3, 4km
N1
N109
Q202
Q203
Q201
N108N16
N6
Q205
N101
N5
N4
N11
W2
W3
G1
G2
Padon (gas)
Peel (oil)
Well Construction Strategy
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• Alpha’s Well Construction strategy is to:
⎻ Engage with key drilling contractors and professionals to
efficiently drill and complete the Cheviot and Peel wells
⎻ To manage the drilling process through an integrated
company/contractor team including Integrated Drilling
Services (IDS)
⎻ Promote the interaction and alignment of the in-house
subsurface and wells team with IDS team and establish
an integrated geo-steering team.
⎻ Build on previous geo-steering experience (internal and
external) and to take advantage of technically advanced
techniques
• Continuity of the teams over the 3 years drilling
programme should result in learnings and efficiencies not
reflected in the current well costs
Drilling interfaces
DPMS
IDSRIG CO
Cheviot Development Plan
14
Redeployed FPSO with suitable oil, water and gas handling capacities
• Petrojarl Varg
• Proven North Sea vessel, low redeployment cost
• Minimum cost and short time to first oil – c. 2.5 years from FID
Well numbers and locations optimised and tailored to the capacity of the FPSO
• 18 sub-sea, long horizontal wells (40,000 ft vs original 2,000 ft) spread over 3 drill centres
⎯13 Cheviot producers; 2 water injectors; 2 gas injectors
⎯1 Peel producer (Peel is shallower Palaeocene field)
• Alpha appointed Baker Hughes for the provision of
integrated drilling services
• Contract signed with Stena Drilling for Stena Spey rig
Standard SPS & SURF Equipment
• To minimise engineering-driven changes to scope and cost
Low cost, simple standard and proven infrastructure with relatively low associated decommissioning costs
SURF/SPS
Cheviot Full Development Execution Team
• Post FID, the “Cheviot Team” will comprise in excess of 150+ Alpha employees and dedicated contractors
• Execution management team in place
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Wells Manager
Alpha Petroleum
SURF/SPS Delivery
Manager
Alpha Petroleum
FPSO Delivery
Manager
Alpha Petroleum
30 employees dedicated Cheviot
team30 employees
dedicated Cheviot team
45 employees dedicated
Cheviot Team
Project Manager
Alpha Petroleum
In-house team of 30 employees across G&G, Petroleum Engineering, Procurement, Commercial, Finance, IT,
HSE, building to 50 after FID
Alpha Partners
Subsurface Manager
Alpha Petroleum
Project Services
Manager
Alpha Petroleum
Wells FPSO
Alpha management team role
• To enable our vendors to succeed
• Ensure integration across all aspects of the project
• Provide the Operator perspective
• Assurance and verification
• Rigour and discipline in project execution
• Prepare for successful operation
Development Execution – Service Providers as Partners
16
1
• Traditionally the Operator of a development field
would set the rules, technical specs and technology
to be used
• This historically led to over-specified equipment
and cost overruns/delays
• Alpha contractors are not just providing services,
but are playing the role of “partners” in the
development of the Cheviot field
• As partners, contractors are all incentivized in
developing the field according to plan
• Simplification of engineering
• Remove multiple interfaces
• Improved cost and schedule certainty
The approach ensures the project team is individually and collectively providing the right
solutions to the Cheviot development
Alpha partnership approach to the Cheviot development
execution to Create a ‘One Team Environment’Alpha – Operator
Overall Management and CoordinationSteering committee
Oversight and Conflict resolution
Drilling Services Subsea Equipment & installation FPSO
Parties Communicate from inception to execution rather than silos
Integration Execution Benefits and Savings
Contractors
Mutual reliance to deliver – identify problems and solutions from FEED to execution
Summary
• Cheviot Development
• Relatively low subsurface risk
• Project matured and risks mitigated
▪ Blue Chip partnerships
▪ Industry standard designs
▪ High proportion of fixed cost /
lump sum contracts
• Attractive economics
▪ $38/bbl full cycle oil breakeven
• Experienced management team with individual and corporate track record of delivery
• Significant upside potential through establishment of a new North Sea hub in an under exploited area
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