An Operator’s View on Deepwater Floating Systems and Technology Development Ming-Yao Lee Manager of Offshore & Marine Engineering Chevron Energy Technology Company SMART 100 Symposium on MArine Resource & Technology Taipei, Taiwan October 16, 2011 Notes go here. 2011 Chevron U.S.A., Inc.  All rights reserved.

Presentation Outline Why Deep Water? Overview of Floating System Concepts Concept Selection Process and Criteria Deepwater Design Challenges Chevron’s Deepwater Project Experiences New and Emerging Floating System Concepts Concluding Remarks 2011 Chevron U.S.A., Inc.  All rights reserved.

Why Deep Water? – Easy Oil is Gone! What does it mean: Harsher environments Deeper waters Lack of infrastructures What can we do about it: Courtesy of Bluewater Opportunities of floating system technologies for enabling solutions Mitigation of risks associated with use of new technology Building collaborative & productive partnerships to leverage project experience and accelerate technology deployment 2011 Chevron U.S.A., Inc.  All rights reserved.

Deepwater Resource is Significant 7500 ft 5000 ft 1000 ft 1500ft Reserves MMBOE Water Depth ft 1 – 49 5 – 249 250+ 1,000 – 1,499 1,500 – 4,999 5,000 – 7,499 >7,500 More bubbles and bigger bubbles, e.g. CVX will drill an average of 4-5 exploration wildcat wells per year, with a focus on Lower Tertiary prospects, and maintain an impact Exploration Factory. Estimated Volume of Gulf of Mexico Deepwater Fields OCS Report: MMS 2009-016 2011 Chevron U.S.A., Inc.  All rights reserved.

Chevron and the Worldwide Portfolio Long-term global deepwater offshore growth expected 2011–2015 deepwater expenditures estimated to be over $200 B, ~75% increase over the previous five years The “Golden Triangle” still dominate, growth in Asia Pacific will be significant Worldwide Producing Deepwater (DW) Basins Global Forecast of FPS Spending The “Golden Triangle” of deepwater, namely Africa, the Gulf of Mexico, and Brazilian areas, still will account for nearly 75% of global deepwater expenditure over the forecast period, but the emergence of Asia as a significant deepwater region should not be overlooked. Asian deepwater expenditure over the 2009-2013 period will increase by 90% compared to 2004-2008 spend. Much of this growth will be driven by the development of the Kebabangan cluster in Malaysia as well as the MA-6 development offshore India. Chevron Participation Other DW Basins 2011 Chevron U.S.A., Inc.  All rights reserved.

What Concepts Are in Use? FPSOs continue to dominate concept selection primarily from lack of pipeline infrastructure. Driven by drilling, completion and well intervention costs, other concepts have become more important such as: Semi-submersibles Tension leg platforms (TLPs) Spars Global Forecast of FPS Hull Type Despite the near-term slowdown due to global financial crisis in 2008-2009 and oscillating crude oil prices, the global deepwater offshore market is expected to be both healthy and with robust growth. 2011 Chevron U.S.A., Inc.  All rights reserved.

Proven Floating Concepts Dry- or Wet-Tree Solutions Wet-Tree Solutions Developments in deepwater environments can be characterized by the type of access to the development wells; direct vertical access (DVA) systems from surface (e.g. dry-tree solutions), non-DVA systems at seabed (i.e. wet-tree solutions), or combination systems. Given the relatively short history of production in deep waters, operators need to have more confidence that the chosen floating system concept will perform as planned and produce competitive economics. Technical attributes (pros & cons) associated with the existing tool-kit concepts are shown on this slide. This does NOT preclude operators from considering other more innovative development concepts and/or extending these tool-kit concepts to reduce cost and risk. Spar  Good heave motions ▬ Vortex-induced motion (VIM) ▬ Size-limited TLP Minimum heave Weight-sensitive Depth-limited Semi-Submersible  Quayside integration Riser fatigue FPSO Storage capacity Quayside integration Riser interface Riser fatigue 2011 Chevron U.S.A., Inc.  All rights reserved.

Looking at Water Depth TLPs: Depth-limited due to conventional tendon design restrictions. Semis: Increasingly popular due to depth insensitive and quayside integration and might soon be used for dry-tree applications. Cascade/Chinook: Soon to be the first GOM FPSO One of the key factors that affect the selection of a floating system concept is “water depth”. This slide shows the relative water depths of floating system concepts that are either installed or under construction. The perceived water depth capability of each concept is also illustrated. As shown, the main limitation for TLP is due to the weight of its tethers. For water depth beyond 1,500 – 2,000 meters, the tether weight tends to penalize the hull size and the economics of a TLP concept. 2011 Chevron U.S.A., Inc.  All rights reserved.

Multiple Concepts Needed for Opportunities Water Depth vs. Production Capacity Large overlaps reinforce the need for concept evaluation and selection during early phase of a project. There are a number of opportunities where only a single concept is practical. Water Depth (ft) 9,000 - 7,000 - Spar TLP Semi FPSO 5,000 - 3,000 - FPSO Boundaries Abalone –A petrobras development in Brazil @ 6500 feet and Agbami @250,000 bopd Spar Boundaries Perdido @ 7,800 feet and Tahiti @140,000 bopd TLP Boundaries Magnolia @4,600 feet and Heidrun @ 250,000 bopd Nb. Snorre A is an outlier in todays market. It would not be an economic choice today. Semi Boundaries Independence Hub @ 7,900 feet and Thunder Horse @ 290,000 bopd Platform Name Water Depth(ft) Production Capacity (Mboe/day) SPAR Neptune 1930 45 Medusa 2223 73 Genesis 2599 67 Gunnison 3150 73 Front Runner 3330 78 Boomvang 3453 73 Nansen 3678 73 Tahiti 4100 137 Holstein 4344 138 Mad Dog 4420 87 Hoover/Diana 4800 154 Constitution 4970 103 Red Hawk 5300 20 Horn Mountain 5423 76 Devils Tower 5610 78 Perdido 7817 130 TLP Hutton 482 122 Snorre A 1100 366 Heidrum 1132 251 Prince 1490 63 Morpeth 1699 53 Jolliet 1759 43 Matterhorn 2816 42 Auger 2862 175 Mars 2933 231 Brutus 2985 155 Ram/Powell 3216 198 Marlin 3236 90 Ursa 3800 217 Neptune 4250 58 Marco Polo 4300 120 Shenzi 4373 108 Magnolia 4674 75 SEMI Innovator 2986 37 P-26 3248 118 P-51 4101 215 Thunder Hawk 5904 72 P-52 5904 235 Na Kika 6271 181 Thunder Horse 6298 293 Blind Faith 6996 35 Atlantis 7072 230 Independence Hub 7920 167 FPSO Abalone 6562 100 Agbami 4797 250 Aker Smart 3937 60 Akpo 4347 125 Baobab Ivoirien 3182 70 Berge Helene 2277 75 Bonga 4101 225 Brasil 4232 90 Capixaba 4396 100 Captain 341 60 Cidade Janiero 4429 100 Dalia 4462 240 Erha 3871 150 Espadarte 2625 100 Firenze 2625 20 Fluminense FPSO 2428 81 Frade 3494 100 Gimboa 2333 100 Girassol 4593 200 Golfinho II 4547 100 Greater Plutonio 4429 220 Kikeh FPSO 4429 120 Kizomba A 4101 250 Kizomba B 4101 250 Kizomba C #2 2142 100 Marlim Sul 3937 100 Mondo 2388 235 Opportunity Oil 4921 100 P-31 1083 200 P-33 2559 63 P-34 4101 60 P-35 2822 100 P-37 2969 180 P-43 2625 150 P-48 3412 150 P-50 4068 165 P-53 FPSO 3543 180 P-54 Roncador 4593 180 Piranema 5249 30 Sao Mateus 2297 25 Seillean 4724 24 Sendje Ceiba 2625 160 Stybarrow 2707 80 Xikomba 4856 90 1,000 - 100 200 300 400 Production Capacity (Mboe/day) 2011 Chevron U.S.A., Inc.  All rights reserved.

Concept Selection Process Cost Hull motion characteristics Export options or storage requirements Hull Technical Commercial Riser system Production rate and reservoir aerial extent Hull Concept Selection Water depth Direct vertical access of wells Understanding the advantages/disadvantages Minimizing the risks, especially subsurface & drilling (~> 50% cost) Ranking based on project/company criteria Metocean Production only? Drilling? Region and Location Reservoir Management 2011 Chevron U.S.A., Inc.  All rights reserved.

Motion Characteristics of Floating Hulls Natural Periods of Motion Vertical motions are controlled by tendons Vertically moored Spread moored Vertical motions are controlled by hull configuration Sea Energy TLP Spar Semi Ship Beam To minimize vessel motions, it is desirable to ensure that the frequency of the waves (period) does not coincide with a resonant frequency of the vessel (the frequency at which the vessel ‘sings’ and so motions are significantly worse). The slide shows the typical wave period together with typical heave motion periods for the primary floating concepts. The TLP, semi-submersible, and spar will not suffer resonant response since their natural heave periods are far away from the period with maximum sea energy. However, ship-shaped FPSO in beam sea configuration may suffer significant motion. Therefore, the aforementioned design of weathervaning or turret moored FPSO’s are deployed in regions where storms are likely to occur equally from all headings, in order to maintain the FPSO in head seas. Spread moored FPSO’s are acceptable in West Africa since severe weather is predominantly from the south or southwest. Ship Bow 5 Wave Period (Seconds) 20 Note: Hull motions are minimized by keeping outside the area of wave energy. 2011 Chevron U.S.A., Inc.  All rights reserved.

Summary of Basic Concept Features Spar TLP Deep-Draft Semi FPSO Turret Spread Moored Export Alternatives Pipeline Pipeline/ Tanker Water Depth Up to 8,000 ft 400 to 6,000 ft 800 to 8,000 ft 50 to 8,000 ft Topside Weight Requirements Up to 20,000t Up to 40,000t Metocean Characteristics by Region All Not harsh conditions Riser System Top-tensioned, SCR*, Flexible, Tower Top-tensioned, SCR, Flexible, Tower SCR, Flexible, Tower Flexible, SCR, Tower Dry or Wet Trees Dry or Wet Wet (eg. FPSO for GoM) Concept selection for floating production systems has a complex number of parameters to consider. FPSO’s are the most common concept selected because of storage or export capabilities. Local regulations and local content may impact concepts. *Steel catenary riser (SCR) 2011 Chevron U.S.A., Inc.  All rights reserved.

Key Concept Selection Criteria Technical Feasibility; support all equipment for operations while meeting all performance criteria Maturity of Design Technical robustness Historical performance Experience of people involved Costs and Risks CAPEX / OPEX Project Execution Plan After stepping through the selection process, these are some of the key criteria that affect the final selection. The ultimate goal is to select an optimum hull concept which: Supports all necessary equipment for production while meet all performance criteria Provides sufficient robustness to fulfill its intended purpose Built, installed and operated at minimum risks and costs 2011 Chevron U.S.A., Inc.  All rights reserved.

Ultra-Deep Water Has Other Challenges Design Challenges Capability to predict and verify response behavior of entire floating system Testing facilities cannot model floating systems with complete mooring lines and risers Key Questions* To what extent can the truncated test be done? Can the numerical analysis reproduce the test results? Can the full-depth extrapolation capture the coupling effects, e.g., “tail wagging the dog”? 1:100 model in a 10m deep wave basin for 1500m full water depth Compromise Wave basins are not big nor deep enough!! e.g., 1:100 model scale in a 10-m deep basin for 1,500-m WD Typical Range 1:50 – 1:100 Numerical Interpretation Physical Testing Uncertainties Model Scale (- Water Depth) 2011 Chevron U.S.A., Inc.  All rights reserved. *Ref: Lee & Ma, DOT 2008

How do we handle uncertainty in this area? Ever-Changing Environment:100-year Hs Contours Based on Passage of More Large Storms How do we handle uncertainty in this area? Hot spot ??? JSM (7,000’) BGF (5,200’) Point to note: in the Central GOM “hot spot”, the new API RP 2MET has the revised criteria in place. Recent major hurricanes in the GOM like Ivan (2004)/Katrina (2005) tracking would feed into increased design statistics. However, there’s still significant upside potential outside of Central GOM, e.g. Gustav & IKE of 2008. Several large storms passing west of central GOM could change platform design statistics further, widen perceived intense area of Gulf* Hs (m) 2011 Chevron U.S.A., Inc.  All rights reserved. *Ref: OTC 18903 & 19602 15

Example Changes: Central GOM Add large storms, eliminate early data… Example, 100-year Hs, Central GOM: 2003 was 13.5 m 2008 now 15.5+ m Example Changes: Central Gulf site 100-year Hs: 2003 was 13.5 m 2008 now 15.5+ m Have adjusted JSM, BGF sites for historical record and Ike, but… Statistics still vulnerable to change from big storms 16 2011 Chevron U.S.A., Inc.  All rights reserved. 16

Chevron Installations and Constructions FSU/FPSO Alba/Captain Rosebank FPSO *Terra Nova FPSO *Hai Yang Shi You *Nan Hai Fa Zian *Bohai Shi Ji Spar Genesis Tahiti *Mad Dog *Perdido Semi-Submersible Blind Faith Jack/St. Malo Compliant Tower Petronius TLP Big Foot FPSO Tantawan Benchamas Explorer Pattani Spirit FPSO Frade *Papa Terra FPSO/FSO Agbami Escravos LPG *Usan FPSO *Cossack Pioneer FPSO/FSO Kuito Sanha *Kome Kribi *Moho-Bilondo *N’Kossa Negage Lucapa FPSO *Intan *PBS&J San Jacinto Gendalo-Geham TLP West Seno Compliant Tower BBLT Tombua-Landana * Non-Operated Joint Venture In Design 2011 Chevron U.S.A., Inc.  All rights reserved.

Recent Chevron Floating Projects The Chevron Way at its best: people, partnership and performance – health, environment and safety Used a system approach in concept selection – coupled hull, mooring and riser solutions Integrated operations and project teams early in the process Aligned company and contractor – contracting strategy Guard unknowns in deepwater operations, especially contingency of vessel and equipment – crane limit, vessel breakdown OTC 19857 OTC 20249 Agbami 3Q 2008 Blind Faith 4Q 2008 Frade 1Q 2009 Tahiti 2Q 2009 Agbami – 3Q08 (The world’s largest FPSO; A worldwide partnership/teamwork – “One Project, One Team”) Blind Faith – 4Q08 (Reached full production within 2 months of first oil) Frade – 1Q09 (CVX’s first operating asset in one of the most promising deepwater regions) Right to hold facility in yard to achieve planned sailaway completion? Use Separate integration contactor? Tahiti – 2Q09 (Reached full production within 2 months of first oil) 2011 Chevron U.S.A., Inc.  All rights reserved.

Current Floating Systems Projects in Design Jack & St Malo semi Big Foot TLP Papa Terra TLWP 2011 Chevron U.S.A., Inc.  All rights reserved.

Dry Tree Facilities for Ultra-Deep and Large Payload No proven dry-tree concepts TLP limited by Water Depth For ultra-deepwater Wilcox reservoirs, our additional challenges: WD is deep; the drilling (reservoir) depth is even deeper. High tension and large stroke for the riser tensioning systems. Spar limited by Payload 2011 Chevron U.S.A., Inc.  All rights reserved.

New Enabling or Enhancing Concepts FPSO with drilling capability Reduce development drilling cost Increase oil recovery Circular-shaped FPSOs to reduce CAPEX Better hull steel efficiency Simplified constructability No turret (even in harsh conditions) Dry-tree semis to reduce CAPEX and increase flexibility Higher topsides weight Deeper dry-tree developments Quayside integration Octabuoy MinDOC Azurite FDPSO Sevan SSP Pair-C Semi Aker Dry Tree Semi 2011 Chevron U.S.A., Inc.  All rights reserved. Azurite FPSO photo courtesy of Murphy Oil Company

Chevron Technology Qualification Process “All new technologies that will, by the end of Select (i.e. prior to FEED), have been proven either through field trials, extensive testing, or successful application in a parallel industry, shall be considered.” Example: Dry-Tree Semi Issues Hull motions to accommodate proven riser tensioning systems Constructability of new hull forms and/or critical components Minimize risks of new technologies 2011 Chevron U.S.A., Inc.  All rights reserved.

Concluding Remarks Deep water will require a large portfolio of projects to be developed with floating production systems. Development opportunities often call for floating system concept evaluation and selection. A more standardized concept selection process is needed. Focus on new developments of enabling/ enhancing concepts, and be open to new technologies. Dry trees and/or platform drilling are likely to become more important, to increase recovery and reduce cost. Operation’s input early and throughout the floating system project will pay significant dividends. A standardized concept selection process is needed to: not re-inventing the wheels. Leverage best practices & lessons learned to improve project results. Integrated operations and design will lead to a more reliable floating facility, which is easier to operate & maintain. 2011 Chevron U.S.A., Inc.  All rights reserved.

Thank You! New floating system technologies are required to address ever increasing water depth and large topside challenges Experience, technology and perseverance enable us to overcome challenges and deliver value Collaborative and productive partnership will accelerate technology development and deployment Questions? New concept from inception to installation ~10 years. 2011 Chevron U.S.A., Inc.  All rights reserved.