Importance of Effective Sand Management - DTI View Colin Cranfield Reservoir Engineer Licensing & Consents Unit, Aberdeen

slide no. 2 Outline UKCS context – Production targets General observations – Environmental aspects DTI initiatives – Mature fields – Production efficiency Conclusions

slide no. 3 Structure of DTI’s Energy Group Energy Strategy Unit Energy Markets Unit Nuclear and Coal Liabilities Unit Licensing and Consents Unit Director General Energy Innovation and Business Unit British Energy

slide no. 4 LCU – organisation & objectives Field development – London- & Aberdeen-based field teams – Plus: consents & measurement Environmental – Aberdeen-based teams – Environmental management & inspection Aims – Maximise UKCS economic recovery – Minimise environmental impact

slide no. 5 DTI / PILOT - vision & challenges PILOT targets for 2005 & 2010

slide no. 6 UKCS production forecast (MM boe/d)

slide no Shrinking window of opportunity

slide no. 8 DTI / PILOT - vision & challenges PILOT targets for 2005 & 2010 Production increments needed from – Brown fields – New developments – Exploration success

slide no. 9 Sand – effect on production / facilities Monitoring and controlling sand – Typically choke wells back Fluctuating separator performance – Less residence time – Liquid carry-over Sand clean-out – Online preferable – Offline Requires human intervention Shut-downs to clean out separators Replacement of worn items Lowered production efficiency

slide no. 10 Sand – effect on flow measurement Liquids carry-over from separator – Affects ability to meter accurately GAS Orifice plates – Significant under-estimation possible – 0.3% error represents loss of one day’s production p.a. – Ultra-sonic meter tubes Change in surface roughness can cause inaccuracies OIL Turbine meters – More frequent meter proving

slide no. 11 Sand – typical operator approaches Focus on down-hole issues – Optimising well completion strategies – Well location Less focus on sand issues at surface Best practice - totally integrated – Sand prediction, monitoring and control – Well sanding limits – Defined and optimised procedures – Down-hole sand control within overall strategy

slide no. 12 Environmental considerations Sand disposal – Volumes – Increased weight Legislation – Hydrocarbon contamination Water-washing required – Exemption required for discharge to sea – Dealt with by DTI environmental inspectors Erosion – Increased corrosion rates – Potential for loss of integrity Hydrocarbon discharge

slide no. 13 NEW DEVELOPMENTS & EXPLORATION Fallow blocks / Fallow discoveries Shortened licence terms for new licences Access to infrastructure “Promote” licences DTI initiatives / support

slide no. 14 NEW DEVELOPMENTS & EXPLORATION Fallow blocks / Fallow discoveries Shortened licence terms for new licences Access to infrastructure “Promote” licences DTI initiatives / industry support MATURE FIELDS Brown field work group – Bench-marking study DTI action on production efficiency

slide no. 15 Production efficiency - overview DRIVERS Maximise Brown field potential Mature infrastructure Security of (gas) supply Environmental & safety considerations PROCESS Consultation process completed 1Q 2003 Establish base line / agree definitions Formulate plan of action

slide no. 16 Size of production efficiency prize (according to Brown field work group)

slide no. 17 Intervention tool box Compression Corrosion High water-cut Liquid hold-up Slugging Sand control Set points, valves & controls Weir heights Power generation Water injection

slide no. 18 Conclusions Sand management is important Integrated approach is needed – Focus on overall system Sub-surface and topsides – Consider overall cost / benefits Collaborate / share best practices More effective sand management will – Add value / lower costs / raise efficiencies – Help meet PILOT targets

slide no. 19 Further information / contacts Field development Measurement Production efficiency Environmental