Early Offshore Petroleum Development Cost Estimates Using GIS Narmina Lovely, GEOG 596A Advisor: Patrick Kennelly

2 Outline Introduction – the Business Challenge Summary of Discovery to Development Process Spatial Characterization of Prospects and GIS Methodology Engineering Characterization of Prospects Integration of GIS with Other Applications Presentation of Results Conclusion and Future Steps

3 The business challenge Estimate petroleum development costs to guide exploration program Automate, standardize and codify engineering cost estimation

4 The business challenge TD: WD: VOL: 310 AGE: Miocene Pressure: 28378psi HC Type: Oil TD: WD: VOL: 250 AGE: Miocene Pressure: 24480psi HC Type: Oil 15$ a barrel 50$ a barrel While X has bigger volume, Y might be a better value

5 Discovery to Development Process Exploration well Appraisal well Exploration Exploration prospect inputs −Outline of prospect area −Well location −Reserve Size −Water Depth −Target Depth −Fluid Type −Expected Pressures Output is well cost and well timing Appraisal Number of appraisal wells determined by reserve size Output is well cost(s), seismic cost, and timing Field Development Based on logic from tool which will be seen in upcoming slides Output is all development costs and production forecast for life of field

6 Spatial characterization of developments 30 o 3000 feet Well Spacing Calculation Bottom Holes Placement Maximum Drill Reach Calculation Drill Center Distribution Gathering System Alignment for Multi- drill Center Scenarios Generation of Tie-Back Options

7 Spatial characteristics of developments Well Spacing Calculation INPUTS: Hydrocarbon type Prospect Area and Shape Maximum Volume per Well

8 Spatial characteristics of developments Bottom Holes Placement

9 Spatial characteristics of developments Maximum Drill Reach Calculation INPUTS: Target Depth Water Depth Maximum drill reach Spatial Well Distribution 30 o 3000 feet

10 Spatial characteristics of developments Drill Center Distribution

11 Spatial characteristics of developments Gathering System Alignment for Multi-drill Center Scenarios INPUTS: Center of the Prospect Drill centers Spatial Distribution

12 Spatial characteristics of developments Generation of Tie-Back Options INPUTS: Hydrocarbon Type Platforms Spatial Distribution

13 Engineering characterization of prospects Engineering characterization of developments a. Drilling performance and well types b. Completion technologies and configurations c. Production facilities and tie-backs d. Additional production parameters

14 Engineering characterization of prospects Drilling Performance and Completion Technologies 30 o 3000 feet Drilling performance (days to drill 10,000ft) Varies by geologic target Well tangibles vary by geologic target Drill rig day rates ($/day) – company rates Rig type MODU or Platform Rig Type of Well Exploration, appraisal, or development Completion type Wet tree or dry tree Maximum drill reach Establishes number drill centers required

15 Engineering characterization of prospects Production Facilities and Tie-backs Wet Tree Local FPS host cost a function of: Peak field production Water injection requirements Number of wells Shut in Tubing Pressure Water depth Typical Wet Tree Development Subsea tie-back to existing FPS host Oil – 25 mile radius Gas – 75 mile radius Subsea cost a function of: Number of wells Number of drill centers Distances between drill centers Shut in Tubing Pressure Dry Tree local FPS host cost a function of: Peak field production Water injection requirements Drill rig requirements (Dry tree development only) Number and type of wells Shut in Tubing Pressure Water depth

16 Engineering characterization of prospects Additional Production Parameters Field production forecast is the sum of individual wells brought online per drilling and completion schedule. Well forecasts utilize initial rate, reserves per well, and decline by geologic age. Water injection wells are the ratio of producing wells with well depth consideration. Optimize facility options (dry tree versus Subsea tie-back) based on number of wells at each drill center Export pipeline cost included to existing FPS’s within 30 miles or nearest one Matches facility cost spending profile with first oil date Facility abandonment and salvage cost included

17 GIS and Information Technology applied Flow of Automation Spatial characterization of developments ArcGIS & ET GeoWizards Engineering characterization of developments MS Excel Organization of results MS Access Presentation of results PowerPoint VBA Automation

18 Organization of results A

Subsurface Data: Gross recoverable mmboe 250 Net recoverable mmboe 63 Reserves per well mmboe/well 9 Number of producers 27 Number of injectors 9 Capital ($m): GrossWI:9% E&A Drilling: Dev drilling:11,788 1,107 Facilities: 3, Cap OH: Total:16,248 1,525 Indicators(NRI)SuccessRisked Ps:25% IRR % NPV7 ($m) % Disc. payback (yrs) IE (NPV/WI capital) ProspectX SS Development w Semi Host BP CONFIDENTIAL

20 Conclusions Manual process was automated for a batch of prospects Took days for each prospect manually, a matter of minutes automatically with favorable results ARCGIS was a key technology to automate the calculation Integration of GIS Technology with Access, Excel and PowerPoint Generated results for hundreds of prospects for comparison purposes: 800+ prospects, 2,300+ development options Future Steps: −Incorporate an economic model for the output −Simplify cost estimate updating −Incorporate portfolio analysis toolkit

21 Acknowledgements BP Engineering Team - Engineering Characterization of developments Charles Fried - Flow of Automation between GIS and Excel Engine Patrick Kennelly – Penn State Program Advisor