Delivering Value in a Low Oil Price World

1
Chris Mottershead

• Delivering Value in a Low Oil Price World

2
Recent Past

• Industry responded well to profitability
  challenges of 90s
• Collaboration became more common, e.g. POSC and
  MoBPTeCh
• Increased industry standardisation, e.g. Norsok
  and CRINE
• Less people, and new ways of doing business
• New value created by technology
• Extended Well Tests, e.g. ETAP and West of
  Shetland
• Extended Reach Wells, e.g. Wytch Farm
• Deepwater production, e.g. Shell in GoM and Elf
  in Angola
• Coiled tube drilling on the North Slope

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Future Will Be Different

• We are embarking on an exciting journey over the
  next decade
• On the edge of a radical change in the industry,
  which builds upon our recent successes
• cost management
• standardisation
• new ways of working
• But adds new technological competencies to
• create new markets
• exploit new forms of resource

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Vision of The Future

• From where the focus in specific areas is by
  improving
• Profit Increased Volume / Lower Unit Cost
• Towards a much more complex relationship
• Profit S Price (of substitution)
• - Taxes (production, profit and down stream
  fiscal incentives)
• - Depreciation (of portfolio)
• - Unit Operating Costs (leveraged by throughput
  improvements)
• - Distribution charges
• - Conversion costs

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Entering Industrys Most Exciting Period

• Need to improving our existing resource push
  businesses
• as we follow through on the opening up of new
  access, e.g. Russia
• exploit the opportunities created by
  deregulation, e.g. gas and electricity
• find ways to exploit deepwater plays cheaply
• optimise portfolio to returns on CE (rather than
  prioritise CAPEX)
• enhance operating efficiency (rather than simply
  managing lifting cost)
• Create new market pulled opportunities and
  businesses
• World economic growth will pull energy growth in
  new areas
• Cleaner fuels will be demand everywhere
  (especially in new markets)
• New markets for LPG, CNG, Fuel Cells, Methanol,
  Extra Heavy Oil, etc..
• Rise of the International Energy Service Provider

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International Energy Service Provider

• Customers buy energy in a competitive market on
  cost
• Differentiate on Quality, particularly
  environmental
• Greater diversity and substitution in Heat, Light
  and Transport fuels
• new and old liquids
• electricity
• gases
• This will demand a whole new range of technology
  for
• production
• conversion
• distribution
• use

7
New Technology for Carbon Spectrum

• Biomass - e.g. Yorkshire Waters 40MW Willow
  burning power station
• Coal - Coal Bed Methane production or ICCG Power
• Extra Heavy Oil - coking in refineries or
  hydrocracking to syncrude
• Medium/Light crude - deepwater exploitation
• Gas - Offshore LNG, Power or Gas to Liquids
• Hydrogen - Fuel Cells for Transport and Static
  Power Generation
• Renewables - Solar, Wind and Wave
• Nuclear fission and fusion?

8
Future Will be a Technologists Challenge

• Continue to grow existing resource lead
  businesses - as it becomes more of a commodity
  there will be increased business competition and
  cost collaboration.
• Creation of market pulled Integrated Energy
  Service Industry over the next decade.
• Both areas will require radical improvements in
  our Industrys technological competencies.