Introducing the UNFCWhy classify our resources?David MacDonald, Vice President Segment Reserves27 September, Mexico City

Outline

History of resource classifications

Fundamental purpose of resource classification

Capital value chain at work in the North Sea

How the UNFC can facilitate development

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Resource Classification is not a new Problem!

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Purpose of Resource Classification

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External user

External Influencers

Internal users

Governance and Assurance

Internal StakeholdersInternal preparers

Capital Value Chain

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Adding Value

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Development needs a Plan

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The UNFC can help to define that development plan

Improving recovery factors in the North Sea

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BP North Sea - Executing a Resource Led Strategy

Strong incumbent position in North Sea

Strategy• Deliver 6 major projects (both field redevelopments

and green field projects)

• Execute targeted E&A programmes, informed by Catchment Area Reviews around all Hubs

• Grow Recovery Factor in existing fields

Recovery Factor Theme• RF technical limit (RTL) review of all fields

• Assess optimal life of field depletion plan that could deliver RTL

• Define activity set to pursue technical limit

• Monitor & optimise reservoir management for value

Long term seismic plans for each ‘Hub’• Seismic technology solution integrated with depletion

plans

Portfolio Management• Deepened in Valhall, Quad 16 (Andrew Area)

• Sales of Wytch Farm and Southern Gas

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Resource progression

BP North Sea portfolio – Resource ‘tube’

Technical Limit52+% RF31% RF 42% RF38% RF

ReservesOnline

NewActivityFunded

Planned Options

Prod

uced

• Optimising base production

• New infill drilling

• Enhanced oil recovery

• Extending facility life

36% RF

Life of Field Depletion Plan

Options with technical barriers

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Integrating subsurface description with operational activity – depletion planning

• Describing the habitat of the remaining hydrocarbon

− Technical limit seismic imaging

− Forensic reservoir description

− Accurate description of historical drainage & sweep

• Appropriate recovery mechanisms for later field life

− Modifying pore-scale process through EOR e.g. WAG, polymer

− Depressurisation (blow-down)

• Ensuring the facilities are fit-for-purpose and have appropriate life

− Increased water & gas handling; changing fluid chemistries (H2S)

• An integrated depletion plan to optimise infill drilling, wellwork & effective reservoir management

Magnus ongoing redevelopment to maximise recovery factor

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Magnus pushes recovery factor 60%+

• Very successful initial waterflood development recovered initial sanction volumes

• Subsequent phases of development will increase recovery to 50-65%

− Subsea water injection added to debottleneck water injection well constraint

− WAG EOR scheme using stranded gas from WoS fields involved new import gas pipeline, additional compressor and recompletion of injection wells

− Platform slot constraint reduced by adding 4 new slots with splitter technology to side of platform providing 8 new wells

− Field life extension from 2008 to 2030 through ongoing CAPEX on facilities upgrades

• Enabled by substantial jacket & platform drilling package to reach field extents

• Full field seismic OBC coverage just been acquired (August 2011); 4D seismic for WAG surveillance

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Magnus Development phases

• 7 subsea & 15 platform wells

•MSM only WF development

• LKCF development

• Increase off-take to 140mbd

• Revised petrophysical interpretation

• Infill drilling to utilise 20 slots

• plant PW de-bottlenecking

• 20 additional wells

• Subsea injectors (SWIFT)

• South Magnus subsea tie-back

• Miscible WAG EOR scheme for MSM and LKCF – brownfield mods

•8 new platform slots

• North West Magnus satellite development from platform

• Phase I and Phase II infill drilling programmes

• Options for further WAG patterns and Extended EOR scheme to progress remaining CR volumes

Magnus Full Field Recovery Factor

30% 40% 50% 60% 70%

500

600

700

800

900

1000

1100

1982

- Init

ial S

ancti

on 1986

1987

1991

1994

1995

2000

2005

2010

Proved

2011

Dep

letion

Plan

Mag

nus

Fiel

d R

ecov

erab

le o

il (m

mst

b)

Current Recovery of 820mmstb

Produced Infill Ph2 Max EOR & BlowdownBase Infill Ph3 Left in ground

Evolution of Magnus Field Production Profiles

0

20

40

60

80

100

120

140

160

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035

Mag

nus

Hub

Oil

Prod

uctio

n R

ate

(mst

bd)

2011 Depletion Plan2010 Proved20052000199519941991198719861982 - Initial SanctionActual

(Historical profiles - Annex B revisions)

Andrew satellite tie-backs unlock deep gas recovery

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Second lease of life for Andrew platform

• Andrew platform initially developed Andrew Palaeocene with dry trees; and subsea tieback of Cyrus

• Farragon subsea field later tied into Cyrus manifold

• Kinnoull discovery will be developed via 30km tieback via Arundel discovery to Andrew platform, with brownfield modifications for process module

• Enables development of Andrew Lower Cretaceous gas through both process capacity increase and CoP extension

• Enabled by aggressive catchment area review and increasing license position and operatorship

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Andrew Hub depletion plan

0

10

20

30

40

50

60

70

80

90

100

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

And

rew

Hub

Ann

ualis

ed P

rodu

ctio

n (g

ross

mbo

ed)

• Platform startup

• Cyrus 2-well subsea tieback

• Platform sidetrack drilling program

• Farragon 2-well subsea tieback via Cyrus

• Kinnoull 3-well tieback direct to Andrew

• Farragon 2-well subsea tieback via Cyrus

• Andrew Lower Cretaceous gas online

• Additional Lower Cretaceous wells

• Further subsea tie-ins

2003: Farragon discovery

2008: Kinnoull discovery

2006: Arundel discovery

Graded: Developments

Solid: Base production

Speckled: Hopper options

oilgas

Schiehallion FPSO replacement for 2nd phase of field life

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Schiehallion and Loyal Current Production

• Field discovered 1993; on stream 1998• FPSO (Floating Production, Storage, Offloading)• Oil exported via shuttle tanker to SVT; x storage

tanks• Gas exported via 20” pipeline to SVT; treated

and exported to Magnus

Magnus

SHETLANDISLANDS

Sullom Voe

ClairEOSPSSchiehallion

Foinaven WOSPS

OIL

• Peak production 184,000 bo/d• 2010 Production c.22,000 boe/d

• Production to date c.400 million boe; estimated c.450 million boe still to produce (Base Case - new FPSO)

• Designed for 25 yr field life; already looking at field extension to 2035+.

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Q204 Project

• Reservoir potential and production history requires a higher specification vessel fit for remaining field life

• Q204 project (new FPSO, enhanced subsea facilities, additional wells) sanctioned in July 2011

• Ca. £3bn investment

• 270m long FPSO in same location as old vessel• 130,000 bpd oil, 320,000 bpd liquids• Oil export shuttle tanker to SVT; gas expected to Magnus

via SVT• 25 year design life

• New vessel is EOR polymer ready

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Current challenges

• Maintaining wellwork & drilling activities on aging infrastructure – significant PoB requirements for integrity & obsolescence projects

• Bringing 3rd party opportunities across infrastructure

− Challenging brown field modifications required

− Activity set on existing fields keeps platforms at full activity capacity

− Some projects progressing:

− Centrica’s Seven Seas project in Southern Gas Basin to West Sole

− BP’s Devenick subsea tie-back to Brae

• Blowdown !

− Planned blowdown in many fields being deferred due to new opportunities being identified (oil vs. gas price differential reinforces)

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Improving recovery factors in the North Sea

• Describing the habitat of the remaining hydrocarbon

− Technical limit seismic imaging

− Forensic reservoir description

− Accurate description of historical drainage & sweep

• Appropriate recovery mechanisms for later field life

− Modifying pore-scale process through EOR e.g. WAG, polymer

− Depressurisation (blow-down)

• Ensuring the facilities are fit-for-purpose and have appropriate life

− Increased water & gas handling; changing fluid chemistries (H2S)

• An integrated depletion plan to optimise infill drilling, wellwork & effective reservoir management

Sustainable and Efficient Development

− Long sighted policies for the global markets

− Government resources management for security and efficiency

− Industry processes to develop new technologies and efficient project management

− Cost effective allocation of financial resources

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• Securing affordable and sustainable energy requires a common standard for developing: