RWE Dea Norge - Operators Conference

RWE Dea Norge
- Targeting profitable growth on the NCS
Hugo Sandal
Managing Director
RWE Dea Norge Norwegian Operators Conference
RWE Dea: Where we come from,
and where we stand today
Norway
RWE Dea Norge Facts & Figures
United Kingdom
41 years
Denmark
Poland
Ukraine
Ireland
Germany
33 licences
Canary
Islands
0.88 Mio Sm³ liquid production (2013)
0.46 B Sm³ gas production (2013)
Algeria
Libya
Turkmenistan
Azerbaijan
Egypt
Trinidad & Tobago
NOK 2 165 Mio operating result
Mauritania
Guyana
Suriname
NOK 1 392 Mio investments
106
employees
* OE = Oil Equivalents
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 2
Exciting and challenging times
Norway
Recap
> Last year: RWE Dea Norge
celebrated 40 years on the NCS,
and was entering the most
exciting period of the company’s
history so far
> That still holds true
And the World is Changing….
> The Norwegian oil industry is in a
period of significant uncertainty the oil price is falling whilst costs
are rising at an unprecedented
rate
> Companies are undertaking
drastic measures – modus
operandi is changing
> The international market is
following closely large geopolitical
movements, both in Eastern
Europe and the Middle east
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 3
A well balanced portfolio
Alta discovery
PL721 (op)
Norway
Exploration
Zidane (op)
Knarr
> Active in “all” NCS areas
> Good mixture of different types of
prospects and leads
> Good track record
> Recent Alta discovery in the
Barents Sea
> Atlas well is being drilled
(operated)
Development
> Zidane (operated)
> Knarr
Atlas well (op)
Production
> Snorre and Gjøa main fields
RWE Dea Norge Norwegian Operators Conference 2014
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……a number of new
licenses and
discoveries
Exploration results
> Participation in six of the most
significant discoveries during the last five
years
> Operated wells: Titan and Zidane
> Non-op wells: Knarr, Luno, Skarfjell,
Alta
> Nominated to “Explorer of the year” in
2011 (npf) and ‘’Gullkronen 2013’’ (Rystad)
Operator role
> Six exploration wells drilled since 2010
> Five discoveries
> One dry well
> Zidane development
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 5
NCS E&A efficiency by Company since 2007
Source:
Volume discovered vs. Net days (all E&A wells)
Norway
RWE Dea
Million boe
250
Impact of Alta well
for RWE Dea
> Since 2007, total of 7.6 bn boe
discovered from 21,900 E&A
drilling days.
> Average exploration efficiency is
0.35 mboe/day (0.28 excluding
Sverdrup) including companies
shown in chart below:
200
150
12
100
10
8
6
50
4
0
2
0
200
400
Net days
>
600
800
0
0
2000
4000
RWE Dea Norge Norwegian Operators Conference 2014
6000
PAGE 6
Note: Most recent wells included are Alta discovery, Vollgrav dry Source: NPD fact pages; WEPC Norway BD Book, research and analysis
PL420 Atlas - Operated
Licencees:
RWE Dea (O)
Statoil
Idemitsu
30%
40%
30%
PL420
Leiv Eiriksson Rig
Important area for RWE Dea
Atlas
> Well 35/9-12 S (Atlas) spudded
04.11.2014
> Leiv Eiriksson rig (Ocean Rig)
> The second of three slots in Leiv
Eiriksson Consortium
> AGR contributes with well
management team
> Well objective is to evaluate the
Hydrocarbon potential in the Upper
Jurassic section
Atlas well
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 7
Barents Sea
PL721 licencees:
RWE Dea (O)
Repsol
OMV
Wintershall
40%
20%
20%
20%
Highlights
> One of the Snøhvit owners
PL721, Snøhvit,
Alta
Dea Norge presence since 1980
> One of the largest equity holders
> Operatorship in 22nd round (PL721)
> Remigrated hc play
> 3D seismic work commitment
> Drill / drop decision by 2016
> NPD data Barents Sea South-East has
been acquired; working on the 23 Round
> 30% equity in PL609 and the recent
large Alta discovery
> Preliminary volumes
> 14 - 50 million Sm3 of oil
> 5-17 billion Sm3 of gas
> More drilling in 2015
PL721 (op)
Alta
Snøhvit
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 8
Profitable growth equals
sustainable growth…
Zidane Delay
> The Zidane PDO postponement
is in line with this perspective:
We must ensure a robust and
cost efficient project in order to
move forward
PAGE 9
PL435 Zidane - operated
PL435 Zidane/
Norwegian Sea
Licencees:
RWE Dea (O)
Maersk
Edison
OMV
40%
20%
20%
20%
First field development
project as operator in Norway
Zidane
Subsurface
> Two separate geological structures
drilled; Zidane 1 drilled in 2010, Zidane 2
in 2012, both dry gas discoveries
> Recoverable reserves estimated at
18 billion Sm3 gas
Development
> Subsea tie-back from four wells to
Heidrun - processing on host platform
> Zidane partners participate in Polarled
to secure gas export capacity
> PDO postponed, now planned for 2015
RWE Dea Norge Norwegian Operators Conference 2014
> First gas earliest 2019
PAGE 10
Is natural gas attractive for the
NCS oil industry?
The value of gas compared to oil has
dramatically weakened
$/bbl
p/th
Norway
Index
2000=100
> Gas prices have gradually
decoupled from oil since early
2000’s
> The gas price parity has been
at ~ 50% of oil the past 5 years
> The oil industry cost level has
followed the rise in oil prices
> Profitability of current and
future gas projects at risk
*SSB - table 07098: Producer price index for Oil- and Gas
production, mining and power
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 11
How to maximize both oil & gas
recovery from the NCS ?
Norway
> Tax regime since 1975 has been aiming to
tax “black oil” super-profit
> We have a profitability challenge for gas
on the NCS that may leave significant
volumes behind
> The lead-time for gas developments from
frontier areas is unacceptably long
> NCS gas infrastructure is lacking feed of
new volumes after 2020
> The gas market in Europe is less robust
than it used to be and is challenged by
influx of renewables
50% of the undiscovered resources is Gas
….and 50% of the undiscovered gas is in the Barents Sea
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 12
Norway
From IOR to IRR
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 13
Oil Price Predictions
2013
120
1980
2009
100
2011
1984
2004 $/bbl
80
2006
1986
60
1990
2004
40
1999
20
11098
0
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
RWE Dea Norge Norwegian Operators Conference 2014
2025
2030
PAGE 14
Success criteria
The main contributors to our success
Competent staff
> Excellent individuals
> Inspiring knowledge environment
> We “make each other good”
Dedicated long term owner
> Provided sufficient funds and gave us freedom
to act
Norway
Located in Oslo
> Temperature in personnel market not as high as
in Stavanger
> Close to decision makers
RWE Dea Norge Norwegian Operators Conference 2014
PAGE 15
Thank you for your attention!
RWE Dea Norge Norwegian Operators Conference
Norway
Back ups
RWE Dea Norge Norwegian Operators Conference 2014
Mind the gap
NCS Gas export level is dropping soon
Norway
BCM/Year
NCS Gas Export*
> Gas export may drop with 1/3 by 2023
140
> What will fill the gap?
120
?
100
80
> Are we able to sustain Norwegian gas
export without gas from the Barents
Sea
> What does history tell us about lead times for
new gas infrastructure developments?
60
> 7 – 10 years lead time for fields with
established oil production
40
> 10 – 15 years lead time for major gas
fields
20
> 15 – 20 years lead time when
harmonization and unitization is required
0
2004
2008
2012
2016
2020
NCS Gas Export
> Gas infrastructure decommissioning will soon
have to be on the agenda
> Reduced linefill means escalating unit costs
* Source: Wood Mackenzie - Gas export from developed fields
RWE Dea Norge Norwegian Operators Conference 2014
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