2 - Field Development Plan

1 1 Field Development PlanJan BygdevollDiscipline leader Reservoir Engineering Norwegian Petroleum DirectorateManila 7. February 2006 Jan-062 ObjectiveswResource management aimswAuthority's functionwAuthority s toolwDevelopment plan wwhy?wauthority focus and roleswcontent wapproval proceduresJan-063 Resource Management AimswThe petroleum resources must be managed such as to provide the best possible economic outcome for the petroleum resources must be managed within the context of an environmental sustainable oil and gas industry should be developed in a way that makes due consideration to the viable Development of other sectors of the administration body wAuthorities FunctionswManage the resources to the best of the peoplewEstablish regulations to guide the activity towards the national goalwMonitor/Supervise that the companies comply with

2 RegulationswGive advice to the politicians (President/Parliament)wKeep administrative records of obligations and rightswManage the informationJan-065 Society vscompany interestwIncrease oil recoverywSmall/marginal fieldswJoint developmentswNational budgetwAbandonmentwLife cycle analyseswEnvironmental issueswField Development plan , area studieswTransport capacity and tariffs (third party access)Jan-066 Management toolswLicensing roundswApproval of plan for Development and Operation of a petroleum deposit (PDO) wApproval of plan for Installation and Operation of facilities for transport and utilisation of petroleum (PIO)wProduction permits (Export of gas from a Field requires a government approval)wRegulation of the gas transport systemJan-067 ObjectiveswResource management aimswAuthority's functionwAuthority s toolwDevelopment plan wwhy?

3 Wauthority focus and roleswcontent wapproval proceduresJan-068 What is a PDO?PDO= plan for Development and Operation(Hydrocarbon deposit)PIO= plan for Installation and Operation(Pipeline/infrastructure)Jan-06 9 Why PDO?wEnsure maximized added value for society at largewEnsure a qualitative good government approval processwEnsure efficient evaluation of Development planJan-0610 The information received in a PDOwThe authority is able strategic planningwcontrol big international oil companieswchallenge the oil companies (resource management & safety)wincrease the government take by assisting oil companies to operate more efficientlyJan-0611 Petroleum PolicywGood estimates for resources, costs, production and prices give a solid basis for decisions in all phases of the Petroleum Activity.

4 WExplorationwPlanning for optimal use of infrastructurewDevelopmentwProductionwAb andonmentJan-0612 What is a PDO?In Norway:TimeOperator creates a PDO NPDA nalysisRecommendTermsMPER ecommendTermsParliamentGives permissionJan-0613 Authorities PDO processwImpact assessment (when required)wReceived by the Ministry 2-3 months before submission of the PDOwConsultation process with all relevant authorities, institutionsand groupswPDOwReceived by the Ministry of Petroleum and Energy (MPE)wConsultation withNorwegian Petroleum DirectorateMinistry of Labour and Government Administration/Petroleum Safety AuthoritywMPE drafts white paperwConsultation with relevant ministrieswProposition submitted for approvalwApproval by the Parliament or by the King in Council (Government)Jan-0614 Development PlanningNPD interaction prior to PDOwObjectives:wTo ensure that the authorities considerations are smoothly included in the Field Development during the early planning phasewObtain an efficient approval processwMeasures.

5 WPerform Area-study (study the effect of the new Field Development in a broader geographic perspective)wGather information by participation in licence committee meetingswHave an early dialogue with operatorwMake in-house evaluations and investigate alternative solutions/interpretationswMore meetings with operator to influence decisions or clarify questionsJan-0615 Requirement to Submit a PDOwA PDO is a description of all important aspects of the developmentwA PDO shall be submitted to the Ministry for approval when a license decides to develop a petroleum deposit ( Field ) wThe Ministry may require an account of the impact on the environment or other affected activities (Impact Assessment)wSubstantial contractual obligations must not be undertaken, nor construction work started, until the PDO has been approved, unless by consent from the MinistrywOn application from the licensee the Ministry may waive the requirement to submit a PDOJan-0616 PDO - Content1.

6 Geological evaluation2. Reservoir evaluation3. Drilling and completion4. Field installations5. Costs and schedule6. Health, safety and environment7. Organisation and execution8. Economic evaluation9. Removal10. Area considerations$ $ $Jan-06178. Economic evaluationAssumptions:Real-term economics analysis:Reservoir/profileBefore taxCapexDiscount factorOpexNPV(/IRR)ScheduleBreak-even oilpricesTariffsSensitivitiesPricesAfter taxExchange ratesFinancingPDO Economic analysisJan-0618 PDO Economic analysiswGeneral economic assumptions and evaluation methodwPrice developmentwCurrency developmentwRate of returnwTariff/income/expenseswResultswPr e taxwPost taxwEconomic uncertainty evaluationsJan-0619 PDO - Economic PolicywGood estimates for resources, costs, production and prices give a solid foundation for.

7 * Economic Policy* A sustainable long term finance-policy* Planning monetary policy issueswHigh quality forecasting is neededJan-0620 What is a PDO?In Norway:TimeOperator creates a PDO NPDA nalysisRecommendTermsMPER ecommendTermsParliamentGives permissionJan-0621wEnsure that the plans are consistent and with conclusions that are thoroughly evaluated and documentedwEnsure that all important aspects of the Development are included in the plan , according to acts and regulationswFocus on areas where there is a difference between what is optimal for the society and what is optimal for the licenseeswMake recommendations and provide the best possible basis for decision for Ministry and Parliament/GovernmentwPresent conclusions to the MinistryApproval of PDONPD s roleJan-0622 NPD interaction after PDO approvalwFollow-up of conditions in the PDO approvalwFollow-up that safety and working environment are in line with regulationswReport discrepancies to the MinistrywInformationwlicensee meetings wAd hoc meetings on project statusJan-0623 Field Development

8 PlanwDifferences between a company s interest and a society s interestwA Field Development plan is used to achieve the society s interestwThe authority has to do their own evaluation of the areawGood estimates in a Field Development plan give a solid foundation for decision in all phases of the petroleum activitySum u