Drilling and Development Activities

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Nov 8, 2013 (3 years and 7 months ago)

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Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
1
INTERIM RESULTS -06
Drilling and Development Activities
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
2
Frontier basin in an energy deficient region
Dominant position in the basin•
Uganda Block 2 –operated

Uganda Block 1 & 3 –non-operated

DRC Block I & II –awaiting decree
Remote frontier basin•
Billion barrel potential

Deep & shallow targets

Onshore & offshore drilling
Local power and product needs•
All hydrocarbon products imported

Established power & product market

No local refinery

Potential to further develop regional market
Two stage development•
EPS to serve local requirements

Potential export project of >150,000 bpd

All practical export options via Kenya
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
3
Kaiso-Tonya –strategic beachhead location

Good road and air access

Close to existing road
infrastructure

Relatively flat

Remote from villages/people

Secure

Good drainage

Common access point for Ugandan
and DRC operations
~39km
~11km
Kaiso-Tonya beachhead is a
unique location in Block 2
to service all exploration,
development and production
activities
Kaiso-Tonya beachhead is a
unique location in Block 2
to service all exploration,
development and production
activities
Escarpment
Kaiso-Tonya
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
4
INTERIM RESULTS -06
Drilling activities
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
5
Supporting exploration -onshore drilling Challenges

Rig mobilisation to site

Drilling depth limitations

Mobilisation times between wells

Cost effective campaigns
Strategy •
Initially targeted shallow horizons with
relatively cheap unsophisticated rigs

Rig specification upgraded following success

Requirements change through phases of
exploration, appraisal and development
Initial Campaign

Eagledrill–shallow slimholetargets

Dafora–deeper targets, slow mob/demob
Current Requirement•
Nabors –access to deep targets

Light rig –small & mobile to drill multiple wells

Rigs for next phase being considered
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
6
Supporting exploration -offshore drilling Challenges

Lake bed soil conditions unknown

Limited metoceandata

Remote location –limited in-country
engineering support

Rig mobilisation and launch in lake
Offshore rig requirements •
60m maximum water depth

Barge or jack-up options acceptable

Drilling capability 3,600m vertical wells
Current status •
Technical bids received

Tender process ongoing

Commercial bids due end October
Drilling plans •
Spud first well offshore Q4 2008
Modular Jack-up
Modular Floater
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
7
INTERIM RESULTS -06
Early Production System
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
8
Early production system –project phasing

EPS rationale and benefits

Regional demand -products and power

Field characteristics -subsurface & crude

Project phasing

Facilities configuration, location & design

Commercialisation approach and product/power sales
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
9
Rationale for early production system
MOU with government •
Target to deliver first oil in 2009

Power generation dependant on
transmission
EPS viewed as “facilitator”•
Development while inventorisingbasin

Early product and power delivery

Revenue for Tullow and Government

Data acquisition
Stages of EPS progressed so far•
Appraisal programme

Subsurface understanding

Facilities requirement

Commercial structure
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
10
Regional demand -domestic oil products
Current product sources

Mombasa refinery

Imports via Mombasa
Product distribution

White oil -pipeline, rail and road.

Black oil -road only

Significant infrastructure constraints

Frequent shortages
Mombasa refinery

Ageing equipment

Investment required to meet auto fuel spec
Competitive domestic market

No Government price control

Pricing at premium to international pricing

25+ licensed operators

Competition encouraged
Current Infrastructure

Pipeline Operator 100% owned by Kenya

2008 expansion funded by Tamoil
COMPANY
Govt. of Kenya
50
Shell/BP
13
20
45
Kobil/ Kenoil21
7
Total17
15
Chevron
11
14
14
Tamoil**
13
11
Market total
87
82
81
Uganda
Market
Share (%)
Kenya
Market
Share (%)
Mombassa
Refinery
Share (%)
-
-
-
--
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
11
Local demand -power generation
Uganda’s current power emergency•
Growth constrained by demand

Delay of Bujagali200MW hydro (currently 2011)

Regional drought affected existing hydro
Interim solution

150MW leased generation, fired on imported diesel oil, costing circa 24c/kwhr

Government tariff supporting circa 13c/kwhr
Long term Solution

Existing hydro plus Bujagali

Installation of permanent IPP thermal projects (~100MW)

Incentives to ensure on time delivery by developers

Keep generation supply ahead of demand growth

East African Masterplanfor long term development of transmission to allow power
support across borders
Where does the EPS fit?•
50MW of planned 100MW thermal

Generation from indigenous oil, balance of payments

Transmission project provides eastern ring of planned infrastructre
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
12
Field characteristics –subsurface analysis progressing
Complex reservoir geometry •
Multiple zones

Discontinuous stacked sands

Intra field faulting
Reservoir data compilation underway •
Core analysis

PVT properties

Test data integration
Reservoir modelling ongoing •
3D seismic interpretation is key

Appraisal well data being integrated

Petrel model will be constructed

3D simulation and network model required to
define deliverability
Nzizi
Mputa
Nzizi
Mputa
Pre-appraisal model
Possible alternative model
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
13
Field characteristics -sweet but waxy crude
PVT data collection •
Samples taken from all wells

Recent samples still undergoing PVT
analysis
Crude properties

Lightsweet crude with high wax content

High Pour Point will require heated
transportation

Yields heavily weighted to vacuum gasoil

Low yields of light products
Medium
~300 scf/stb
GOR
Heavily weighted to vacuum gasoil
Low yields of light products
Yield
Very high
+39 deg C
Pour Point
Medium
33-37 deg API
Gravity
Very low
0.09 wt%
Sulphur
Comment
Result
Quality
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
14
Early production system –project phasing
Project Phased•
Meet 2009 first oil target

Provide time for

Transmission line design and construction

Secure power purchase agreement
Phase 1 –oil sales 2009•
Sanction late 2007

Facility designed for 4,000bopd capacity

Oil production initially limited to ~2,000bopd

Products evacuated by road tanker
Phase 2 -power sales 2010•
Sanction 1H 2008

~50MW of local power generation

Transmission line upgraded

Uninterruptible PPA
Phase 3 –potential facilities upgrade•
Need to develop non-spec HFO market

Reservoir delivery potential to be assessed
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
15
Early production system –facilities configuration
Topping unit
4000 bbls/day
Trucks
Transport HFO, naptha, diesel and
kerosene (260 km black top road) to
Kampala
Hoima
Hoima
E
sc
a
r
p
m
e
n
t
Product split
•1800 bbl/day waxy HFO for power
•1380 bbl/day waxy HFO for market
•180 bbl/day naptha
•500 bbls/day diesel
•120 bbls/day kerosene
•Electricity supply into grid at Nkenda
Equipment
•Topping plant, separators, tanks, loading facilities
•Trucks (heated)
•6”flowlines(buried and/or heated)
•Downholepump completion, tree, gensets, controls
•Power station
•132kV electric overhead line –175km
Power station 50 MW HFO Gensets(8 MW)
Early
Production
System
132kV
270km
transmission line
(via Hoimato Nkenda)
Mputa
1 pad
Mputa
1 pad
Mputa
3&4 pads
Mputa
3&4 pads
Nzizi
2
pads
Nzizi
2
pads
Road
Flowline
Electric line
Option of heated line
KAMPALA
KAMPALA
Production wells
completed with:
sliding sleeves, gravelpacks,
downholepumps
Nkenda
Nkenda
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
16
Early production system –site location
Technical Considerations

High reliability and product quality

Management of waxy product
Safety Considerations •
Road upgrade for trucking operations

Plant safety to international standards
Environmental considerations

Several site options screened

Gas effluent emissions to international
standards

Zero liquid effluent discharge with
managed storm water disposal

Minimised plant footprint

Buried flowlines
Mputa 2
Inject D
Inject C
Inject G
Inject A
Inject B
Prod 2
Prod 3
Prod 6
Mputa 1
Mputa 3
Mputa 4
PR
O
P
O
S
E
D
J
ET
T
Y
S
E
B
A
G
O
R
O
A
I
R
ST
R
I
P
CPF
Prod 1
Water Supply Line From Lake Albert
Well Production Line
Water Injection Line
High Traffic Route (Existing Road)
High Traffic Route (New Road)
Central Processing Facility
CPF
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
17
= Metering
Prod wells
Water inj
wells
Diesel
Kerosene
prod water
GAS
OIL
HFO
Topping
Unit
Power
Export
Plant
Power
Water Trt
Lake
Water
Naphtha
Fuel Gas
to users
Flowline (c. 1-2km)
Water Trt
Crude
Fuel Gas
Sub-Station
11kv-132kV
Emerg + Black
Start Gens
UPSTREAM
CRUDE PROCESSING
PLANT
POWER PLANT
Road Tanker
loading
Inst Air
Fire Water
Drains
Flare
Pot Water
Chem Inj
Steam
Diesel
Laboratory
Sewage Trt
Heating
UTILITIES
Camp
Early production system –design concept
Road Tanker
loading
Road Tanker
loading
Road Tanker
loading
Power
Generation
Plant
GAS
Separation/
Coalescing
HFO
M
M
M
M
M
M
M
M
M
M
M
M
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
18
Commercialisation -commercial concept
Upstream JV
Upstream JV
Tullow Crude
Processing
Tullow Crude
Processing
Tullow Power
Tullow Power
UETCL
UETCL
Oil Resellers
Oil Resellers
Production Sharing
Agreement
Crude Supply
Agreement
HFO Supply
Agreement
Power Purchase
Agreement
Oil Product Sales
Agreements (many)
Transmission Line
Agreement

Mirrors physical systems

Simplifies commercial agreements

Arms length pricing
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
19
Commercialisation –product delivery and sales

Topping plant production

79.5% HFO

12.5% Diesel

3.0% Kerosene

4.5% Naptha

0.5% Gas

Diesel and Kerosene volumes will be
readily consumed in the market

Naphtha volumes could be blended to
HFO or sold separately if higher value

HFO volumes exceed current market

Will be absorbed by planned generation

All EPS production likely to be
absorbed within Uganda

Facility expansion will require HFO
market to be developed
20
Refinery Fuel
4,000
Total
1,800HFO for Power
2,180
Marketed products
Production (bbls/d)
EPS Production
13,649
2,180
Total
1000LPG
739
120
Kerosene
6591,380HFO
7,189
500
Diesel
n/a180Naphtha
1,550
0
Aviation
3,4120Petrol
2006 Market
EPS
Product
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
20
Commercialisation–power generation and sales
Power Generation•
50MW base case (85MW under review)

Output sold to state transmission
company -UETCL

Supports Government plan to balance
hydro and thermal generation
Transmission Line•
275 km 132kV line required

Tullow supporting design and
implementation

Government obligations

securing route

EIA approvals

Resettlement and compensation plan
Power Purchase Agreement•
Power purchase agreement to provide
for cost recovery mechanism

HFO fuel price linked to international
prices

Minimum dispatch guarantee critical for
EPS production

Competitive marginal cost versus
imported fuel
EPS Transmission Expansion •Mputato Nkenda
•270 km, single line
•Capacity 100MW
•Target Date 2009
Southern Transmission Expansion•Nkendato Mbarara
•SWECO study completed
•Finance process initiated
•In service date Q1 2011
Existing Nkenda–Mutundwe
32kV line
•Old line
•Wood pole construction
Future 220kV line
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
21
Early production system -Summary
EPS is challenging

Technical -subsurface, physical systems, transport of oil, schedule
BUT the EPS enables us to…

Start development while inventorisingthe Basin volumes

Gain experience of commercial agreements in Uganda

Improve our understanding of the subsurface and production behaviour

Gain experience in oil transportation

Realise early production and power

Generate early revenue for Uganda and Tullow
In addition to delivering the EPS we remain focused on the big oil
export development opportunities
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
22
INTERIM RESULTS -06
Large Scale Export Development
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
23
Export project development –general concept

Threshold for major export ~ 300 mmbbls

Project will involve a 1,300km pipeline to Mombasa

Regional power and refining requirements need to be considered

Upstream development is likely to require onshore and offshore
wells in Blocks 1,2 and 3A

Block 2 is natural gathering point for export from Lake Albert

Lake development drilling feasibility study and high level
development planning underway

Stabilisedcrude will be gathered into common export pipeline
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
24
Concept for export option
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
25
Export project development -challenges

Remote land-locked location

Field Development Maturity

too early to predict what the development spread will look like

Potential for numerous separate reservoirs & fields

Infrastructure

fabrication, construction and operations

Manpower and materials for process plant construction

Pipeline

rights of way/trenching/coating/insulation/heating

terrain –rivers, swamps, canyons, mountains, towns

0wnership, international routes and tariffingarrangements

Efficient management of PSC and non-PSC costs

Environment –flora and fauna, wildlife, pollution

Politics –in-country and regional

Security –both for facilities and pipelines
Slide
Tullow Oil plc –Uganda Analyst Visit –October 2007
26
Export project development –Summary

Development feasibility established and initial concepts prepared

Main technical and environmental challenges identified

Engineering studies ongoing

Onshore/Offshore development challenges and solutions

Export route options

Refinery options

Costs & Schedule

Significant learningsto be taken from EPS development

Outline schedule and costs prepared

Q4 2008 -start lake offshore drilling

2009/10 -project sanction under “all success”case

2014/15 -earliest first oil