STATOIL s view on R&D directions

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1 STATOIL s view on R&D directions 1. Introduction 2. Background of Norwegian oil sector development 3. Statoils business challenges and technology needs 4. How to stimulate Technology development 5. The need for competence FORCE seminar, Stavanger, 8-9 April 2002

2 Introduction The petroleum industry is the most important business area in Norway 47% of Norway s export income It is an industry for the future 24 % of the reserves are produced Future challenges are: Environmental requirements More complex reservoirs Deeper waters and more sub sea wells Internationalisation Timing of IOR efforts Norway is a high cost petroleum area R&D investment in Norway is below international average 2002: 2,6 billion NOK (+ Government funding 165 mill NOK)

3 Experiences in developing Norway as an Oil nation Active government participation in Research and Development Goodwill-agreements Large research programs Unser directed Research SPUNG (Government program for utilizsation of natural gas) App. 200 MNOK from the state Multi phase research App. 500 MNOK in Research institutions (IFE, SINTEF) Government funds has released capital from the Industry and has resulted in significant value creation

4 Statoil has mastered increasing complexity Every Statoil project has required innovative solutions: Åsgard Statfjord/Gullfaks operations New technology Lufeng Statfjord satellites Troll Norne 1999 Sleipner A/ Sleipner West Statpipe Gullfaks SELF CONFIDENCE: Respect the task complexity -- belief in ability to master it Time

5 Use of technology in development projects Percent of projects Statoil P A C Y X B N O Industry 0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1 Substantial innovation Moderate innovation Conventional technology NCS complexity fosters innovation Source: UIBC 2000 (Independent Project Analysis)

6 Challenges are still ahead of us Cash flow from a typical E&P project Improved regularity and utilisation More rapid Production development Better product prices Increased recovery Extended taleend production Shorter decision phase Faster development Reduced Exploration costs Reduced OPEX Reduced tariffs Reduced CAPEX Income CAPEX OPEX Tariffs Exploration costs

7 Methods for increased recovery.. 4D seismic Reservoir Management Smart wells Water- and Gas Injection Recovery rate Objective Statfjord 49,4 % 61,4 % 65,6 % 68 % Gullfaks 46,5 % 49,4 % 54,5 % 62 %

8 .has given enormous value creation Statfjord field: A technology adventure Expected production Added Value" (2000 vs 1982) 1000 bbl per day bbl per day bill bbl additional oil

9 The need for reservoir understanding increases From 3D to 4C-seismic Seismic signals deteriorates through water Sea bed logging secures more types of waves Hydrophone X Y Z 4C seismic gives information about pressure - (P) shear-waves (S), and the result is more thorough reservoir information

10 New technology challenges Kristin-field: High Pressure and Temperature Haltenbanken Sør Complicated reservoir High Pressure bar High temperature o C Kristin

11 Technology drivers E&P Norway Snøhvit Snøhvit Remote Remote control control from from shore shore Long Long distance distance multiphase multiphase transport transport CO CO 2 reinjection 2 reinjection Subsea Subsea gas gas compression compression to to prolong prolong production production and and increase increase recovery. recovery. Barents Sea Snøhvit Development Development of of new new areas areas Low Low GOR/ GOR/ low low pressure pressure reservoirs reservoirs Deeper Deeper water water Smaller Smaller fields fields Remote Remote from from infrastructure infrastructure Stricter Stricter environmental environmental requirements requirements Halten/Nordland the growth area Tampen enhanced recovery Oslo Stavanger Troll/Sleipner gas production Statoil s core areas

12 Technology drivers E&P International Mexico Carbonates Shallow water HPHT and H2S Venezuela Reservoir mgmt/ EOR incl. N2 injection Extra heavy oil Offshore development Deep water Regional evaluation Western Europe Harsh environment Zero discharge Western Africa Deep water turbidite sands Regional evaluation Floating LNG Deep water LFP Brazil Deep water turbidite sands Regional evaluation Carbonates exploration LFP Deep water HSE application Caspian Regional evaluation Production from multi-layered thin formation zones Shallow water exploration and development NC, incl. ice Reduced drilling and well cost Seismic data quality. LFP Zero discharge Iran and Middle-East Carbonates EOR Regional evaluation Onshore- and shallow water GTL

13 R&D project portfolio 2002 Budget profile* Corporate strategic challenges Exploration Reservoir management Field development Total gas solutions Refining Op. and maint. Health, Safety and the Environment Academia, etc. * Excluding license funding

14 R&D project portfolio 2002 R&D Response to business needs Health, safety and environment 1. HSE management 2. HSE culture 3. HSE friendly technology Corporate strategic challenges 1. CO2 management 2. Hydrogen and renewable energy 3. New trends and opportunities 4. New ideas Exploration 1. Basinwide plays and petroleum systems 2. Deepwater turbidite sands as exploration targets 3. Generation of robust carbonate exploration models 4. Seismic data quality 5. Advance integrated lithology and fluid prediction (ILFP) 6. Visualization technology 7. Risk management 8. Corporate Data Store (CDS) Reservoir management 1. Reservoir imaging and monitoring 2. Advanced 3D reservoir description 3. Carbonate reservoirs 4. Realise and increase recovery 5. Required well and production technologies 6. More efficient drilling methods 7. HP/HT technology Field development 1. Tail-end production 2. Marine structures 3. Flow assurance 4. Subsea production system 5. New operating environments Total gas solutions 1. GTL technical development 2. New synthesis gas technology (OTM) 3. Next generation LNG plants 4. Deep water pipeline network 5. Gas processing 6. Gas transport and gas chain management 7. Methanol -- new markets 8. Gas to wire (GTW) Op. and maint. 1. Cost-effective production Refining 1. Oil/feedstock technology 2. Refining 3. Product

15 Reservoir management Business challenges 1. Maximise recovery from existing fields 2. Improve competence in carbonate areas Ambition level Priority area: Be overall strong R&D response 1. Improve reservoir imaging and monitoring to monitor dynamic processes taking place during production 2. Advance 3D reservoir description to optimise drainage strategy 3. Understand carbonate reservoirs to efficiently produce from this type of reservoirs 4. Realise and increase recovery by advancing recovery methods 5. Develop required well and production technologies to optimise drilling (through tubing), completion and production from wells in mature fields 6. Develop more efficient drilling methods to reduce cost and time of drilling 7. Develop HP/HT technology to design, construct and intervene high pressure, high temperature wells.

16 Mobilization of Technology and Knowledge Troll/Sleipner Tampen Halten/Nordland Frontier areas Western Europe The Caspian Venezula Western Africa Iran Brazil Mexico Russia NCS core/frontier INT core areas INT new areas Exploration Field Development Production (IOR) Collaboration with Academia, Research Institutions and Suppliers Good networks Effective sharing of Knowledge/Technology

17 Ways to acquire technology capabilities Learning by doing Learning from NOJV Cost-effective development and operation of SOL Use of suppliers R&D

18 Recruitment We need Competent newly graduated students Experts within special areas Profiling The Oil Industry not a sunset industry Summer project Cooperation agreements with universitites

19 The summer project Background Startet with 28 students from NTNU and HiT in students from 5 different universities participated in 2001 Objectives Contribute in developing international competitive education Secure a good collaboration between Statoil and universities Secure recruitment

20 University collaboration Field course at Svalbard

21 We need the best Competence