The Scottish Oil Club February 2006
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16 February 2006 Exploration in the Atlantic Margin The Scottish Oil Club February 2006 Graham Stewart Faroe Petroleum
Transcript of The Scottish Oil Club February 2006
16 February 2006
Exploration in the Atlantic Margin
The Scottish Oil ClubFebruary 2006
Graham StewartFaroe Petroleum
16 February 2006
Content
1. Why does Faroe Petroleum exist?2. Why explore in the Atlantic margin?3. Changing fortunes of the Atlantic margin4. What next for Faroe Petroleum
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Why does Faroe Petroleum Exist?
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-1992
• Atlantic margin explored for 20 years:– 100+ wells– No commercial discovery
• Focus was on structural plays
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-1992
1990 1992 1994 1996 1998 2000 2002 2004 2006
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1992-1993
• Faroes– Rights to resources in the
subsoil• Foinaven/Schiehallion
– Significant discoveries– Near “white zone”
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- 1994
Foinaven
Schiehallion
1990 1992 1994 1996 1998 2000 2002 2004 2006
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1994 - 1997
• Faroes– Data acquisition
commences• Focus
– Judd Basin– Foinaven play
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- 1997
Foinaven
Schiehallion
1990 1992 1994 1996 1998 2000 2002 2004 2006
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Foinaven Play
• Had worked nearby• Same geology expected• “similar” geophysical characteristics found• Restricted to one basin
Combined trap
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1998-1999
• White zone dispute between Faroes and UK resolved
• Oil price collapsed– Economics of prospects looking difficult
• Several oil company mergers/takeovers– Fewer companies competing for acreage– Restructuring within the oil industry
• Less focus on exploration
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Faroe Petroleum - StrategyEstablished in 1998 as Faroese oil company:
• focusing on exploration and appraisal projects – starting in Faroes
• building a high potential value portfolio inthe Atlantic margin and North Sea
• participating in a dynamic drilling programme with significant equity
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Strategic focus
Seismic Exploration Appraisal Development Production Secondary Recovery
- - - Capital Gain- - - Production growth
Primary focus
Secondary focus
Dec
reas
ing
Ris
k
Increasing Value
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Why explore in the Atlantic margin?
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Atlantic margin under-explored
• Over 2,400 E&A wells drilled on the UKCS to date
• Only 4 drilled in Faroes – 1 success
• UKCS matured in places – but not WoS
• Recent WoS discoveries may lead to new infrastructure • improving
economics of future discoveries
WoS region accounts for less than 10% of all E&A wells drilled on UKCS
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Summary…for the geologists• Faroe Shetland Basin
– Is a large geographic area (similar to UK Viking Graben, but less explored)– Contains more, large un-drilled structural traps than the North Sea– Younger tectonic events (Atlantic opening in the Tertiary)– However, basalt masks deep structures & historic data quality poorer
• Similar Tectonic history compared to North Sea, namely:– Palaeogene subsidence - accumulation of major submarine fan reservoirs and maturing the
Jurassic source rocks– Widespread deposition of Upper Cretaceous cap rock – Jurassic rifting and source rock deposition
• Same source rocks as North Sea: Kimmeridge Clay– Larger gas kitchen in Faroe Shetland (due to thicker Cretaceous-Tertiary overburden)– Additional mid Jurassic source rocks
• Reservoirs:– High performance Palaeocene reservoirs comparable with North Sea e.g. Foinaven,
Schiehallion– Widespread Lower Cretaceous reservoirs– Pre-Cretaceous reservoirs of lower quality than North Sea– Commercial production from Devono-Carboniferous (Clair) comparable to North Sea
(Buchan, Stirling)
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Significance of Atlantic margin
UKCS Average Field Discovery Size vs Atlantic margin discoveries (mmboe)
0
100
200
300
400
500
600
700
800
900
1965
1970
1975
1980
1985
1990
1995
2000
mm
boe
Brit
anni
a
Mill
er Alb
a
Nel
son
Foin
aven
Sch
ieha
llion
Loch
naga
r??
Atlantic Margin Fields/Discoveries
Cap
tain
Bitt
ern
Lagg
anC
ambo
??
Buz
zard
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What has Faroe Petroleum been up to?
• 1998: – Faroese company formed ahead of 1st Faroes Licensing Round
• 2000: – Faroes 1st Round: awarded 2 licences FP/Eni
• 2002: – established presence in UK – Aberdeen – to source people and capital
• 2003: – AIM flotation– drilled first Faroese well (Licence 002) – shows only
• 2004: – UK 22nd Round: awarded 6 licences, 2 operated, 10% to 100% equity
• 2005: – acquired North Halibut Licence in Outer Moray Firth from Shell and Esso– awarded 2 licences 10% to 100% equity in Faroes 2nd Round– awarded 3 new (promote) licences in Moray Firth all as operator in UK 23rd Round– acquired Eni’s 75% stake and operatorship of Licence 002 in Faroes
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Atlantic margin position
Gross Exploration Acreage in the North Atlantic Margin - by Company
0
2000
4000
6000
8000
10000
12000
14000
Don
g
Stat
oil
Che
vron FP
Shel
l
OM
V
Dan
a
GdF
Apac
he
Anad
arko BP
Talis
man AP EN
I
Hur
rican
e
Suns
hine
Tota
l
Gey
sir
Mae
rsk
Hes
s
XoM BG
PCan
ada
CoP
Km2
WoS Faroes
Source: Faroe Petroleum
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Cross section
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Overview of current portfolio
15 licences 5 in Faroes
2 operated by FP, 2 Statoil & 1 Eni equity stakes - between 10% and 100%
6 in UK West of Shetlands2 operated by FP (100%) in shallow water each a discovery, adjacent to Clair oil field2 operated by Chevron, 1 by Shell and 1 by OMV -10% to 25% equity
4 in UK North Sea – new playshallow water in prolific area4 operated by FP
All with significant potentialshallow and deep watervariety of discrete play types6 seismic surveys completed in 2005
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Meanwhile, back at the ranch…
…changing fortunes of the Atlantic margin…
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1999
Foinaven
Schiehallion
US$15
1990 1992 1994 1996 1998 2000 2002 2004 2006
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2000
• 1st FaroesLicensing Round– 7 licences (4 + 3)– 8 well
commitments
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2000
Foinaven
Schiehallion
US$15
1st Faroes Licensing Round
1990 1992 1994 1996 1998 2000 2002 2004 2006
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2001
• 3 wells drilled in Judd Basin– Traces– Small accumulation– 170m HC column (Marjun)
• Results positive for first wells• BUT…far from what was expected
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2001
Foinaven
Schiehallion
US$15
1st Faroes Licensing Round
Marjun
2 dry holes –BP& Statoil
1990 1992 1994 1996 1998 2000 2002 2004 2006
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What went wrong?
• Geology was not as expected– Lack of seal
• Geophysical characteristics– Lithology (not hydrocarbons)
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Nick Loizou (1995 – 2002)
• Structural Traps– 38% of drilled wells– 60% success rate
• Stratigraphic traps– 50% of drilled wells– 0% success rate
• Combined traps– 12% of drilled wells– 25% success rate
• AVO– 81% lithology– 19% hydrocarbons
Stratigraphic trap Combined trap
Structural trap
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2002-2003
• Marimas– Traces
• Cambo– “discovery”
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- 2003
Foinaven
Schiehallion
US$15
1st Faroes Licensing Round
Marjun
Cambo
2 dry holes –BP& Statoil
1990 1992 1994 1996 1998 2000 2002 2004 2006
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2004
• 2nd Faroes Licensing Round– 7 licences– No well commitments
• Rosebank/Lochnagar– Stacked discovery
• Cambo “appraisal”• Laggan (gas) – test• Clair comes on stream
– (discovered in 1977!)
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- 2005
Foinaven
Schiehallion
US$15
1st Faroes Licensing Round
Marjun
Cambo
Rosebank/Lochnagar2nd Faroes round
US$50
2 dry holes –BP& Statoil
1990 1992 1994 1996 1998 2000 2002 2004 2006
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2006 and beyond
Foinaven
Schiehallion
US$15
1st Faroes Licensing Round
Marjun
Cambo
Rosebank/Lochnagar2nd Faroes round
US$50 ?2 dry holes –BP& Statoil
7-8 wells in 2006
1990 1992 1994 1996 1998 2000 2002 2004 2006
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What next for Faroe Petroleum?
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Projected Forward Drilling Schedule
13121110987654321 ExplorationExploration
committed expected
1514
AppraisalAppraisal
2006 2007 2008
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Evolution of Faroe Petroleum
• 1998-2000 started in Faroes– now 5 licences - 2 operated
• 2003 expanded into UK WoS– 6 licences – 2 operated
• 2005 expanded into UK North Sea – 4 licences – all operated
• 2006 expanding into Norway– ??licences??
• Atlantic margin a continuing theme
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Faroe Petroleum’s Focus Today
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Now for some snaps
…of the Faroes…
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16 February 2006
Thank you
