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Challenges for offshore development in Colombia V Colombia Investment Conference October 2012

Challenges for offshore development in Colombia V Colombia Investment Conference October 2012. Álvaro Racero Baena Caribbean Regional Executive Director . Worldwide Offshore activity Repsol offshore activity Offshore Colombia Challenges Summary. Growth in offshore projects: .

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Challenges for offshore development in Colombia V Colombia Investment Conference October 2012

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  1. Challenges for offshore development in ColombiaV Colombia Investment ConferenceOctober 2012 Álvaro RaceroBaena Caribbean Regional Executive Director

  2. Worldwide Offshore activity • Repsol offshore activity • Offshore Colombia Challenges • Summary

  3. Growth in offshore projects: Onshore and Offshore Projects Production Start Dates Source: IHS CERA, Capital Costs Analysis Forum–Upstream Houston, May 2012

  4. Worldwide offshore production • Deepwater continues to be an important oil supply in the world (not only in US) and will continue to increase in the future. • The contribution from deepwater fields rises from around 5.4 Mbdin 2011 to 11.2 Mbdin 2035. Source: IHS CERA * Deepwater >1000 <5000 feet; Ultradeep Water: >5000 feet.

  5. Rigs Availability Major offshore drilling basins (rig supply/utilization) • Source:ODS-Petrodata, Morgan Stanley Research, October 2012

  6. Repsol: Offshore presence around the world Offshore activity in 20 countries (operator in 14) Norway Canada Ireland * Bulgaria Spain Portugal USA Venezuela Tunusia Morocco Trinidad and Tobago Cuba Guyana Sierra Leone Colombia Liberia Indonesia Angola  Australia Brazil * Namibia Acreage @ September, 30th 2012 Deepwater OPERATOR and jointventure Exploration Productión NON OPERATOR  Services Contract in production operations *Pending of officialratification

  7. Repsol: Offshore Exploratory and Appraisal Wells 2008-2012: 52 Offshore exploratory (Operator & joint venture in 22) 32 deepwater (Operator & joint venture in 10) Deepwater non operated (dw) Deepwateroperated & joint venture & (dw)

  8. Repsol: Deepwater Operated Exploratory Wells

  9. Repsol: acreage in Colombia • Repsol has 10 blocks in Colombia, 3 in the offshore (Tayrona, RC-11 and RC-12)

  10. Proyecto Cardón IV Ubicación y Concepto de Desarrollo – Fase 300 Estructuraliviana Perla 2ST1 Estructura liviana Perla 3 14 Tubería del Pozo 14” Tubería del Pozo Plataforma de Interconexión Perla 1x 30” Tubería de Exportación Multifasica • El Campo Perla está localizado aproximadamente 50Km al oeste de la Península de Paraguana (Golfo de Venezuela) en lo que se denomina el Bloque Cardón IV West. • Validez de la licencia es de 30 años desde el 2 de Febrero de 2006 • PDVSA tiene el derecho de entrar en la asociación hasta con el 35%, hasta 120 días después de declaración de comercialidad • Gas Original en Sitio = 17 TCF/ Reservas = 8.1 TCF • GSA firmado el 23-12-2011 • Declaración de comercialidad publicada el 15-08-2012 • Plan de desarrollo aprobado el 20-08-2012 Perla 5 Perla-4X Perla 2ST1 Refineria Amuay Perla-5 Refineria Cardon Perla-1X Perla-5 Perla-3X Cardon IV East Block Cardon IV West Block Perla 4x Perla 1X Perla 3x Perla-2ST1 5 Pozos Perforados : 4 verticales y 1 sub-horizontal.

  11. Challenges for offshore Colombia • HSE AND ENVIRONMENTAL IMPACT CONTRACTS & CONTRACTING STRATEGY EQUIPMENT, AVAILAVILITY AND LEAD TIME LEGAL FRAMEWORK (STABLE, ADECUATE) QUALIFIED STAFF INTEGRATED DYNAMIC TEAMS PROJECT COSTS & COST CONTROLS INFRASTRUCTURE & MARKETS INTEGRATION EFFICIENT APPLICATION OF TECHNOLOGY REMOTENNES AND LOGISTICS GAS PRICES

  12. IHS CERA Upstream Capital Cost Index Indexincludes: • Steel • Land Rigs • Offshore Rigs • Engineering and Prof. Management • Equipment • Construction labour • Yards Fabrication • Sub-sea • Bulk materials • Offshore installation vessels

  13. Cost inflation 2002 Fiat Punto 2007 BMW 320 2012 AUDI A6 $12,000 = 2003 Valve (super duplex SS) 2007 $40,000 = 2012 $48,000=

  14. Mitigating the Risk of project execution though a consistent and proved methodology • Assuring the appropriate human and technical resources • Developing time and cost effective projects that consistently provide added value to the business • Predicting project costs and schedule in a reliable way • Manage opportunities and project risks during all phases of the project lifecycle. • Improve communications establishing a common language

  15. Comparación del precio del Gas en diferentes mercados (USD/MMBTU)

  16. Offshore Guajira wells Statistics by spud year, WD, TD Araza-1 ~ 20 years no wells Spud year ~ all the well in shallow water Variable TD Water Depth

  17. Kaleidoscope • An integrated project to improve the subsurface imaging through seismic processing • Leaded by the Repsol subsurface team in Houston

  18. Kaleidoscope • Applying state-of-the-art algorithms to resolve complex geological geometries • Either in sub-salt environment or in complex thrust belts

  19. Technical maturity Designation Call for the Geopressure team Data preparation Team meeting Budget approval Study completion Study approval PDDP Geopressureanalysisprocess Input: Delivered study (ies). Output: Updated Geopressure model, shallow hazards and geomechanic results, gathered and completed in the PDDP. Participants: Project manager, manager of Operaciones Geológicas, Drilling Manager, Geopressure Team. Description: The Team coordinator and the Drilling Manager validate and approve the study and its conclusions with the support of the recommendations of the Team specialists. The Project manager enters the conclusions and recommendations of the study in the PDDP.

  20. Biodiversity, a must to preserve • 7 areas of coral-reefs • 9 bird sanctuaries including the protected Nariva Swamp • Several turtle nesting beaches • Cost line geomorphologically complex with 8 zones particularly sensible to oil spills • 6 zones of artisan fishing • 9 types of sediments, with 4 types of benthonic communities

  21. Summary Improve quality of subsurface image and capabilities in Seismic Processing. Improves well prediction. (Kaleidoscope/Phoenix Project) Multidisciplinary geopressure group to improve on the well prognosis for areas with limited well data available Operational Deep-Water capabilities with an offshore drilling group in Houston which give support, supervise and design all offshore drilling operations. IPM and adequate contracting strategies to minimize risks of cost overruns Repsol’s regulatory and drilling groups have been actively engaged with all of the industry initiatives related to the new and evolving regulations in the GOM. Along with 23 other operators in the GOM, Repsol has elected to join the Helix Well Containment Group (HWCG), one of the two groups approved by BOEMRE, to find solutions for spill containment.

  22. Thanks

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