ExxonMobil Subsea Projects W. Africa Development Challenges

Subsea UK

June 1, 2006

Dave C. Lucas

2

Presentation Outline

• ExxonMobil Subsea History & Trends

• ExxonMobil West Africa Project Highlights/Outlook

– Angola

– Nigeria

• Subsea Systems

– Building Blocks

– Future Opportunities

• Subsea Equipment Challenges

– Operability & integrity – reliability through life cycle

– Management of the basics

• West Africa Execution Challenges

– Local content

3

ExxonMobil Offshore Technology - A Long Term Commitment

ExxonMobil’sfirst TLP

1992

Industry’s deepestwater depth DDCV

ExxonMobil’s first FPSO

1960s - 1990s

Industry’s first diverless subsea

template

19761983

Industry’s first compliant tower

ExxonMobil’sfirst major GBS

1975

1980

1940s - 1970s

Platform design and wave force calibration

2000

Industry recorddeepwater drilling

Industry’s first iceberg resistant GBS 1997

• Track record for offshore innovation • Focus on fundamentals to ensure

integrity and cost effectiveness• Ability to apply research and add value to

deepwater developments

Industry’s largest FPSO’sKizomba A & B

(2004-2006)

4

ExxonMobil’s Move to Deeper Water

HondoCA

850 ft

HondoCA

850 ft HarmonyCA

1200 ft

HarmonyCA

1200 ft

LenaGOM

1000 ft

LenaGOM

1000 ft

Zinc-SSGOM

1480 ft

Zinc-SSGOM

1480 ft

WestDelta-GOM168 ft

WestDelta-GOM168 ft

GrandIsle-GOM50 ft

GrandIsle-GOM50 ft

Hoover/Diana-GOM

4800 ft

Mica-GOM4350 ft

SS

‘47 ‘62 ‘76 ‘83 ‘89 ‘93 ‘00 ‘03 ‘04 ‘05 ‘08‘01

AngolaKizomba-B

3600 ftFPSO/TLP

AngolaKizomba-C

2400 ftFPSO/SS

FPSO TLP

Marshall Madison-GOM 4850 ftMarshall Madison-GOM 4850 ft

AngolaXikomba4450 ft

EPS-FPSO/SS

AngolaKizomba-A

3900 ftFPSO/TLP

‘06

NigeriaErha

3600 ftFPSO/SS

5

ExxonMobil Subsea Business Trends

• Subsea portfolio is expected to double within the next 5 years – primarily driven by developments in West Africa

• Increasing contribution from subsea volumes, primarily deepwater

• Field locations remote from infrastructure, operating requirements more demanding

• High rate wells, significant volumes increasing need for reliability focus

World-wide portfolio of subsea projects

Production by Resource Type

0%

20%

40%

60%

80%

100%

1996 2004 2010FCST

KO

EB

D Deepwater

Other

Conventional

6

Integrated Subsea Systems

• Utilize available designs, ensure compatible interfaces

• Migrate toward standard components:

– minimize project specific engineering

– improve reliability– enable prestocking of long lead

components– program focus, provide

schedule and execution flexibility

– minimise project management• Integrate installation activities to

capitalize on vessel synergies

• Use flexible installation methods to enable optimum use of drilling rigs

7

High Impact New Technology Opportunities

• Multiphase flowmeters to replace test lines

• Drill-thru trees

• Batch setting execution opportunities

• Alternate flowline & well jumper connection systems

• Single flowline tiebacks – require new hydrate management strategies

• More effective insulation materials

• Steel Catenary Risers from turret moored vessels

• Subsea processing concepts (multiphase pumps, separation, seawater injection)

Drill-Through Tree

8

Subsea Challenges – Real Life Examples

CO2 Corrosion in PipelinesHose Failure on Hydraulic Flying Lead

Control Module – Electronics FailuresSmooth-Bore Flexible Riser Failure

9

Subsea Challenges – Operability and Integrity

• Operability and integrity impact opex and downtime

• Flow assurance challenges

• Integrity of subsea and pipeline systems

• Subsea valve integrity

• Control system integrity

• Aging equipment

Subsea Production Choke Failure

Control Fluid Leak from Subsea Umbilical Termination Assembly

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Challenge – Ensure reliability through entire field life cycle

Need to flatten out the traditional reliability “bathtub curve”

Commissioning and start-up

(infant mortality)

Production build-up

through to early decline

OP

EX

Mid to late life

Abandonment

The ChallengeThe Challenge

Control System

37%

Umbilicals & Distribution

33%

Hardware 22%

Other8%

Subsea Equipment Failures

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Improved Reliability - Management of The Basics

• Critical elements for achieving reliable system performance:

– Standardization of designs – quit tinkering

– Thorough qualification of equipment to actual service conditions, including installation and full life cycle operation

– Management of design changes

– QA/QC during manufacture, especially materials and welding

– Active management of supply chain i.e. sub-suppliers

– Application of appropriate company standards, particularly where industry standards are inadequate or do not exist

12

West Africa – Current Local Content Scope

• Subsea local content scope includes fabrication and assembly of parts typically made elsewhere – manifolds, piles, FLET’s, jumpers, umbilicals, pipeline welding & coating and insulation

• In country ongoing support includes – logistics bases, receival & integration testing, catering, brownfield modifications, operations & maintenance personnel

13

West Africa – Local Content Challenges

• Main barrier to increased local content is lack of local companies to provide wider range of oilfield services to meet growing demand

• What does West Africa need to meet growing local content demands ?

– All levels of basic oilfield services including machine shops and specialty welding

– Maintain inventory of oilfield materials, fittings and rental equipment

– More fabrication yards, docks and assembly plants

– All levels of post first oil support services including jumper & flying lead fabrication, commissioning expertise and equipment

– Light well intervention capability - eliminate mobilization, rapid response

– ROV maintenance expertise - improve reliability, build local expertise

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Subsea Success - Business Case

• Cost of wet tree systems is outpacing competing development alternatives

• Growth driven by rapidly escalating costs for:

– Mobile Offshore Drilling Rigs (MODUs)– Installation vessels– Subsea equipment

• Subsea trend toward greater rates / recovery per well-bore to meet commercial metrics

• Trends are for more marginal fields in remote locations

• Impacts may be fewer subsea wells, fewer developments $

/ Dev

. Wel

l

Time

Dry Tree Systems

$ / D

ev. W

ell

Time

Dry Tree Systems

$ / D

ev. W

ell

Time

Dry Tree Systems

$ / D

ev. W

ell

Time

Dry Tree Systems

$ / D

ev.

Wel

l

Time

Wet Tree Systems

$ / D

ev.

Wel

l

Time

Wet Tree Systems

$ / D

ev.

Wel

l

Time

Wet Tree Systems

$ / D

ev.

Wel

l

Time

Wet Tree Systems

“Win – Win” solution for subsea suppliers is lower overall SURF costs to

sustain greater industry activity

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West Africa – What is needed for ExxonMobil portfolio ?

• Reliable equipment – standardized designs, quality components, accelerated schedules/procurement

• Flexibility for installation methods, ability to use smaller vessels versus drilling rigs where possible

• Adequate qualification to actual full field life service conditions

• Management of subsupplier quality throughout procurement chain

• Build inroads into local content, all aspects of basic oilfield capability and services

• Partnerships with approved local companies

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ExxonMobil Development Company Subsea Contacts

• Subsea Equipment – Dave Lucas

• dave.c.lucas@exxonmobil.com

• Flowlines & Flow Assurance – Mike Cook

• mike.f.cook@exxonmobil.com

• Risers – Jim Zimmerman

• jim.j.zimmerman@exxonmobil.com

Questions ? Corporate Separateness Notice

Nothing in this presentation is intended to override the corporate separateness of local entities. Working relationships discussed in this material do not necessarily represent a reporting connection, but may reflect a functional guidance, stewardship, or service relationship. Where shareholder consideration of a local entity matter is contemplated by this material, responsibility for action remains with the local entity.

Exxon Mobil Corporation has numerous affiliates, many with names that include ExxonMobil, Exxon, Esso and Mobil. For convenience and simplicity in this presentation, those terms and terms like corporation, company, our, we and its are sometimes used as abbreviated references to specific affiliates or affiliate groups. Abbreviated references describing global or regional operational organizations and global or regional business lines are also sometimes used for convenience and simplicity. Similarly, ExxonMobil has business relationships with thousands of customers, suppliers, governments, and others. For convenience and simplicity, words like venture, joint venture, partnership, co-venturer, and partner are used to indicate business relationships involving common activities and interests, and those words may not indicate precise legal relationships.

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• Track record for innovation in deepwater

• Design integrity and cost reduction through application of technical fundamentals Genesis - 1998

Diana/Hoover - 2000

Hondo - 1981Zafiro - 1997Balder - 1999Jotun - 1999Girassol - 2001Xikomba - 2003Kizomba A - 2004

Hutton - 1984Snorre - 1992Ram - 1997Ursa - 1999Kizomba A - 2004

West Delta 73 - 1974Central Cormorant - 1981

Seahorse/Tarwhine - 1990Snorre - 1992

Zinc - 1993Zafiro/Topacio - 1997

Balder - 1999Diana - 2000

Girassol - 2001Kizomba A - 2004

ExxonMobil Deepwater Experience

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ExxonMobil Operated Subsea Projects in W. Africa

• Existing ExxonMobil Operated Subsea Production (May ’06)– Angola (9 production & 15 injection wells, 125 kbd)

– Nigeria (7 production & 7 injection wells, 120 kbd)

– Equatorial Guinea (50 production & 10 inj, 180 kbd)

• Recently completed projects– Kizomba B in AB15 (record cycle time of 31 months)

– Erha in OPL 209

• Projects currently underway– Kizomba C in AB15 (2 FPSO’s & 36 subsea wells)

– Marimba in AB15 (4 well tieback to Kizomba A)

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W. Africa ExxonMobil Operated Subsea Opportunities

• Angola Block 15 discoveries– Bavuca

– Clochas

– Kakocha

– Marimba North

– Mavacola

– Mbulumbumba

– Reco Reco

– Tchihumba

– Vicango

• Nigeria OPL 209 & 214– Bosi

– Uge

AB15

OPL 209/214