Ready for the Drill Bit: Managing the risks
Transcript of Ready for the Drill Bit: Managing the risks
Ready for the Drill Bit: Managing the risks
As presented to various interested groups throughout the Bahamas.*
*BPC maintains a robust outreach and educational schedule, presenting to various business, civic, trade and religious communities in The Bahamas on a regular basis.
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Key Points
Bahamas Petroleum is working to:
– Maximize value growth to its shareholders
– Ensure wealth and opportunity creation for the Bahamian people and nation
Growth and development of the petroleum sector will require that wells be drilled to verify the presence
of hydrocarbons
If drilling is successful:
– The identified prospects have the potential for multi-billions of barrels of oil
– There will be time to train Bahamians for the jobs and opportunities
– The next two years could help rebase the Bahamian economy
Bahamas Petroleum and the Government are working on parallel paths:
– The Government is working to put regulations in place to oversee activities
– Bahamas Petroleum is aligning itself to ‘best practices’ jurisdictions of Norway, UK and the US as we prepare to drill
– All parties are committed to responsible exploration and preserving the environment for future generations
Geologically the Bahamas is considerably different to the US Gulf of Mexico. A “Macondo” type spill is
highly unlikely
Our “oil spill” modeling shows that “Mother Nature” is taking care of the Bahamas; but trans border
response planning will be important
Bahamas Petroleum Company Overview and Introduction to Geology
Exploration Potential of Bahamas Petroleum Southern Licences
Risk and Reward: Exploration/Production Life Cycle
Risk and The Environment
Summary
4
Corporate Overview
Isle of Man based Oil and Gas Exploration Company
Founded by Alan Burns in 2005
Initial Exploration licences granted in 2007
The ordinary shares of the Bahamas Petroleum Company Plc are traded on
the London Stock Exchange Alternative Investment Market (AIM: BPC)
Future Bahamian listing via BDR on BISX
Exploration office in Nassau staffed with Chief Operating Officer, Business
Manager, Lawyer and Environmental Scientist
Will add Bahamian members to the Board of Directors
Share Price Information
* Share price and Market Cap as at 27 January 2012
GBP USD Price* 0.0784 0.12
52 Week High 0.2506 0.39
52 Week Low 0.0539 0.08
Market Cap (mm) 96.5 151.6
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Regional Setting
6
Petroleum System Elements – Regional, Surface and Subsurface Data
0
2
4
6
8
Oil & Gas Generation
Window
Gas
Generation
Window
Depth
(km
)
Source
Reservoir
Trap & Seal
Migration
Gas & Oil
No More
HC Generation
Source: AAPG/ExxonMobil/Schroeder 2004
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The Ideal Seismic Response
Increase in Impedance Decrease in Impedance
Able to resolve boundaries of beds a few meters thick
1 meter
Source: AAPG/ExxonMobil/Schroeder 2004
Bahamas Petroleum Company Overview and Introduction to Geology
Exploration Potential of Bahamas Petroleum Southern Licences
Risk and Reward: Exploration/Production Life Cycle
Risk and The Environment
Summary
9
➜ Cretaceous reef/platform imaging is significantly improved. Better imaging of the deeper section
➜ Pronounced dip to the south-west; thicker Jurassic (source); opens migration pathway to beneath
Cuban ramp; increased potential fetch area
➜ Records the evolution from hypersaline basin to platform basin morphology
Platform Margin Bahamian Foreland
Cuban Border Nassau Trend A Fold B Fold C
Top Cretaceous Structure
10
11
10 Kms
Fold B
Fold C
Trend A
Top Cretaceous Structure
Top Vertical closure
Area
Fold B 700m 750m 423 km2 (104,526 acres)
Fold C 950m 350m 63 km2
(15,814 acres)
Top Vertical closure
Area
12
10 Kms
Fold B
Fold C
Trend A
Top Aptian Structure
Top Vertical closure
Area
Fold B 2400m 1400m 288 km2
(71,166 acres)
Fold C 3250m 750m 63 km2 (15,814 acres)
Top Vertical closure
Area
Bahamas Petroleum Company Overview and Introduction to Geology
Exploration Potential of Bahamas Petroleum Southern Licences
Risk and Reward: Exploration/Production Life Cycle
Risk and The Environment
Summary
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Typical Petroleum Lifecycle
Seismic: Provides detailed information on geologic (geophysical) conditions that may
indicate the presence of hydrocarbons
Exploratory Drilling: Verifies the presence or absence of a hydrocarbon reservoir, if present
additional testing may be done to establish possible flow rates
Appraisal Drilling: Determines volume of hydrocarbons, and characteristics of the reservoir
to ascertain whether a commercial development is viable
Development Planning and Construction: Determines most effective production and
transportation systems and build necessary facilities
Development and Production: Produces oil and gas from the reservoir through formation
pressure, artificial lift, and possibly advanced recovery techniques, until economically-
accessible reserves are depleted. Transports production to markets
Phase
~ 5 – 10+ years ~ 1 year ~ 1 – 3 years ~ 3 – 6 years ~ 20 – 40 years
Seismic & Geologic
Studies
Exploratory Drilling
Appraisal Drilling
Development
Planning &
Construction
Development and
Production
$50 million USD
$60 – 160 million USD
$400 – 600 million USD $30 – 40 billion USD
Bahamas Petroleum
Stage
Estimated Typical Costs
Co
st
Bahamas Royalty Income (Undiscounted)
Phased Development - 2 billion barrels of oil - conceptual
Year
$M
M
Annual Production Company Challenges:
Subsea development with FPSO
Environmental aspects
Limited reservoir specific information
Geologic complexity/oil quality
Government Challenges:
Converting resource use into sustainable
economic development
Benefits to The Bahamas:
Additional long term direct source
of revenue
Enhanced indirect revenue
Potential for direct and indirect
employment
Diversification in the economy
Social development 15
256
220
182
146
120
72
36 Millions
bbls
/yr
Annual
Cumulative
1 2 3 4 5 6 7 8 9 10
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Rig – Songa Mercur – to drill well offshore Cuba 2012
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Subsea Development for the Production of Oil
Bahamas Petroleum Company Overview and Introduction to Geology
Exploration Potential of Bahamas Petroleum Southern Licences
Risk and Reward: Exploration/Production Life Cycle
Risk and The Environment
Summary
19
What is the Environmental Risk?
The incremental risk is negligible
– Geology is considerably different from the Gulf of Mexico
– 5 wells drilled previously in The Bahamas, 1947 – 1986; no accidents
– Mother Nature is working to protect The Bahamas from an accident in our license area
– 6 wells to be drilled this year in Cuba; one very close to The Bahamas
– Along major ship and particularly tanker routes from around the world and into the U.S.
Be prepared!
– Oil spill modeling
– Worst case discharge
– Environmental Impact Assessment
– Environmental Management Plan
– Sea bottom and shallow drilling hazards
– Oil Spill Response Plan
– Joined Clean Caribbean and The Americas
– Visited Cuba to evaluate capabilities and response organization
– Inter and intra-Government communications
– 12 months of well planning with high quality data
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Historic and Proposed Drilling
Repsol dry hole
Announced November Spud
World Crude Oil Tanker Movements
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Bahamas
Why a “Macondo” Type Spill is Unlikely in The Bahamas
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The geology of the U.S. Outer Continental Shelf (OCS) is fundamentally different to the
geology of The Bahamas
US Gulf Bahamas
Rock Type Sandstone & Shales Carbonates
Rate of Sedimentation Rapid 20,000’ < 10 million years
Slow 20,000’ ~ 200 million years
Compaction High Low
Pore Pressure Abnormal – High Normal
New rule changes and legislation regarding wellbore integrity, well control equipment and workplace safety provide for redundant safety measures and ensure equipment is operating properly
Proper well planning is essential to drilling a safe well. We expect the planning for our well to take almost 1 year and our new 3D seismic provides the best data available for planning a safe well
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Oil Spill Modeling
One of the industry requirements prior to drilling is the development of an oil
spill contingency plan – this plan is based on the simulation of an oil spill
Used to understand the transport of oil away from a spill so that we can be
prepared to respond immediately and effectively in the event of an accident
Very sophisticated model incorporating ocean currents, wind and oil properties
Key conclusion: “Mother Nature” is looking out for The Bahamas
Trans border planning and response will be important
% of oil released making shoreline, remainder either
evaporated or biodegraded
2,556 individual spills lasting 60 days tracked for 90 days;
no intervention
Environment: Oil Spill Movement Simulation
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Location Surface
15 mbopd
Seabed 10 mbopd
Seabed 20 mbopd
Eastern US 0.05 0.03 0.02
Southeast
Florida 0.09 0.04 0.03
Florida Keys 0.04 0.02 0.01
Western
Bahamas 0.07 0.14 0.29
Eastern
Bahamas 0.16 0.12 0.11
Northern Cuba 46.44 34.98 27.26
Bahamian MPA’s 0.00 0.00 0.00
Total 46.9 35.3 27.7
• simulated release site
Sophisticated model incorporating ocean currents, wind and oil properties
An uncontained, GoM-type spill – very minor landfall impact on Bahamas
Trans border planning and response will be important
Ocean State Bathymetry
Bahamas Petroleum Company Overview and Introduction to Geology
Exploration Potential of Bahamas Petroleum Southern Licences
Risk and Reward: Exploration/Production Life Cycle
Risk and The Environment
Summary
Timeline: Company Planning
26
4Q13 3Q13 2Q13 1Q13 4Q12 3Q12 1Q12 4Q11 3Q11 2Q12 3 Years
Corporate Objectives
• A well safely executed to 2,000’ into Jurassic source
• Shallower objectives as justified commercially
• Facilitate the drilling of a well
• Address funding, environment and permissions
• Delay not in the interests of shareholders but realisable
SEISMIC
2Q11
ENVIRONMENT
DRILLING
2D
3D
EMP
Well FEED
Long Lead
Farm-in
BDR COMMERCIAL
Long Lead
Acquired Fast track Interpretation
Potential well sites 3D PSDM Interpretation
Sites Defined
Farm-in
Consultation
Consultation?
Spill Study
Multi-beam
Renewal Obligation
Submitted
Clean Caribbean & Americas
Spill Plan
Cuba
Potential well sites
Enabling Regulations ?
EIA
Repsol
Zarubezhneft
Petronas PDVSA? ONGC? Cuban
Drilling
Repsol??
27
Key Points
Bahamas Petroleum is working to:
– Maximize value growth to its shareholders
– Ensure wealth and opportunity creation for the Bahamian people and nation
Growth and development of the petroleum sector will require that wells be drilled to verify the presence
of hydrocarbons
If drilling is successful:
– The identified prospects have the potential for multi-billions of barrels of oil
– There will be time to train Bahamians for the jobs and opportunities
– The next two years could help rebase the Bahamian economy
Bahamas Petroleum and the Government are working on parallel paths:
– The Government is working to put regulations in place to oversee activities
– Bahamas Petroleum is aligning itself to ‘best practices’ jurisdictions of Norway, UK and the US as we prepare to drill
– All parties are committed to responsible exploration and preserving the environment for future generations
Geologically the Bahamas is considerably different to the US Gulf of Mexico. A “Macondo” type spill is
highly unlikely
Our “oil spill” modeling shows that “Mother Nature” is taking care of the Bahamas; but trans border
response planning will be important