Deepwater The Future of the Oil and Gas Industry by rraul

VIEWS: 720 PAGES: 23

									         Deepwater
The Future of the Oil and Gas
          Industry
         Claiborne P. Deming
           President & CEO
          September 23, 2002
             Today’s Agenda…

 The Demand Story

 The Supply Challenge

 The Deepwater’s Role

 Murphy Oil and the Deepwater
                                                                         The Stage is Set….
                                                                              Year 2000
              400
                                                                                            United States 
      Energy
  Consumption
    per Capita
  (Million Btu’s)
                                                                                            Australia 


                                                                                     New Zealand 
              200
                                                                                             Korea 
                           400.0
                           350.0
                           300.0
                           250.0

                                                                                                             Western Europe
                           200.0
                           150.0
                           100.0
                            50.0




                                                                                                       
                             0.0
                               $100   $1,000   $10,000   $100,000




                                                                                                                 /Japan
                                                                                Venezuela 

                                                                               Thailand 
                                                                                              
                                                                                 China       Latin America
                                                                             India
                  0
                    $100                                            $1,000                  $10,000                   $100,000
                                                                             GDP per Capita
Source: IEA/CIA
                                Crude Oil Demand will Grow
                                              Substantially
          Demand is likely unstoppable over the next 20 years
                                                                      Regional Demand Increases
         Crude Oil Demand                                              (Million BPD 2000 to 2010)
          100 MBD
                                                                                   +1.4
                                                               +0.9               Russia
                                                              Europe
           90 MBD                       +2.3
                                        North
                                       America                            +1.3
                                                                         M.East
                                                                                           +5.4
                                                              +0.6                         Asia
           80 MBD                                            Africa
                                                   +1.5
                                                  South
                                                 America


           70 MBD



           60 MBD
                1990                    1995               2000               2005                2010
Source: PEL/Internal Murphy Analysis
Requiring Tremendous New Production
                                                                   New Capacity Sources

                                                                         Europe 2.6
                                   Required New                          Africa 2.3
                                     Capacity                            S. America/Other 5.3
                                                                         N. America 5.5
                                                                         Russia/Caspian 6.6
                                                                         Other OPEC 7.5
                                                                         Middle East 16.3
                        Current
                        Capacity                          Existing       49.3
                                                        Production
                                                            after
                                                       Natural Decline


               World Crude Capacity               2010 World Crude Capacity
                     78.8 MBD                            95.4 MBD
Source: PEL/Internal Murphy Analysis
      However, Access to Major Reserves is
                                  Limited
                         Worldwide Reserves in Billion Barrels

                                                                      Russia/FSU


                                                                           57
                                              21            676
                                     Europe
       N. America         54
                                                        Middle East


                                                                      44
                                                                           Asia
                                                   75

                   S. America 90
                                              Africa



                          2000 Total – 1,016 Billion Barrels
Source: Wood MacKenzie
                               (Non-OPEC – 214 Billion Barrels)
   Middle East – Difficult for Outsiders
              Projected Capacity Growth of
                      Middle East
      Annual Production
                                                  Controlled by NOC’s
          (MBPD)
        40                                        Marked by War’s,
                                                   Embargoes,
        30                                         Government
                                                   Instability
        20
                                                  10% Return
        10                                         Contracts ( when
                                                   offered)
          0
               2000       2005E    2010E

     The Middle East will remain world’s largest oil producer and
     exporter, however it is closed to majority of our industry
Source: PEL
                     Russia/Caspian Region is
                              Growing, but…
                   Russia/Caspian
                 Production Forecast
  Annual Production                               Investment returns
      (MBPD)
                                                   to date are negative
     12
                                                  Legal/Contractual
     10
                                                   System is tenuous
       8
                                                  Transport costs can
       6
                                                   exceed $5.00/Bbl
       4
       2
       0
              1990   1995   2000   2005E 2010E

        Requires immense capital and regional clout – Only the
        SuperMajors can operate successfully
Source: PEL
                       North America is Mature
          North American Production Forecast
             (Does not include Deepwater)
     Annual Production                                        Most heavily drilled
         (MBPD)
                                                               region in the world
     15
                                                              Massive capital
     12
                                                               required just to
      9                                                        maintain current
      6                                                        production

      3                                                       Remaining high
                                                               potential areas are
      0
                                                               off-limits
             1990      1995      2000      2005E     2010E
              US Production   Canadian Production   Mexico


          North America will not supply the world’s growing demand
Data Source: PEL
                                  Unconventional Sources are
                                             not the Answer
           Full-Cycle Cost Comparison
   Full Cycle
  Cost $/BOE


 $14                                                                 Reserves are immense
 $12                                                                  (Est. at 3 trillion
 $10                                                                  Barrels)
  $8                                                                 Full-Cycle costs are
  $6                                                                  high
  $4
                                                                     Processing is energy
  $2
                                                                      intensive/produces
  $0                                                                  large quantities of CO2
                                                               co
                             ia




                                                      ds
                     n
           t




                                           r
         as




                                            e
                   ia



                            s



                                         at




                                                              no
                                                     n
                         us
                  p
      E




                                                  Sa
                                      w
               as




                                                            ri
     e




                         R



                                     p
  dl




                                                           O
               C




                                                 il
                                  ee



                                                O
 id




                                  D
M




Source: CERA
         The Deepwater Offers a
            Credible Alternative

 Reserves and prospectivity are immense

 Full cycle returns are now averaging 20%

 Technology is driving development costs
  downward

 Safety/Environmental record is
  exemplary
            Deepwater Reserves are Immense
                 2000 Discovered Reserves in Billion Barrels




                                                                60
                                                              Billion
                15.0                                  16.0
                         14.0     10.0      5.0               Barrels


              US GOM     Brazil   Angola   Nigeria   Others   Total
Source: Wood Mackenzie
            Deepwater Production is Growing

                         Production is set to grow by 4 Million
         Annual
       Production
                               barrels per day by 2008
         (MBPD)
           8
           7
           6
           5
           4
           3
           2
           1
           0
                 1998     2000    2002     2004    2006      2008     2010

                          GOM    Brazil   Angola   Nigeria   Others
Source: Wood Mackenzie
          Deepwater Technology
           Continues to Improve
 FPSO’s allow production in depths up to
  9,000 feet

 Sub-sea tiebacks allow profitable
  development of smaller reservoirs

 Deep and extended reach drilling exploit
  entire reservoir
                         And is Decreasing Costs
                    Capex/boe                         Average Field Water Depth
                                                  Water
   $/BOE                                         Depth (ft)
   $7.00                                          1,200
   $6.00                                           1,000
   $5.00                                             800
   $4.00
                                                     600
   $3.00
                                                     400
   $2.00
   $1.00                                             200
   $0.00                                               0
           1990    1995   2000   2005E   2010E             1990   1995   2000 2005E 2010E


            Development costs have decreased by almost 50%
             since 1990 - even as we go deeper and deeper
            Full-Cycle returns now average 20%

Source: Wood Mackenzie
                Safety Record is Improving
        Recordable Injury/Illness
             Incident Rate
         6.0
         5.0
         4.0        3.39                   3.38
                                    3.02
         3.0                                      2.27
                                                         1.97
         2.0
         1.0
         0.0
                   1996             1997   1998   1999   2000

               Even though we are producing and drilling more,
                the actual number of accidents is declining and the
                incident rate is decreasing rapidly
Source: MMS
                        Oil Spills Have Declined
           Oil Spill
        Incident Rate               Dramatically
            3.0
        Incident Rate




              2.0
                    1.46    1.54

                                   1.00
              1.0
                                           0.44
                                                    0.27

              0.0
                    1996   1997    1998    1999     2000

          Even with more wells being drilled and more
           production coming online, the actual spill rate
           and incident rate are both declining
Source: MMS
              Future Deepwater Growth
                             Potential
Exploration/Growth Potential of Major Deepwater Basins
        Low    Remaining Exploration Potential        High

  Maturing     Growing                      Emerging
  • Congo      • Nigeria                    • Egypt

  • Brazil     • Gulf of Mexico             • Malaysia
               • Equatorial Guinea          • Gabon
               • Angola                     • GOM Ultra-deep
                                            • Black Sea/Caspian
        Current and Projected Deepwater
                                 Growth
               Deepwater Production   Deepwater Production
                     (Bbl/d)            CAGR 2002-2007
Petrobras            1,100,000               12%
Shell                  780,000                5%
BP                     550,000               20%
ExxonMobil             220,000               24%
ChevronTexaco          150,000               22%
TotalFinaElf           100,000               35%
ConocoPhillips          25,000               10%
Murphy                 <10,000               35%
   The Keys to Success in the
                  Deepwater
 Build the right skill-set
 Encourage and reward exploration
 Think globally and move quickly
 Exploit niches created NOC’s /
  SuperMajors
The Deepwater and Murphy – A Perfect Fit
            MEDUSA              Gulf of Mexico Deepwater
 HABANERO                        30% success rate

                                 Medusa, Frontrunner are the
                                 cornerstones of a growing
                                 presence
                                 Production will reach 75,000
                 FRONT RUNNER    bbl/d by 2005

                                Block K
Deepwater Malaysia
 500 MMbbl potential
                                                  Block H
 Low cost- $6.50/bbl all in

 Murphy has 7 Million
 acres under lease
      The Deepwater and Murphy – A
                         Perfect Fit
MBOE / D
200
                Deepwater GOM Production

150



100                                                           + Deepwater Malaysia Production


 50



  0
  Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
                           Conclusion
 Demand growth is likely unstoppable
  through 2020
 Most of the remaining reserves are
  either high-cost or located in unfriendly
  regions
 The deepwater is open and offers
  tremendous growth and prospectivity
 Murphy Oil has the skill-set and vision
  to become a leader in the Deepwater

								
To top