Promotion of Frontier areas Effective communication

Transcription

1 Promotion of Frontier areas Effective communication Espen Myhra Assistant Director General Where to go When companies are identified, the next step is to find out how to approach them There is a variety of ways to go about this It is important to have a direction Important to follow up interested companies 1

2 Internet A good web page is very important The web page should contain information about: Framework conditions Who is responsible for what withing the State (links) As much data as possible: Play models, basin maps, wellinformation etc. Speeches/ presentations Licensing rounds Exploration history Sucess stories News and press releases relating to the petroleum sector Links to other important sites Updated and functional Information in hardcopy Brochuers Factsheets DVD/ CD rom Etc. To be handed out at meetings, conferences or stands The information material must be informative and honest, but at the same time selling your shelf 2

3 Power point presentations Use time and effort in making some standard power point presentations Should have at least one long and comprehensive presentation and one short version Presentation should cover: Framework conditions (fiscal, licensing terms, access to infrastructure etc.) Geological information (resource potential, play models, own mapping of prospects, sucess stories, etc.) Once again informative and honest, but at the same time selling your shelf Where to go? 3

4 Expert conferences Sell the geology of the Shelf to other geologist at technical conferences Can sell your own mapping of prospects or play models The resource potential Many conferences have call for papers Some conferences focus on larger areas like SE Asia or NW Europe Sometimes it is possible to become the main focus for part of a conference if the right connection is made Hand out presentation material/brochures More general conferences Many companies makes a living of arranging investor conferences It is possible to become the main attraction at a conference or your region is the main attraction More aggregated geological presentations combined with a framework condition presentation Important with a broad enough representation so that all kind of question can be answered (both geological and legal/economical) Cover current topics like upcoming licensing rounds etc. Hand out presentation material/brochures 4

5 Arrange information session In connection with large conferences (like OTC) many different companies are gathered Use the opportunity to invite a group of companies to an information session about your country Identify and invite relevant persons in a company Invite well in advance and follow up invitation with a phone call Could be smart to limit the amount of companies Evaluate if relevant press should be invited Follow up such events with the companies Meetings with individual companies In connection with large conferences exclusive one on one meetings with companies can be arranged Use the opportunity when in town to meet with individual companies Be as approachable as possible for oil companies that wants to meet with the authorities Should consultants be used? 5

6 Licensing rounds Promote licensing rounds well in advance Make brochuers that is distributed to companies Have a part of your web-page dedicated to the licenising round Try to present at conferences (technical and more general Arrange roadtrips? Stands Participate with stands at larger conferences Make posters Hand out information material Set up meetings 6

7 Your experiences? Example: General presentation of the NCS 7

8 The Norwegian Continental Shelf Areal extent of the NCS: 1.4 mill. km 2 (3,5 times the size of California) 60 % opened for exploration 16 % of the opened area currently licensed 8

9 Petroleum resources on NCS 31 % Total recoverable resources: 81 BBOE 31 % Sold and Delivered Reserves 70% still to be produced ¼yet to find 26 % 12 % Contingent Resources Yet to Find > 60 discoveries 130 improved recovery projects (IOR) on fields are under assessment Source: MPE/NPD NB 2006 Total petroleum production Mill Scm o.e./year Oil production NGL (included condensate) Gas sale Source: MPE/NPD NB 06 9

10 The Barents Sea emerging frontier area Snøhvit development: LNG terminal 5.7 TCF gas MMB cond Undiscovered resources: Total: 6,3 BBOE Oil/cond 2,5 BBO Gas: 21 TCF Area of overlapping claims Exploration drilling : Goliat: 51 MMBO Well 7228/7-1: Triassic oil in a new play large salt basin The area of overlapping claims equals the size of the Norwegian part of the North Sea The Norwegian Sea growth area First oil production: production from 6 fields: > BPD liquids ~ 0.5 BCF gas Under development: Urd (2005): 65 MMBO Kristin (2005): 320 MMB cond TCF Ormen Lange (2007): Gas: 14 TCF Undiscovered resources: Total: 7,7 BBOE Liquids: 2,6 BBO Gas: 29 TCF 10

11 The Norwegian Sea versus the Gulf of Mexico Gulf of Mexico: ~ 1000 wells > 200m water depth ~ 426 wells > 600m water depth ~ 10.7 BBO, 26 TCF Norwegian Sea: ~ 195 wells ~ 13 wells > 600 m water depth ~ 5.7 BBO, 38 TCF miles Trondheim Source GoM: BP 2003 Torshavn Predefined area The North Sea: Many opportunities in mature areas Norway Norway Is the Norwegian part of the North Sea under-explored? UK Source-map: Konkraft 11

12 The North Sea: -many opportunities in mature areas Undiscovered resources: Total: 7,5 BBOE Liquids: 4,3 BBO Gas: 18 TCF Liquids Gas Access to G & G data Release of seismic and well data Diskos database Joint database for quality controlled G & G data Seismic navigation and seismic data available from Diskos All seismic navigation data is public Logs available from Diskos A list of seismic surveys is published on the NPD website showing when these become public Well data is published on the NPD website (Fact pages) 12

13 Conclusions: Opportunities on the Norwegian Continental Shelf High resource potential including both mature and frontier areas 70 % of estimated recoverable resources remains to be produced One fourth (21.4 BBOE) of total resources yet to find World class petroleum system New plays still being developed and confirmed Easy access to G & G data The Framework conditions 13

14 The situation on the NCS today More 1/4 of the total resources yet to be discovered Substantial resources left in mature areas Large prospective areas not explored An all time high annual production (ca. 1,7 billion barrels o.e in 2004) About 11 billion USD invested on the NCS in 2004 and an expected increase for 2005 Predictable licensing system without sign-on fees Frontier areas: Awards every second year Nomination Announcement Application Negotiations Award Mature areas: Annual awards in fixed pre-defined exploration areas covering all mature acreage on the NCS Announcement of acreage: January Deadline for applications: 1st October Awards of Production Licences: December Production Licenses on the NCS is awarded based on announced and non-discriminating criteria. 14

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16 Characteristics of the Norwegian Petroleum Tax System Today s system - A short description: 28% corporation tax, 50% special petroleum tax Full consolidation of income and expenses No signature bonuses All expenses are tax deductible Investments are depreciated at a high rate (6 years) Uplift allowance against special tax. May deduct 30% of the investment Financial costs may be deducted against both the corporation tax and the special tax Effects of the system Projects with a nominal return of around % are sheltered from the special tax The system performs well regarding, net present value per dollar invested, break-even prices and required probability of discovery The Norwegian system: Low risk, Few distortions to pre-tax economics. Recent amendments to the petroleum tax act Three main amendments: Tax value of exploration deficits will be reimbursed in relation to the tax assessment Reimbursement of the tax value of losses carried forward when the company ceases its activities 30% uplift against special tax over four years instead of six years for new investments The effect of the amendments: Increased fiscal certainty for new companies Improved profitability of investments in i.e. tail-end production and improved oil recovery Simplify trading in licenses 16

17 Direct access to the European gas market Pipelines entering four main markets Efficient transportation Regulated gas transportation regime Gassco neutral operator of the transportation system New Companies on the NCS The NCS has traditionally been dominated by the largest international oil companies in addition to Statoil og Hydro Today there is a great variety in challenges on the NCS and the composition of players needs to reflect this The Ministry wants new companies to the Shelf that has the geological and technical expertise, backed up by financial muscles, to challenge the established players and contribute to value creation We are especially interested in the independents, that through activity in other parts of the world, have a proven track record for value creation 17

18 The public administration and the framework The framework conditions: Predictable Transparent No hidden costs or sign-on bonuses Highly competent and approachable public administration A common goal: Maximizing the values of the petroleum resources on the NCS Close dialogue between the Authorities and the industry Good resource base Why the NCS? Well developed Infrastructure Proximity to gas markets Predictable regulatory framework Award of Production licenses based on the applicant's qualifications in petroleum related areas Skilled workforce and world class supply industry 18