A Global Perspective on the Future of Subsea Technology – SUT Subsea Technical Conference

1. A Global Perspective on the Future of Subsea Technology – SUT Subsea Technical Conference February 2009

2. Agenda • Future Demand • What Environment Are We Working In • Current Status Of Subsea Developments • Subsea Systems Update • Engineering Developments • Message To The Industry

3. Energy Resource Update • The IEA warn that reserves will need to be exploited faster than at present if an energy ‘Crunch’ is to be avoided in the future • $1 Trillion needs to be invested annually up to 2030 • Even if demand remains flat until 2030, an additional 45 mbl/day needed to offset the effect of oilfield decline

4. Current Environment • Enhanced Environment and Safety Performance • Large Demand in SE Asia for Oil & Gas • Driven to Deeper Waters – 1000m+ • Hostile Environments • Innovative Engineering Solutions • Gradual Elimination of Surface Facilities • Enhanced Recovery • Remote Field Management • Total Acceptance of Subsea Solutions

5. Current Status of Subsea Developments • Deepwater to 2500m + • 15K systems in operation • One major Operator has gone from <10 subsea projects in the 90’s to a projected 50 in 2013 • Tie back distances already exceed 100 km • Subsea Processing • Multiphase Pumping now accepted technology • Compression by 2010 – Ormen Lange + others proposed • Separation/Boosting/WI – Tordis 2007 • RWI – Tryihans, Columba, Albacora • Risers –SCR’s, Flexibles, Towers • Subsea Wells – Worldwide • Operational - >3400 • Under development - >600

6. SUBSEA PROCESSING SYSTEMS • Why Do We Need Subsea Processing? • Oil & gas fields being discovered in deeper, more remote places • Fields further away from host facilities or shore • Increased recovery factors • Improved flowrates • Improved flow assurance • Potential cost savings over use of conventional technology, eg second pipeline • Improved project economics

7. Subsea Wells Dry Wells Wax Hydrates Scale Flow Assurance 6 - 8 km 10 - 100 km Tieback Distance SUBSEA DEVELOPMENT CHALLENGE Water Depth Res. Pres. Gradient Lift, Boost and Separation Options

8. TECHNOLOGY DRIVERS …… • Access to difficult reserves • Accelerated production • Improved flow assurance • Reduced capex and opex • Improved reservoir recovery • Shorter time to first oil

9. ………AND CHALLENGES TO BE RESOLVED • Maturity / Limits of technology ? • Demonstration of reliability ? • Sufficient priority and focus ? • Business risk ? • Mental barriers – perceptions ? • Long field life

10. Full Subsea Processing Water Removal & Debottlenecking Multiphase & Injection Pumping SUBSEA PROCESSING EVOLUTION Subsea Gas Compression 3 Phase Separation Subsea Water Removal Boosting & Injection 2002 2004 2006 2008 2010 2012 CAPABILITY /COMPLEXITY • Key features of evolution • Stepwise in capability and complexity • Small steps to manage risk • Modular system approach TIME

11. 2000 2005 2012 2010 System Development FOCUS AREAS • Multiphase Pump • Injection Pump • Gas Compressor • Integrated Prod. Umbilical • Separators – Compact / Downhole • Power Distribution & Power Connector Technology • All Electric Products Equipment Development • Multiphase Pumping System • Raw Water Injection System • Subsea Separation System • Subsea Cooling or Heating System • All Electric Systems

12. MULTI PHASE PUMP Application: • Well stream energy enhancement Advantages: • Drawdown of wellhead pressure • Increased production rates • Increase reservoir recovery • Increased tie-back distance • Separated liquids evacuation Status: • Helico-axial pumps in operation subsea • Twinscrew pumps qualified – pilot subsea application 2005 SUBSEA PROCESSING EQUIPMENT

13. INJECTION PUMP • Application • Water injection pressure boosting • Advantages • Increased injection rates • Increased tie-back distance • Ability to inject produced water or sea water • subsea • Status • Pump designs well proven topside • Critical parts qualified in MPP programme • Detail design of production version complete SUBSEA PROCESSING EQUIPMENT

14. SUBSEA GAS COMPRESSOR • Application: • Subsea gas compression • Advantages: • Drawdown of wellhead pressure • Increased production rates • Increase reservoir recovery • Increased tie-back distance • Separated gas evacuation • High tolerance for liquid droplets • Status: • In development by various specialist companies SUBSEA PROCESSING EQUIPMENT

15. SUBSEA PROCESSING EQUIPMENT COMPACT SEPARATION TECHNOLOGY • Application: • Compact gas, oil and water 2 or 3 phase separation • Advantages: • Small size and weight • Status: • Separation performance qualified • topside • Gas/Liquid 2 phase unit in operation • offshore • Concept design for subsea unit • complete

16. COMPACT ELECTROSTATIC COALESCER • Application: • Removal of water from oil after separation • Advantages: • Small size and weight • Oil polishing to 0.5% water in oil • Status: • Topside pilot unit on Petrojarl FPSO • Design for subsea unit complete • Subsea equipment components • qualified • Next step subsea pilot testing SUBSEA PROCESSING EQUIPMENT

17. DOWNHOLE SEPARATION Application: • Remove water from well stream and re-inject into reservoir Advantages: • Improvement on production rate • Improves reservoir recovery • Produces export-quality oil • Good quality injection water Status: • Land base testing complete • Offshore pilot testing next step Oil to surface Power Fluid X-over Injection Zone H-Sep HSP Production Zone SUBSEA PROCESSING EQUIPMENT

18. SUBSEA PROCESSING EQUIPMENT INTEGRATED PRODUCTION UMBILICAL • Application: • Integrated flowline, control umbilical and power cable • Advantages: • Simplified subsea architecture • Cheaper faster installation • Can be used as production flowline or service line • Trace heating and monitoring possible • Status: • 8 and 10 inch prototype test completed • Next step 10 inch IPU system test • Disadvantages – installation vessel size / jointing of superduplex offshore

19. Electric - Ability to handle the power requirements of a subsea processing system, particularly subsea pumps More efficient than hydraulic, particularly over longer distances due to hydraulic losses. However AC systems become inefficient on long step outs and may drive to DC systems or subsea power generation technology. Hydraulic - Able to utilise existing water injection system Simpler system May compromise water injection system Limited distances SUBSEA PROCESSING SYSTEMS Subsea Power Distribution

20. 2000 2005 2010 Equipment Development FOCUS AREAS - SYSTEMS • Multiphase Pump • Injection Pump • Gas Compressor • Integrated Prod. Umbilical • Compact Separator • Downhole Separator • Power Distribution System • Multiphase Pumping System • Raw Water Injection System • Subsea Separation System • Subsea Cooling or Heating System System Development

21. 2000 2005 2010 Subsea Production Trees Equipment Development FOCUS AREAS - SYSTEMS MULTI PHASE PUMPING SYSTEM • Multiphase Pump • Injection Pump • Gas Compressor • Integrated Prod. Umbilical • Compact Separator • Compact Coalescer • Downhole Separator • Pump functionality • Well stream pressure boosting • Optimization of gas lift in artificially lifted wells • IPU functionality • Production pipe • Power supply and umbilical functions • Heating for hydrate mitigation for production and shut-down • Multiphase Pumping System • Raw Water Injection System • Subsea Separation System System Development

22. 2000 2005 2010 Equipment Development SUBSEA PROCESSING SYSTEM RAW SEAWATER INJECTION SYSTEM • Multiphase Pump • Injection Pump • Gas Compressor • Integrated Prod. Umbilical • Compact Separator • Compact Coalescer • Downhole Separator • Injection Pump and Filter System functionality • Filtering raw water to injection quality • Water injection for pressure maintenance Power, Control & Chemical Injection Umbilical • Multiphase Pumping System • Raw Water Injection System • Subsea Separation System Water Injection Tree System Development

23. SUBSEA SEPARATION SYSTEM Water Injection Trees • Separation System functionality • 2 or 3 phase separation of wellstream • Increase production • Increase reservoir recovery • Improve flow assurance • Debottleneck flowlines, riser and topside systems. • Re-inject produced water Subsea Production Trees Separator Gas Compressor Booster Pump Oil and Gas Export Lines Power and Control Umbilicals SUBSEA PROCESSING SYSTEM

24. SUBSEA PROCESSING SYSTEMS Subsea Cooling and Heating Can provide an effective mitigation against hydrates and wax by increasing cooldown time Can provide a solution to upheaval buckling concerns Able to utilise certain flowline materials, e.g. flexible lines and certain insulation coatings, which have a lower design temperature threshold

25. Geological Surveys • 3D Software Fledermaus • Pipeline Routing • Integrate with ABAQUS • Significant Financial Savings

26. Lateral Buckling on 3D Seabed

28. MESSAGE • The subsea industry has met its challenges over the years with some catastrophes but many successes • Considerable R&D spend on subsea technology • Greater emphasis on testing before full field implementation • Reliability Standards being set – Structured Approach • Incorporation of lessons learnt • Improve Quality Management to ensure second and third tier suppliers testing / documentation traceability is visible • Standardisation is key to cost containment and reliability • Programme approach bring major benefits in schedule & cost • December 2007 – the worlds first seabed separation facility installed on Tordis Subsea Systems Will Facilitate Australia’s Development Of Its Oil & Gas Reserves

29. MESSAGE Remember – this is not rocket science – It’s much harder than that!