Oil & Gas Operational Excellence

Not an official UNCTAD record Oil & Gas Operational Excellence 8th Africa Oil & Gas Conference Morocco 2004 Phil Millette Oil & Gas Industry Consultant Honeywell Process Solutions

Agenda • Introduction • Oil & Gas industry drivers / challenges • What is Operational Excellence? • Solution components & Customer Examples

Company Overview • 108,000 employees in nearly 100 countries • A Fortune 100 company – $23 billion sales in year 2003 • One of 30 select companies represented by the Dow Jones Industrial Average • On Money magazine’s list of 75 Best Benefits companies for the third consecutive year – December 2003 • Winner of the Technology and Business Vision Award from Start magazine and Microsoft®, and the Control Engineering Editors’ 2003 Choice Award, for Honeywell’s Experion PKS™ system, an integrated solution that boosts manufacturing capacity and cost effectiveness.

Honeywell’s Business Segments SpecialtyMaterials Aerospace $3.2B $8.8B $7.5B $3.7B Automation and Control Solutions Transportation Systems 2003 Sales Total = $23B Broad and Diverse Businesses, Technologies and Products

Automation and Control Solutions • Businesses: • Honeywell Fire Solutions • Honeywell Sensing & Control • Now also including Honeywell Sensotec • Honeywell Environmental Combustion & Control • Honeywell Building Solutions • Honeywell Process Solutions • Products: • Controls for heating, cooling, ventilation, air conditioning, humidification, industrial process automation, video surveillance, people and asset tracking and access control equipment; • Security/fire alarm and industrial safety systems, home automation systems; • Advanced software applications for home/building control and industrial optimization; • Sensors, switches, control systems and instruments for measuring pressure, air flow, temperature, electrical current and more • Drinking water solutions • Combustion control solutions • Commitment to service • Global Presence: • 40,000+ employees in 100 countries • Headquarters: Minneapolis, Minnesota • Sales --- $7.5 billion in 2003

Northwest Pipeline Occidental Petronas Phillips Shell Examples - Honeywell Oil & Gas Experience Amoco Trinidad Offshore Platform LNG Plant Kazakhstan Well Field / Fractionation British Petroleum Well Field Over 15 Major North Sea Platforms Atlanta Gas Light LNG Plant Tarim Oil Field Tuha Oil Field British Petroleum Marine Terminal customer Gas Plant Petronas Gas Plants Amoco Texaco Exxon Conoco Gas Plants EPMI/Petronas Platforms Chevron Oil Field Pemex Gas Fractionation Woodside Petroleum LNG/Platforms Corpoven Gas Fractionation / Marine Terminal Sonatrach LNG Plant India Oil Pipeline AGL Pipeline BP Gas Metering Aramco Production Projects Chevron Escravos Shell Pipeline Sasol Dukhan Oil Field AGIP Amerada Hess Aramco Ashland British Gas British Petroleum Britoil Botas Chevron Corpoven Dakota Gasification Diamond Shamrock Dome Petroleum ELF El Paso Natural Gas Enron Enterprise Exxon/Esso Kuwait Oil Mobil Marathon Statoil Sun Texaco Total Transok Woodside

Oil &Gas - Offshore production References • Honeywell controls offshore platforms and FPS in all worldwide regions • North Sea (UK and Norway) • Middle East • Australia • Southwest Asia Selected FPS References: -Hydro Troll Olje / Norway- Semisub. -Texaco Captain / UK FPSO -Woodside Laminaria / Australia FPSO -Esso Jotun / Norway FPSO • West Africa • Gulf of Mexico • Caribbean • Recent EMEA Offshore Projects • Shell Shearwater, North Sea • Mobil Galahad, North Sea • Amerada Hess Scott, North Sea • Shell Brent, North Sea • Chevron Escravos, Nigeria • Chevron Robertkiri, Nigeria • Statoil Kvitebjorn, Norway • Esso Ringhorne, Norway • Veba Hanze 2, The Netherlands • ExxonMobil Skene/UK • BP Clair UK / FEED • Dong Naturgas Torup, Denmark

Honeywell Integrated Oil & Gas Solutions Operational Excellence Solutions Asset Management & Security Solutions Oil & Gas Process & Production Management Solutions Transportation PRODUCTION TERMINAL ONSHORE GAS/OIL FIELDS Improved Performance Lower OPEX Business metrics Best practices GAS PLANT Processing OFF-SHORE PLATFORMS Production SCADA / DCS & Safety, Security Systems Field Instrumentation

Oil & Gas Operational Excellence • Performing at best-possible state • People • Assets • Process • Business • With the equipment, assets, production configuration we have today • From minute-to-minute, hour-to-hour, day-to-day • For improved management of • Safety, • Reliability, • Security, • Process & production performance optimisation, • Production management

Operating Excellence: Achieving Optimal asset performance Flexible real-time technology must support the operational business processes Business Management Advanced Analysis tools Optimization CMMS Approach: Decision Support Diagnostic for Integrated Teams APC Operator Maintenance Asset Diagnostics DCS/ESD Regulatory Control The Future? In use now! Remote expert diagnostic from support center Security Process Sensors Process & Asset Sensors onshore & offshore production

Operating Excellence Challenges • Production Cost reduction / control • Reliability, Uptime! • Personnel • Work Practices improvement • Increased top line revenue • Reliability, Uptime! • Maximize production from existing facilities • Push constraints • Optimize process • Detect Problems, Mitigate Impact • Safety Management • Reliability, Uptime! : need to track health and performance of all plant and automation assets • Environmental Monitoring / compliance • Improve People Effectiveness • Work Practices improvement • Learn from Operations • Safety Management Lifecycle Costs • Plan and Manage Version-up & obsolescence to capture operational improvements • Integrated Management of automation asset WITH the plant asset Focus on more production, more reliability, more safety

Honeywell’s approach • Honeywell looks at all Oil & Gas operational Business Processes • Provide solutions that are focused on enabling the day-to-day, hour-by-hour decisions • Including closed loop response capability where appropriate and possible • Minute-by-minute events & activities • Not focused on the drilling business processes • Not focused on detailed reservoir/petrophysic part of oil & gas asset management • Knowledge of • Automation & safety • Process • Advanced Control • Asset Management • Production Management • Security • IT / Integration Expertise

Figure from POSC SmartFields meetings: Loop Characteristics (Shell) Focus on short term improvement opportunities, with given asset cycle time Field Development production optimization Reservoir Surveillance production operations subjectivityuncertaintycomplexity Enable Ease of information exchange to reservoir surveillance function organizational scale

Oil & Gas Operations Excellence: Solution Map Reservoir Management ERP Decision Support Enterprise Production Summary Enterprise Integration Operations PCC Rich Client & Thin Client Production Management Well Test Manager KPI Manager Production Report Operations Management Regulatory Reporting Production Event Analyst & Shift Report Asset Management APC & Optimization Operator Effectiveness Experion, Plantscape TPS Pipeline Leak Detection* Metering Report Intelligent Choke Cntrl Security Integrated Field Safety Valve Scout Safety State Field Shut Down Analyzer All the components to achieve Operations Excellence

Operational Excellence Solutions: People, Business • Production Control Center (PCC) enables improved decision making & Improved visibility of facilities • Installations on Statoil Kvitebjorn, Norsk Hydro Troll B, BP Ula, BP Valhall, ChevronTexaco Alba, Talisman Gyda • Consistent management & work practices • Helps operators, managers focus on the real issues: find / focus on bottlenecks to improve production and manage important safety issues • Single environment to manage all operations work related tasks • Assign causes for production deferments • Includes safety valve scout, shutdown analyzer, production event analyzer, Well test Manager • Integrates production, process, safety, asset and work flow information together • Designed for Collaborative work, improving work practices, such as reducing routine work load • Matches the vision of major oil companies • Is the overall framework enabling new value to be captured from even existing historians • Use from any web page Safe and Efficient operations: It's like having the best operator on every shift

Operational Excellence Solutions: People, Business • Available functions / applications/ reports with PCC: • Production Overview – advanced form of report and display • Production Reporting • Well Test Manager • Production Balance • Production Allocation • Metering Reports • Lab, chemicals, Emissions tracking • Operations Monitoring & KPI - Manager • Flexible Shift Reporting system • Production Event Analyst • Weather Information • Load Stabilisation • With a partner • Pipeline Management, including multiphase • With Fantoft as pipeline management partner

A Typical Control Room Screen Proprietary and Confidential

Operational Excellence Solutions: Assets • Asset Management Solutions enables path to Best Practice AND lowest cost reliable Oil & Gas Operations • Overall • Improvements due to 3-5% increase in production reliability & increase in throughput • In some markets, savings in cost $1M-$2M due to staff effectiveness & reduction in maintenance cost • Large installation on Pemex Cantarell • Lower deferred production from fewer trips and unplanned shutdowns • Lower maintenance cost through better real time follow up of equipment performance • Transmitters, valves, process equipment, exchangers, vessels, pumps etc • All plant assets can be tracked by Asset Manager • Catch Abnormal Situations early! • Alarm Configuration management, Early Even Detection Reliable means more production, lower cost, more safety

Operational Excellence Solutions: Assets • (2) Asset Management Solutions enables path to Best Practice AND lowest cost reliable Oil & Gas Operations • Through TurboSuite: Better follow-up of turbo-machinery performance due to advanced real-time performance tracking • Lower cost of work order generation – automatic links to ERP systems • Safety Valve Scout & Shutdown Analyzer: Lower cost of safety system tests – obtain business value from analyzing actual shutdown / safety system performance. • Opportunity to foster joint work teams – maintenance and operations • Alert Manager: Better engineering and management response due to quicker notification of alerts: issues and potential problems, using automatic email, SMS etc messaging. Reliable means more production, lower cost, more safety

Asset Effectiveness Early, rich diagnostics per type of equipment Including partnerships with 3rd party equipment suppliers Diagnostic knowledge with the equipment itself Automate work processes Wireless field work support Calibration support Compressor / rotating equipment monitoring Control Loop monitoring Links to CMMS, documentation Safety Management Reporting Checking Shutdown systems Safety Valve monitoring Safe management of the Alarm system Remote Management Example Solutions Web-framework for oil & gas operations and production management Solution Components

The Asset Manager PKS – responding to faults Fill out a work order … An action has many different possibilities Send a page ... Clicking on the advised action can trigger an action--in this case a work order Or an email... Or run a program …

Asset Manager as the key real-time notification and work flow platform Usable on any facility, whatever the automation platform Notification via all Collaboration methods, including Documentation, and Impact Experion Alarm Information Assessment interface Field Entry, View Asset Manager Asset Management Collaborative Control Center IntelaTrac PKS PKS Scouts Safety Loop Turbo Profit Data HART Shutdown APC Scout Valve Scout Suite Sensor Scout & FF Analyzer Scout APC Apps Safety All Experion OPC Rotating Virtual All Valves Loops PKS Valves.. The plant is more than the sum of the instruments

Operational Excellence Solutions: Process • APC (Advanced Process Control) and Optimization technologies boost Production, providing a direct Revenue Increase • Honeywell’s APC and Optimization have repeatedly been used to increase Production and Reduce Cash Costs. • Can increase production by 2% to 10% depending on current conditions • Intelligent Choke controller • Flexible control able to smooth impact of slugs by manipulating choke valves. • Reduces trips due to smoother resulting level control in high pressure separator. • Documented cases on Shell platforms • Multivariable control – Profit Controller • Mature technology • Proven in oil & gas, onshore and offshore applications • In one recent case, increase was 6000 bbl/d. • Also documented cases on BP Ula platform, Woodside • Optimisation – Gas Lift and field wide • Coordinating multiple controllers for optimal performance • Enhanced optimisation by modeling from sand face to surface, through gathering network and gas lift. – with partner EPS. APC provides proven value in oil & gas!

Field Optimization Network Manifold iDO Well, Pipe Network, Facilities Well Choke Valve Field Pump Profit Optimizer Gathering Compressor Profit Controllers UNIFORMANCE SCADA Oil Gas Facilities

Integrated Field-Wide optimisation:Closing the loop with Multivariable Control AIM i-DO i-DO GAIN SUSTAIN Production Data Management i-DO Server Profit Bridge Production Planning Targets Well PerfCurves Network Model and Optimizer ProductionTests EconomicParameters WellModels Pres,GOR, BS&W Pres, kh,Skin Review,Approval ReservoirModels TransientPressure Analysis i-DO Client LAN/WAN/Internet/Intranet EngineerPCs PVO OBJECTIVE FUNCTION {PRODUCT VALUES, ENERGY COSTS} Profit Optimizer – MV Control coord Profit Controllers (RMPCT) MULTIPLE CHOKES MV CONTROL SEPARATOR 2 MV CONTROL GAS LOOP MV CONTROL SEPARATOR 1 MV CONTROL Wells, Separators

Additional areas covered by Honeywell • Operator Training simulators • High fidelity • Platforms, gas plants etc, as well as LNG • Shell, BP as major customers • Business integration • Large project capability • Experience at Nodco, Statoil, others • Integration to SAP via Business Hiway • Implementation of SAP via partner • Experience at Sasol • Implementation of Maximo Maintenance system • Improved Production Site, Plant & platform security • Honeywell security solutions include perimeter protection, Honeywell cctv cameras, Access control, Personnel on Board • Implement and link in 3rd party marine or other harsh service cameras • Central Management capability – country wide • DVM: Digital Video Manager • TemaLine Access Control • Integrated, unique real-time monitoring platform – EBI. • Including Caspian Pipeline consortium, Shell, Spanish nuclear plants, Dubai airport, Sydney Olympics

Oil & Gas Operational Excellence: conclusions • It’s achievable now • Technologies exist to support integration of safety, reliability, process and business management as well as security of facilities • Benefits are real: in increased production, reduced lifting costs, improved reliability and safety • Does not require a capital project to get started • Is not dependent on the underlying automation platform

Oil & Gas Operational Excellence