THE GOVERNMENT OF THE REPUBLIC OF TRINIDAD AND TOBAGO

OffshoreHeavyOilReservoirs Developmentin TrinidadandTobago

PenelopeBradshawNiles SeniorPetroleumEngineer MinistryofEnergyandEnergyAffairs TrinidadandTobago January20,2011

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Outline

OffshoreHeavyOil(OHO) Context Challenges HeavyOilinT&T Historicalperspective OffshoreT&THeavyOilReservoir ScenariosfortheFuture

Framework ScenarioContext OffshoreHeavyOilScenarios Conclusions

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WorldwideProvedOilReserves

SOURCE:BpStatisticalReviewofworldEnergy,2010

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HeavyOilReserves

HeavyOilplaysa significantroleinworldoil reserves 31%ofworldsproved reserves(1P) Heavy 266billionbarrels ExtraHeavy 146billion barrels
SOURCE:DouglasWestWoodLTD,2010

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OffshoreHeavyOil

Approximately8%ofworldproductionisfromheavyoil Ofthis,only10%isbeingproducedoffshore Someofthemoreprolificoffshoreheavyoilfields

CaptainFieldlocatedoffshoreUnitedKingdom 956millionbarrels in340ft.waterdepth(19degreeAPI) GraneFieldinNorway 755millionbarrelsin405ft.waterdepth (19degreeAPI) JubarteFieldoffshoreBrazilinCamposBasinmorethan3500ft. waterdepth 600millionbarrels(17degreeAPI)

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OffshoreHeavyOilLocations

SOURCE:DouglasWestWood,2010

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CaptainField UnitedKingdom.
Property
Company Distanceoffshore API Waterdepth Recovery Reserves Porosity Permeability Production Facilities

Measurement
Texaco 130km 19 88cp@rt 341ft 2035% 956MMbbls 30% 37Darcies 85,000bbl/d SpecializedFPSOs

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GraneFieldNorway.
Property
Company Distanceoffshore API Waterdepth Reservoirpressure Recovery Reserves Porosity Permeability Paythickness Reservoirarea Production Facilities

Measurement
Statoil 185km 19 405ft 2466psi 3540% 755MMbbls 33% 510Darcies 120 ft 10km2 200,000bbl/d 29inchPipeline

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JubarteFieldBrazil.

Property
Company Distanceoffshore API Waterdepth Reservoirpressure Reserves Production Facilities

Measurement
Petrobras 77km 17

3,500ft 2,600psi 600MMbbls 18,000b/d

FPSOs

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OffshoreHeavyOilCosts

HighFrontendcostsduetointrinsicheavyoilqualities
Highviscosity LowAPIgravity Lowreservoirenergy Highaciditycontent

Marketpriceofheavyoilcanbeaslowas65%ofstandard lightoilsuchasBrent/WTI Profitabilityofproductiondirectlycorrelatedtopriceofoil

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EnergyCostComparison
SOURCE:DouglasWestWood,2010

However,offshoreheavyoilisstillcompetitiveoverall

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HeavyOilCharacteristics

QualitiesofHeavyOillessdesirablethanlight

SOURCE:HeavyOilRecoveryAmajorEnergysourceforthe21st future.

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TechnicalChallenges

FluidProperties
Difficultyinmeasurementoffluidproperties HighCAPEXforupgradingofHeavyOils

ReservoirCharacterization Drillingandcompletion
Highwellproductivityrequirements Wellconstructionrequirements

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ReservoirPerformance

EnhancedOilrecoverytechniquescannotbeapplied offshoreinthesamewayasonshore Weightandspaceconsiderationsonplatforms EORtechniquesaresensitivetoimplementationtiming this maybeaproblemoffshore HoweverthereareEORprojectsoffshore

ThermalMethods ShallowenvironmentslikeLakeMaracaibo WateralternatingGas(WAG) SouthBraeField,UK

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TrinidadandTobagoOffshore HeavyOilLocation

Offshore heavy oil area

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OffshoreHeavyOilWestCoast

Offered in Bid round

Soldado Area

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T&TOffshoreHeavyOil

Heavyoiloffshoreproductionapproximately15,000bopd Allviaprimaryproduction HeavyoilfromtheWestCoastprimarilyfoamyoil which hashighGasOilRatioandismobile HeavyoilaccumulationsareassociatedwiththeLosBajos faultsystem OccursintheForest,CrusesouthoftheLosBajosandthe SpringvaleandManzanillaformationsnorthoftheLos Bajos Oilgravitiesrangefrom11to20degreeAPI

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Fieldcomparisons
Norway Grane Statoil38% Prodstart2003 185km 1920 405ft 2466psi 3540% 755MMbbls 2733% 510Darcies 120 ft 200,000bbl/d 29inchPipeline Brazil Jubarte Petrobras 2001 77km 1720 3500ft 2600psi 600MMbbls 18,000bbl/d FPSOs TrinidadTobago Soldado Trinmar 1962 35km 1620 100ft 1600psi 1620% ???MMbbls 2729% 0.70.8Darcies 24,028bbl/d LeasedFPSO

Country Field Company Discovery Distanceoffshore API Waterdepth Reservoir pressure Recovery Reserves Porosity Permeability Paythickness Production Facilities

UK Captain Texaco 1996 130km 1820 341ft 2035% 956MMbbls 2730% 37Darcies 85,000bbl/d FPSOs

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T&TOffshoreHeavyOilResourceSize

Significantheavyoilareasstilltobeexploited Thejuryisstilloutwithrespecttothesizeoftheresources Complexgeology Notthevastamountsofheavyoilstructuresasseenin Venezuelaforexample Solutionsincludeusinganupgrader Whatistheminimumsizeofresourcesneeded Whatisthefutureoutlookandhowdowenavigatefrom here?

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DrivingForces

Offshore Heavy oil Trinidad

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ScenarioAnalysis

Scenariosarenotforecasts Allowsforissues,constraintsand uncertaintiestobeidentified Designedtochallengeour thinking

Source: Assoc.NowNo2F2010

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ScenarioContext

WorldMarketedEnergyConsumption: 19902035(quadrillionBTU)

SOURCE:EIA2010

EnergyConsumptionexpectedtoincrease

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ScenarioContext

WorldsLiquidProduction,19902035, millionsbarrelsperday

SOURCE:EIA2010

Continuedincreasingdemandfor unconventionaloil

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EnergyScenarios

WorldOilPricesinthreeOilPriceCases 19902035(2007barrelsperday)

SOURCE:EIA2010

EIA2010pricescenariosusedasbasis

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EnergyScenarios
WorldliquidsFuelProductioninthreeCases (millionbarrelsperday)

Highestliquidsdemandinlow oilpricecase Unconventionalfuel productionisgreatestinhigh oilpricescenario

SOURCE:EIA2010

Unconventionaldemandissettoincreasein everyscenario

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TrinidadOHOScenarios
Resource Size
High

Better Late Than Never Oil Price

Low Offshore Heavy oil Trinidad

Ramajay
High

No way Jose
Low

Tabanca (if only)

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TrinidadOHOScenarios
Resource Size
High

Better Late Than Never Oil Price

Low Offshore Heavy oil Trinidad

Ramajay
High

No way Jose
Low

Tabanca (if only)

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$ (BestCase) ScenarioRamajay

HighOilPrice,LargeOHOResourceSize WorldOutlook
Developmentofdifficulthighriskexpensiveheavyoil accumulations DevelopmentofEORtechnologies Increaseinenvironmentalconcerns Substitutiontootherformsofenergybecauseofhighoil priceslikeBiofuelsandGTL

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$ ScenarioRamajay $ (BestCase)

HighOilPrice,LargeOHOResourceSize T&TOutlook
Largerthanexpectedoffshoreheavyoilaccumulationsoff WestCoast;maybedeepwaterheavyoildiscovery Involvementofmajordeepwaterplayers Increasedactivityinheavyoil Sharpincreaseinoilproduction matchingthatofgas

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TrinidadOHOScenarios
Resource Size
High

Better Late Than Never Oil Price

Low Offshore Heavy oil Trinidad

Ramajay
High

No way Jose
Low

Tabanca (if only)

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$ (ifonly) ScenarioTabanca

HighOilPrice,MarginalOHOResourceSize T&TOutlook
Lessthanexpectedoffshoreheavyoilresources large gas/condensatefindsindeepwaterarea Highoilpriceandnewtechnologiesmakethesmall accumulationseconomicwithhighoilprices SmallindependentoperatorsfromareaslikeNorthSea andlocalcompaniesseekinggrowthareinterested Increasedproductionofheavyoilwithfocusonefficiency ofoperations Focusandswitchtootheralternativesourcesofenergy

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TrinidadOHOScenarios
Resource Size
High

Better Late Than Never Oil Price

Low Offshore Heavy oil Trinidad

Ramajay
High

No way Jose
Low

Tabanca (if only)

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ScenarioBetter$ latethanNever

LowOilPrice,LargeOHOResourceSize WorldOutlook
IncreasedproductionbyOPEC Dampenedproductionofbothconventionaland unconventionaloils Fewerunconventionalresourcesbecomeeconomically competitive Increaseinenvironmentalconcerns

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ScenarioBetterLate $ ThanNever

LowOilPrice,LargeOHOResourceSize T&TOutlook
Largerthanexpectedoffshoreheavyoilaccumulationsoff WestCoast;maybedeepwaterheavyoildiscovery OperatorsrequirefiscalincentivestodevelopOHO Companiesareriskaversetoadopttechnological innovationduetouncertaintiesinoperationalcosts, marketbehaviorandcompetition Longertimetoincreasedoffshoreheavyoilproduction

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TrinidadOHOScenarios
Resource Size
High

Better Late Than Never Oil Price

Low Offshore Heavy oil Trinidad

Ramajay
High

No way Jose
Low

Tabanca (if only)

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ScenarioNo WayJose $

LowOilPrice,SmallOHOResourceSize T&TOutlook
Lessthanexpectedoffshoreheavyoilresources large gas/condensatefindsindeepwaterarea Operatorspostponeinvestmentforthefuture SmallindependentoperatorsfromareaslikeNorthSea andlocalcompaniesseekinggrowthareinterested Continuedfocusongasdevelopments

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$ Conclusions

Thesizeoftheresourceaccumulationandthepriceofoilarekey uncertaintiesindevelopmentofoffshoreheavyoilinTrinidadand Tobago Thereisaneedfordetailedreservoircharacterizationofalready knownaccumulations Fiscalincentivesmaybedesiredinlowoilpriceenvironment regardlessoftheresourcesize Needtodeterminethepriceofoilnecessarytotrigger economicallyviableoffshoreheavyoilprojects