DUG Permian Basin - Amazon Simple Storage Service (S3)
DUG Permian Basin Robert Manelis General Manager, Permian Production Unit 21 May 2014
Disclaimer Forward-looking statements This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events, conditions, circumstances and the future financial performance of BHP Billiton, including for capital expenditures, production volumes, project capacity, and schedules for expected production. Often, but not always, forward-looking statements can be identified by the use of the words such as “plans”, “expects”, “expected”, “scheduled”, “estimates”, “intends”, “anticipates”, “believes” or variations of such words and phrases or state that certain actions, events, conditions, circumstances or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this presentation. For more detail on those risks, you should refer to the sections of our annual report on Form 20-F for the year ended 30 June 2012 entitled “Risk factors”, “Forward looking statements” and “Operating and financial review and prospects” filed with the U.S. Securities and Exchange Commission. All estimates and projections in this presentation are illustrative only. Our actual results may be materially affected by changes in economic or other circumstances which cannot be foreseen. Nothing in this presentation is, or should be relied on as, a promise or representation either as to future results or events or as to the reasonableness of any assumption or view expressly or impliedly contained herein. No offer of securities Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities in any jurisdiction. Reliance on third party information The views expressed in this presentation contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This presentation should not be relied upon as a recommendation or forecast by BHP Billiton.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 2
Key Themes • One of the world’s largest corporations, diversified global portfolio of assets
• A large, high quality resource base concentrated in Australia and the US – Conventional and Unconventional • Committed to ongoing improvement in our HSEC performance and a good neighbor in the communities where we operate • We have successfully refocused drilling activity on our liquids rich acreage • Progressing development in the liquids rich Permian • We will continue to optimize our investment program for value • Pursuing significant productivity opportunities targeting cost and resource recovery
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 3
25th largest company in the world by market cap Market capitalisation at 30th April 2014 (US$ billion) 550 500 450
Other Diversified Miners
400 350 300 250 200 150 100 50
Vale (123rd)
Anglo American (276th)
Sources: Bloomberg, BHP Billiton. Petrochina, Ind & Commercial Bank of China, China Mobile and other enterprises have been excluded due to high percentage of non free float shares.
Glencore Xstrata (114th)
Rio Tinto (61st)
BHP Billiton (25th)
HSBC
Verizon
IBM
Pfizer
JP Morgan Chase
Procter & Gamble
Novartis
Chevron
Nestle
Roche
Wal-Mart
Royal Dutch Shell
Wells Fargo
General Electric
Johnson & Johnson
Berkshire Hathaway
Microsoft
Google
Exxon Mobil
Apple
0
An outstanding global portfolio of assets, diversified by commodity, geography and market Aluminium, Manganese and Nickel A global producer and supplier of primary aluminium, alumina and nickel and manganese ore and alloys.
Coal A global producer of thermal coal and the largest global supplier of seaborne traded hard coking coal.
Copper A leading global explorer and producer of copper, silver, lead, uranium and zinc.
Iron Ore A premier global supplier of iron ore.
Petroleum A global leader in oil and gas exploration, production, development and marketing.
Potash Development Option Focused on potash project development.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 5
A 670 Mboe/d Petroleum business comprised of high-quality Conventional and Shale assets
Shale (42%)
Eagle Ford
Permian
Fayetteville Haynesville
International (11%) UK
Trinidad and Tobago Shenzi
Algeria
Pakistan
Neptune
Australia (34% of FY13 production) Atlantis
Mad Dog
Gulf of Mexico (13%)
NW Shelf
Pyrenees
Bass Strait
Macedon
Stybarrow
Minerva
Source: BHP Billiton analysis.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 6
Australia and the US remain our core regions FY14 BHP Billiton capital and exploration expenditure BHP Billiton
Petroleum Shale Australia Gulf of Mexico Exploration other
Petroleum other
United Kingdom Onshore US
Algeria
Gulf of Mexico
Pakistan
Trinidad & Tobago
Australia
Bubble size represents resource of one billion barrels of oil equivalent.
Note: Please refer to BHP Billiton Investor Briefing – Day 2 lodged with the ASX on 11/12/2013. The material assumptions underpinning the estimates presented above are unchanged.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 7
Committed to sustainable development Be the safest company in industry
Protect the land where we operate Safeguard and manage water resources Minimise air emissions Be a good neighbor to our communities
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 8
To be the safest company in the industry Recordable Injuries per Million Feet Drilled (US H&P rig fleet) H&P Onshore US rig fleet average
•
US Onshore business is very challenging;
•
Relatively inexperienced workforce;
•
Contractor selection is critical;
•
Hazard identification is a key focus area;
•
Material risks identified and managed;
•
Regularly host safety workshops (safety stand-up).
BHP Billiton Onshore US H&P rigs
2006
2007
2008
2009
2010
2011
BHP Billiton
2012
Recordable Injuries per Million Hours Worked (TRIF, 12 month moving average) 8
Petroleum TRIF
Shale TRIF
6 4 2 0 2008
2009
2010
2011
2012
2013
Source: Helmerich & Payne, Inc.; BHP Billiton.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 9
Community; Being a Good Neighbor • Creating a Community Reference Group (CRG) in Pecos. The CRG is composed of 15 local civic leaders that meet monthly to discuss current events and get an update on BHP Billiton activities. • Supporting local DARE projects such as repairing senior citizens homes and summer camp for at-risk-kids. • Granting college scholarships to high school students based on their community involvement.
Community Reference Group Meeting
• Provide equipment and training for First Responders.
DARE high school students rehabilitating a home in Pecos Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 10
Significant presence in premier US shale plays • We hold 1.5 million net acres1 across four highly productive US shale plays and three US states:
BHP Billiton Onshore US shale plays
– Black Hawk (Eagle Ford) – condensate rich;
– Hawkville (Eagle Ford) – mix of condensate and gas with NGL; – Permian – liquids rich but geologically complex;
– Haynesville – prolific dry gas wells with premier acreage position;
Houston liquids focused area dry gas focused area
– Fayetteville – long term, low technical risk, dry gas option. 1. As at 30 June 2013. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 11
Shale development plan will be continually optimised for value • We are prioritizing investment in the liquids rich, high return shale assets.
BHP Billiton Onshore US shale plays
– pursuing accelerated development in the prolific Black Hawk area; – timing Hawkville development for liquids content and lease retention; – large scale development of the Permian will extend our liquids production profile; • We are preserving the value of our dry gas shale assets. – current drilling the Haynesville delivers 30%¹ rates of return; – Fayetteville investment limited to strong non-operated opportunities with 25%¹ rates of return;
Houston liquids focused area dry gas focused area
• We have flexibility in our Shale portfolio to time investment for maximum value. 1. Rate of return after tax, based on September 2013 futures prices. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 12
Extending our high return liquids profile • Efforts underway to expand our Permian land position in our core focus area. – 100,000 net acres in identified focus areas; – acquiring acreage in highly prospective areas and divesting acreage elsewhere;
Focus area
– testing multiple productive horizons.
Pearsall
Houston
• First shale exploration well drilled in October 2013 in the emerging Pearsall play. – successfully accessed an option across 100,000 net contiguous acres; – evaluation ongoing to determine liquids production potential;
Permian 100,000 net acres Pearsall 100,000 net acres
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Black Hawk 58,000 net acres
Slide 13
Permian – we have defined a highly prospective focus area BHP Billiton acreage in the Permian basin
Focus area
Under evaluation
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 14
Permian – unique multiple horizon potential
• Lease ownership interest can vary by depth and horizon.
Avalon 1st 2nd 3rd
Wolfcamp
• Extensive appraisal program given the large areal and vertical footprint.
Approximately 4,000 feet thick
• A vertical well program followed by targeted horizontal wells has been used to appraise the play.
Bone Spring
• Large liquid bearing column creates the potential for multiple economically productive horizons.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Upper Middle Lower
Schematic for representative purposes
Slide 15
Acreage position appraised through vertical program • Appraisal program designed to delineate acreage position spatially and vertically. • Vertical test wells drilled through subject intervals with ‘mini-fracs’ placed in multiple prospective horizons. • Frac’d zones flowed back and correlated to observed horizontal well performance. • Subsequent horizontal laterals followed up to confirm encouraging vertical frac flowback results.
• Results informed development plan.
Wells
Vertically
Spatially
A
B
C
D
E
Tested Horizons
E
C A D B Schematic for representative purposes
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 16
Permian – targeting a 100 kboe/d development • Well results support planned 100 kboe/d development within the focus area with approximately 60% liquids. • Process of acquiring and consolidating our acreage position.
Production rate – recent wells in focus area (boe/d, 100% basis) 1,800 1,600
1,400 1,200 1,000
• Testing multiple productive horizons.
800
• Significant productivity upside with lower well cost and higher recovery as we have demonstrated in Black Hawk.
400
600
200 0 0
50
100
150
200
(days)
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 17
Learning to get better – faster • Benchmark relentlessly
• Build upon best-in-class performance • Utilize models to drive trials and pilots • Apply design of experiment principles to accelerate feedback • Invest in diagnostics to validate models and gather insights • Leverage learnings across organization
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 18
Improving speed and reducing cost BHP Billiton Black Hawk drilling time performance1 (days)
productivity improvement of ~26%
40
30 20
• Balance drilling focus between time improvements and cost improvements. • Tendered key contracts for tangibles and services.
10 0 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14
BHP Billiton Black Hawk drilling cost
performance2
(US$ million)
productivity improvement of ~24%
8 6
• Continual review of well specification and procedures to ensure fit for purpose design.
• Eliminating waste and wait time in process.
4
• Reduce variability in drilling performance.
2 0
Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 1. Drilling time from spud to rig release. 2. 3-string well design.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 19
Utilize models to diagnose performance issues Flowing BHP Billiton match (psi)
Gas rate history (mmcfd)
Rate restricted
12
History -- Model X
Pressure
Gas Rate
8
4
0
0
400
Days
800
Apparent boundary dominated flow
X
--
History Model
Hyperbolic/terminal decline
1200
Time (days)
Proppant placement model (feet) Bossier
Lab based pressure dependent permeability (md ratio vs psi)
Time (days)
0.0 lb/ft2
Poorly propped in upper layers
Haynesville
0.2 lb/ft2
0.4 lb/ft2
0.6 lb/ft2
Smackover
Propped in lower layers 0.8 lb/ft2
0ft
5000ft
Length (Idealized Case) Source: BHP Billiton.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 20
Uniform fracture geometry is ideal Previous Design – Longer stage length
Microseismic
Production Log Schlumberger BroadBand
•
Microseismic and production logging confirm disproportionate contribution by cluster.
•
Using diversion techniques to improve stimulated rock volume and create a more uniform distribution across clusters.
•
Early results encouraging.
Source: BHP Billiton, Schlumberger.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 21
Uniform fracture geometry is ideal Concept – Shorter stage length
Microseismic
Production Log Schlumberger BroadBand
•
Microseismic and production logging confirm disproportionate contribution by cluster.
•
Using diversion techniques to improve stimulated rock volume and create a more uniform distribution across clusters.
•
Early results encouraging.
Source: BHP Billiton, Schlumberger.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 22
Production, bo
Production, mbo
Benchmarking performance to measure effectiveness
B (642)
C (333)
D (162)
BHP A Billiton (154) (161 wells)
B (435)
C (176)
D (120)
BHP A Billiton (235) (192 wells)
B (558)
C (265)
D (154)
BHP A Billiton (48) (57 wells)
B (167)
C (52)
D (52)
Production, mbo
Production, mboe
BHP A Billiton (227) (226 wells)
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Source: BHP Billiton analysis.
Slide 23
Summary • One of the world’s largest corporations with a strong portfolio of Conventional and Shale assets.
• One of the most active unconventional operators in North America. • Success in Unconventionals requires organizations to learn – quickly. • Analytical and numerical models help target trials and accelerate learning. • Benchmarking is an important tool to allow you to build upon the success of others. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 24
Disclaimer Forward-looking statements This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events, conditions, circumstances and the future financial performance of BHP Billiton, including for capital expenditures, production volumes, project capacity, and schedules for expected production. Often, but not always, forward-looking statements can be identified by the use of the words such as “plans”, “expects”, “expected”, “scheduled”, “estimates”, “intends”, “anticipates”, “believes” or variations of such words and phrases or state that certain actions, events, conditions, circumstances or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this presentation. For more detail on those risks, you should refer to the sections of our annual report on Form 20-F for the year ended 30 June 2012 entitled “Risk factors”, “Forward looking statements” and “Operating and financial review and prospects” filed with the U.S. Securities and Exchange Commission. All estimates and projections in this presentation are illustrative only. Our actual results may be materially affected by changes in economic or other circumstances which cannot be foreseen. Nothing in this presentation is, or should be relied on as, a promise or representation either as to future results or events or as to the reasonableness of any assumption or view expressly or impliedly contained herein. No offer of securities Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities in any jurisdiction. Reliance on third party information The views expressed in this presentation contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This presentation should not be relied upon as a recommendation or forecast by BHP Billiton.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 2
Key Themes • One of the world’s largest corporations, diversified global portfolio of assets
• A large, high quality resource base concentrated in Australia and the US – Conventional and Unconventional • Committed to ongoing improvement in our HSEC performance and a good neighbor in the communities where we operate • We have successfully refocused drilling activity on our liquids rich acreage • Progressing development in the liquids rich Permian • We will continue to optimize our investment program for value • Pursuing significant productivity opportunities targeting cost and resource recovery
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 3
25th largest company in the world by market cap Market capitalisation at 30th April 2014 (US$ billion) 550 500 450
Other Diversified Miners
400 350 300 250 200 150 100 50
Vale (123rd)
Anglo American (276th)
Sources: Bloomberg, BHP Billiton. Petrochina, Ind & Commercial Bank of China, China Mobile and other enterprises have been excluded due to high percentage of non free float shares.
Glencore Xstrata (114th)
Rio Tinto (61st)
BHP Billiton (25th)
HSBC
Verizon
IBM
Pfizer
JP Morgan Chase
Procter & Gamble
Novartis
Chevron
Nestle
Roche
Wal-Mart
Royal Dutch Shell
Wells Fargo
General Electric
Johnson & Johnson
Berkshire Hathaway
Microsoft
Exxon Mobil
Apple
0
An outstanding global portfolio of assets, diversified by commodity, geography and market Aluminium, Manganese and Nickel A global producer and supplier of primary aluminium, alumina and nickel and manganese ore and alloys.
Coal A global producer of thermal coal and the largest global supplier of seaborne traded hard coking coal.
Copper A leading global explorer and producer of copper, silver, lead, uranium and zinc.
Iron Ore A premier global supplier of iron ore.
Petroleum A global leader in oil and gas exploration, production, development and marketing.
Potash Development Option Focused on potash project development.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 5
A 670 Mboe/d Petroleum business comprised of high-quality Conventional and Shale assets
Shale (42%)
Eagle Ford
Permian
Fayetteville Haynesville
International (11%) UK
Trinidad and Tobago Shenzi
Algeria
Pakistan
Neptune
Australia (34% of FY13 production) Atlantis
Mad Dog
Gulf of Mexico (13%)
NW Shelf
Pyrenees
Bass Strait
Macedon
Stybarrow
Minerva
Source: BHP Billiton analysis.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 6
Australia and the US remain our core regions FY14 BHP Billiton capital and exploration expenditure BHP Billiton
Petroleum Shale Australia Gulf of Mexico Exploration other
Petroleum other
United Kingdom Onshore US
Algeria
Gulf of Mexico
Pakistan
Trinidad & Tobago
Australia
Bubble size represents resource of one billion barrels of oil equivalent.
Note: Please refer to BHP Billiton Investor Briefing – Day 2 lodged with the ASX on 11/12/2013. The material assumptions underpinning the estimates presented above are unchanged.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 7
Committed to sustainable development Be the safest company in industry
Protect the land where we operate Safeguard and manage water resources Minimise air emissions Be a good neighbor to our communities
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 8
To be the safest company in the industry Recordable Injuries per Million Feet Drilled (US H&P rig fleet) H&P Onshore US rig fleet average
•
US Onshore business is very challenging;
•
Relatively inexperienced workforce;
•
Contractor selection is critical;
•
Hazard identification is a key focus area;
•
Material risks identified and managed;
•
Regularly host safety workshops (safety stand-up).
BHP Billiton Onshore US H&P rigs
2006
2007
2008
2009
2010
2011
BHP Billiton
2012
Recordable Injuries per Million Hours Worked (TRIF, 12 month moving average) 8
Petroleum TRIF
Shale TRIF
6 4 2 0 2008
2009
2010
2011
2012
2013
Source: Helmerich & Payne, Inc.; BHP Billiton.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 9
Community; Being a Good Neighbor • Creating a Community Reference Group (CRG) in Pecos. The CRG is composed of 15 local civic leaders that meet monthly to discuss current events and get an update on BHP Billiton activities. • Supporting local DARE projects such as repairing senior citizens homes and summer camp for at-risk-kids. • Granting college scholarships to high school students based on their community involvement.
Community Reference Group Meeting
• Provide equipment and training for First Responders.
DARE high school students rehabilitating a home in Pecos Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 10
Significant presence in premier US shale plays • We hold 1.5 million net acres1 across four highly productive US shale plays and three US states:
BHP Billiton Onshore US shale plays
– Black Hawk (Eagle Ford) – condensate rich;
– Hawkville (Eagle Ford) – mix of condensate and gas with NGL; – Permian – liquids rich but geologically complex;
– Haynesville – prolific dry gas wells with premier acreage position;
Houston liquids focused area dry gas focused area
– Fayetteville – long term, low technical risk, dry gas option. 1. As at 30 June 2013. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 11
Shale development plan will be continually optimised for value • We are prioritizing investment in the liquids rich, high return shale assets.
BHP Billiton Onshore US shale plays
– pursuing accelerated development in the prolific Black Hawk area; – timing Hawkville development for liquids content and lease retention; – large scale development of the Permian will extend our liquids production profile; • We are preserving the value of our dry gas shale assets. – current drilling the Haynesville delivers 30%¹ rates of return; – Fayetteville investment limited to strong non-operated opportunities with 25%¹ rates of return;
Houston liquids focused area dry gas focused area
• We have flexibility in our Shale portfolio to time investment for maximum value. 1. Rate of return after tax, based on September 2013 futures prices. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 12
Extending our high return liquids profile • Efforts underway to expand our Permian land position in our core focus area. – 100,000 net acres in identified focus areas; – acquiring acreage in highly prospective areas and divesting acreage elsewhere;
Focus area
– testing multiple productive horizons.
Pearsall
Houston
• First shale exploration well drilled in October 2013 in the emerging Pearsall play. – successfully accessed an option across 100,000 net contiguous acres; – evaluation ongoing to determine liquids production potential;
Permian 100,000 net acres Pearsall 100,000 net acres
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Black Hawk 58,000 net acres
Slide 13
Permian – we have defined a highly prospective focus area BHP Billiton acreage in the Permian basin
Focus area
Under evaluation
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 14
Permian – unique multiple horizon potential
• Lease ownership interest can vary by depth and horizon.
Avalon 1st 2nd 3rd
Wolfcamp
• Extensive appraisal program given the large areal and vertical footprint.
Approximately 4,000 feet thick
• A vertical well program followed by targeted horizontal wells has been used to appraise the play.
Bone Spring
• Large liquid bearing column creates the potential for multiple economically productive horizons.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Upper Middle Lower
Schematic for representative purposes
Slide 15
Acreage position appraised through vertical program • Appraisal program designed to delineate acreage position spatially and vertically. • Vertical test wells drilled through subject intervals with ‘mini-fracs’ placed in multiple prospective horizons. • Frac’d zones flowed back and correlated to observed horizontal well performance. • Subsequent horizontal laterals followed up to confirm encouraging vertical frac flowback results.
• Results informed development plan.
Wells
Vertically
Spatially
A
B
C
D
E
Tested Horizons
E
C A D B Schematic for representative purposes
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 16
Permian – targeting a 100 kboe/d development • Well results support planned 100 kboe/d development within the focus area with approximately 60% liquids. • Process of acquiring and consolidating our acreage position.
Production rate – recent wells in focus area (boe/d, 100% basis) 1,800 1,600
1,400 1,200 1,000
• Testing multiple productive horizons.
800
• Significant productivity upside with lower well cost and higher recovery as we have demonstrated in Black Hawk.
400
600
200 0 0
50
100
150
200
(days)
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 17
Learning to get better – faster • Benchmark relentlessly
• Build upon best-in-class performance • Utilize models to drive trials and pilots • Apply design of experiment principles to accelerate feedback • Invest in diagnostics to validate models and gather insights • Leverage learnings across organization
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 18
Improving speed and reducing cost BHP Billiton Black Hawk drilling time performance1 (days)
productivity improvement of ~26%
40
30 20
• Balance drilling focus between time improvements and cost improvements. • Tendered key contracts for tangibles and services.
10 0 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14
BHP Billiton Black Hawk drilling cost
performance2
(US$ million)
productivity improvement of ~24%
8 6
• Continual review of well specification and procedures to ensure fit for purpose design.
• Eliminating waste and wait time in process.
4
• Reduce variability in drilling performance.
2 0
Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 1. Drilling time from spud to rig release. 2. 3-string well design.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 19
Utilize models to diagnose performance issues Flowing BHP Billiton match (psi)
Gas rate history (mmcfd)
Rate restricted
12
History -- Model X
Pressure
Gas Rate
8
4
0
0
400
Days
800
Apparent boundary dominated flow
X
--
History Model
Hyperbolic/terminal decline
1200
Time (days)
Proppant placement model (feet) Bossier
Lab based pressure dependent permeability (md ratio vs psi)
Time (days)
0.0 lb/ft2
Poorly propped in upper layers
Haynesville
0.2 lb/ft2
0.4 lb/ft2
0.6 lb/ft2
Smackover
Propped in lower layers 0.8 lb/ft2
0ft
5000ft
Length (Idealized Case) Source: BHP Billiton.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 20
Uniform fracture geometry is ideal Previous Design – Longer stage length
Microseismic
Production Log Schlumberger BroadBand
•
Microseismic and production logging confirm disproportionate contribution by cluster.
•
Using diversion techniques to improve stimulated rock volume and create a more uniform distribution across clusters.
•
Early results encouraging.
Source: BHP Billiton, Schlumberger.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 21
Uniform fracture geometry is ideal Concept – Shorter stage length
Microseismic
Production Log Schlumberger BroadBand
•
Microseismic and production logging confirm disproportionate contribution by cluster.
•
Using diversion techniques to improve stimulated rock volume and create a more uniform distribution across clusters.
•
Early results encouraging.
Source: BHP Billiton, Schlumberger.
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 22
Production, bo
Production, mbo
Benchmarking performance to measure effectiveness
B (642)
C (333)
D (162)
BHP A Billiton (154) (161 wells)
B (435)
C (176)
D (120)
BHP A Billiton (235) (192 wells)
B (558)
C (265)
D (154)
BHP A Billiton (48) (57 wells)
B (167)
C (52)
D (52)
Production, mbo
Production, mboe
BHP A Billiton (227) (226 wells)
Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Source: BHP Billiton analysis.
Slide 23
Summary • One of the world’s largest corporations with a strong portfolio of Conventional and Shale assets.
• One of the most active unconventional operators in North America. • Success in Unconventionals requires organizations to learn – quickly. • Analytical and numerical models help target trials and accelerate learning. • Benchmarking is an important tool to allow you to build upon the success of others. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014
Slide 24
