Christopher Carra

1. Christopher Carra La ExperienciaAustraliana en Operaciones Offshore Offshore Operations - The Australian Experience 19/5/2012 Director

2. La Experiencia Australiana en Operaciones OffshoreOffshore Operations - The Australian Experience • The Australian Offshore Resource Base • Offshore Development Types and Key Characteristics • Industry Challenges from an Australian Perspective • Liquids Production • The Mining Boom • Our Social Licence to Operate • Safety • Key Lessons

3. Australian Offshore Resources Courtesy of ABARE

4. Conventional Shallow Water: Bass Strait • Bass Strait has produced almost two thirds of Australia’s oil and almost one third of its gas production to date • Offshore platforms tied back to onshore processing plants • Pipeline network taking crude, condensate, gas to major centres and port facilities • Now in decline – focus mainly on gas supply to the eastern States

5. Conventional Shallow Water:North West Shelf • Near shore on shallow shelf a range of oil and gas developments using small mono-towers and platforms linked back to onshore facilities located on small islands • Major gas platforms located further out tied back by large trunklines to the main Karratha LNG facility • 5 LNG trains in operation • Over 2800 LNG cargoes delivered

6. Remote Oilfields • From mid 80s onwards, oil discovered off remote north and west coasts • No infrastructure or local markets • Region subject to severe tropical cyclones • Early adoption of new technology required • Disconnectable FPSO technology developed and employed since 1986 • Significant sophistication on latest FPSOs with complex subsea field requirements and deep water • Development of robust disconnect criteria to avoid cyclones

7. Remote Oilfields

8. Remote Offshore Gas Projects • Innovative use of a wide range of technologies • Large transportation distances to shore based facilities • First use of floating LNG technology Images courtesy of Chevron, Woodside, Inpex & Shell

9. Challenges • Enhancing Liquids Production • Consequences of “The Mining Boom” • Maintaining Social Licence to Operate • Enhancing Safety Performance

10. Enhancing Liquids Production • No major new discoveries • Deep water unexplored with low success rate – 1 in 12 • Growing petroleum trade deficit Courtesy of APPEA

11. Consequences of “The Mining Boom” Courtesy of ABARE

12. Consequences of “The Mining Boom” • Significant Structural Change occurring • Divergence geographically and by industry • Severe impacts on exchange rate sensitive industries • Significant employment challenges • Cost pressures and development constraints increasing financial hurdles for new projects • New unconventional gas may impact on higher cost Australian developments

13. Maintaining the Social Licence to Operate • Montara Blow Out: August - November 2009, Timor Sea • The Montara Commission of Inquiry concluded “that PTTEP Australasia did not observe sensible oilfield practices …major short comings (in systems and processes, communications, risk management, contractor management) were widespread and systemic, directly leading to the blow out.” Images courtesy of NOPSEMA

14. Maintaining the Social Licence to Operate • Basis of Regulatory Regime • Commonwealth and State jurisdictions • “Safety Case” regime • Performance/Objective based regulations • Onus to demonstrate to Regulator that risks are“As Low As Reasonably Practicable” • Operator is responsible for safe and effective operation of an Offshore Facility • Encourages continuous effort for improvement

15. Changes to Regulatory Regime • Single, unified national regulator for offshore “NOPSEMA” - National Offshore Petroleum Safety and Environmental Management Authority • Enforces compliance across the industry: • Offshore Safety • Well Management • Integrity • Environmental Management • Titles Administration separated out to avoid any potential conflicts of objectives between energy supply and safety

16. Industry Response to Findings of the Montara Commission • Comprehensive review of prevention and response operations and procedures • Reviewed drilling procedures, risk reduction measures, monitoring and assurance processes • Development of self-audit tools for management of well operations • Cap and containment procedures • “Mutual Benefit” aid agreements for drilling relief wells

17. Challenges – Safety Performance • Accident rate of 2.02 is lowest since 2005 – typically fluctuates between 2 and 3.7 • International benchmarking indicates there is room for improvement • Over 40% of incidents occur on floating production units • FPSOs over represented in hydrocarbon releases • Rate of damage to safety critical equipment 3 times that for fixed platforms • Improvements in safety will be critical for the large floating productions systems now being built for offshore gas projects

18. Key Lessons • Implement best-practice safety and environmental regulatory regime • Need to ensure that Regulatory authorities are adequately resourced & trained & continues an active industry dialogue • Become an early adopter of technology but manage the risks • Need to invest to understand regional geology, environment, metocean • e.g. Geoscience Australia’s $75m energy security program returned 833% through exploration commitments • Need to ensure that Colombian industry has active participation on services side in long term • Training/university/R&D encouragement • Consider development of Common User Facilities • Highly successful facility built in Western Australia • Remain aware of impact of high dollar on viability of local services industry

19. Thank you