An Operator’s View on Deepwater Floating Systems and Technology Development

1. An Operator’s View on Deepwater Floating Systems and Technology Development Ming-Yao LeeManager of Offshore & Marine EngineeringChevron Energy Technology Company SMART 100 Symposium on MArineResource & Technology Taipei, Taiwan October 16, 2011 2011 Chevron U.S.A., Inc.  All rights reserved.

2. Presentation Outline • Why Deep Water? • Overview of Floating System Concepts • Concept Selection Process and Criteria • Deepwater Design Challenges • Chevron’s Deepwater Project Experiences • New and Emerging Floating System Concepts • Concluding Remarks 2011 Chevron U.S.A., Inc.  All rights reserved.

3. Why Deep Water? – Easy Oil is Gone! • What does it mean: • Harsher environments • Deeper waters • Lack of infrastructures • What can we do about it: Courtesy of Bluewater • Opportunities of floating system technologies for enabling solutions • Mitigation of risks associated with use of new technology • Building collaborative & productive partnerships to leverage project experience and accelerate technology deployment 2011 Chevron U.S.A., Inc.  All rights reserved.

4. Deepwater Resource is Significant Reserves MMBOE Water Depth ft 1,000 – 1,499 1,500 – 4,999 5,000 – 7,499 >7,500 1 – 49 5 – 249 250+ 1000 ft 1500ft 5000 ft 7500 ft Estimated Volume of Gulf of Mexico Deepwater Fields OCS Report: MMS 2009-016 2011 Chevron U.S.A., Inc.  All rights reserved.

5. Chevron and the Worldwide Portfolio • Long-term global deepwater offshore growth expected • 2011–2015 deepwater expenditures estimated to be over $200 B, ~75% increase over the previous five years • The “Golden Triangle” still dominate, growth in Asia Pacific will be significant Worldwide Producing Deepwater (DW) Basins Global Forecast of FPS Spending Chevron Participation Other DW Basins 2011 Chevron U.S.A., Inc.  All rights reserved.

6. What Concepts Are in Use? • FPSOs continue to dominate concept selection primarily from lack of pipeline infrastructure. • Driven by drilling, completion and well intervention costs, other concepts have become more important such as: • Semi-submersibles • Tension leg platforms (TLPs) • Spars Global Forecast of FPS Hull Type 2011 Chevron U.S.A., Inc.  All rights reserved.

7. Proven Floating Concepts Dry- or Wet-Tree Solutions Wet-Tree Solutions • Spar •  Good heave motions • ▬ Vortex-induced motion (VIM) • ▬ Size-limited • TLP • Minimum heave • Weight-sensitive • Depth-limited • Semi-Submersible •  Quayside integration • Riser fatigue • FPSO • Storage capacity • Quayside integration • Riser interface • Riser fatigue 2011 Chevron U.S.A., Inc.  All rights reserved.

8. Looking at Water Depth • TLPs: Depth-limited due to conventional tendon design restrictions. • Semis: Increasingly popular due to depth insensitive and quayside integration and might soon be used for dry-tree applications. • Cascade/Chinook: Soon to be the first GOM FPSO 2011 Chevron U.S.A., Inc.  All rights reserved.

9. Multiple Concepts Needed for Opportunities Water Depth vs. Production Capacity • Large overlaps reinforce the need for concept evaluation and selection during early phase of a project. • There are a number of opportunities where only a single concept is practical. Water Depth (ft) 9,000 - Spar TLP Semi FPSO 7,000 - 5,000 - 3,000 - 1,000 - 0 100 200 300 400 Production Capacity (Mboe/day) 2011 Chevron U.S.A., Inc.  All rights reserved.

10. Concept Selection Process Cost Hull motioncharacteristics Exportoptionsor storagerequirements Hull Technical Commercial Productionrate and reservoir aerial extent Risersystem Hull Concept Selection Waterdepth Directvertical accessof wells Metocean Productiononly? Drilling? Region and Location Reservoir Management 2011 Chevron U.S.A., Inc.  All rights reserved.

11. Motion Characteristics of Floating Hulls Natural Periods of Motion Vertical motions are controlled by tendons Vertically moored Spread moored Vertical motions are controlled by hull configuration Sea Energy TLP Spar Semi Ship Beam Ship Bow 5 Wave Period (Seconds) 20 Note: Hull motions are minimized by keeping outside the area of wave energy. 2011 Chevron U.S.A., Inc.  All rights reserved.

12. Summary of Basic Concept Features *Steel catenary riser (SCR) 2011 Chevron U.S.A., Inc.  All rights reserved.

13. Key Concept Selection Criteria • Technical Feasibility; support all equipment for operations while meeting all performance criteria • Maturity of Design • Technical robustness • Historical performance • Experience of people involved • Costs and Risks • CAPEX / OPEX • Project Execution Plan 2011 Chevron U.S.A., Inc.  All rights reserved.

14. Ultra-Deep Water Has Other Challenges Design Challenges • Capability to predict and verify response behavior of entire floating system • Testing facilities cannot model floating systems with complete mooring lines and risers Key Questions* • To what extent can the truncated test be done? • Can the numerical analysis reproduce the test results? • Can the full-depth extrapolation capture the coupling effects, e.g., “tail wagging the dog”? 1:100 model in a 10m deep wave basin for 1500m full water depth Compromise Typical Range 1:50 – 1:100 Physical Testing Numerical Interpretation Uncertainties Model Scale (- Water Depth) *Ref: Lee & Ma, DOT 2008 2011 Chevron U.S.A., Inc.  All rights reserved.

15. Ever-Changing Environment:100-year Hs Contours Based on Passage of More Large Storms How do we handle uncertainty in this area? Hot spot ??? BGF (5,200’) JSM (7,000’) Several large storms passing west of central GOM could change platform design statistics further, widen perceived intense area of Gulf* Hs (m) *Ref: OTC 18903 & 19602 2011 Chevron U.S.A., Inc.  All rights reserved.

16. Example Changes: Central GOM • Example, 100-year Hs, Central GOM: • 2003 was 13.5 m • 2008 now 15.5+ m Add large storms, eliminate early data… 16 2011 Chevron U.S.A., Inc.  All rights reserved.

17. Chevron Installations and Constructions FSU/FPSO Alba/Captain Rosebank FPSO *Terra Nova FPSO *Hai Yang Shi You *Nan HaiFaZian *Bohai Shi Ji Spar Genesis Tahiti *Mad Dog *Perdido Semi-Submersible Blind Faith Jack/St. Malo Compliant Tower Petronius TLP Big Foot FPSO Tantawan Benchamas Explorer Pattani Spirit FPSO Frade *Papa Terra FPSO/FSO Agbami Escravos LPG *Usan FPSO *Cossack Pioneer FPSO/FSO Kuito Sanha *KomeKribi *Moho-Bilondo *N’Kossa Negage Lucapa FPSO *Intan *PBS&J San Jacinto Gendalo-Geham TLP West Seno Compliant Tower BBLT Tombua-Landana * Non-Operated Joint Venture In Design 2011 Chevron U.S.A., Inc.  All rights reserved.

18. Recent Chevron Floating Projects The Chevron Way at its best: people, partnership and performance –health, environment and safety Used a system approach in concept selection –coupled hull, mooring and riser solutions Integrated operations and project teams early in the process Aligned company and contractor – contracting strategy Guard unknownsin deepwater operations, especially contingency of vessel and equipment – crane limit, vessel breakdown OTC 19857 OTC 20249 Agbami 3Q 2008 Blind Faith 4Q 2008 Frade 1Q 2009 Tahiti 2Q 2009 2011 Chevron U.S.A., Inc.  All rights reserved.

19. Current Floating Systems Projects in Design • Jack & St Malo semi • Big Foot TLP • Papa Terra TLWP 2011 Chevron U.S.A., Inc.  All rights reserved.

20. Dry Tree Facilities for Ultra-Deep and Large Payload No proven dry-tree concepts TLP limited by Water Depth Spar limited by Payload 2011 Chevron U.S.A., Inc.  All rights reserved.

21. New Enabling or Enhancing Concepts • FPSO withdrilling capability • Reduce development drilling cost • Increase oil recovery • Circular-shaped FPSOsto reduce CAPEX • Better hull steel efficiency • Simplified constructability • No turret (even in harsh conditions) • Dry-tree semis to reduce CAPEX and increase flexibility • Higher topsides weight • Deeper dry-tree developments • Quayside integration Pair-C Semi MinDOC SSP Sevan Octabuoy Azurite FDPSO Aker Dry Tree Semi Azurite FPSO photo courtesy of Murphy Oil Company 2011 Chevron U.S.A., Inc.  All rights reserved.

22. Chevron Technology Qualification Process Example: Dry-Tree Semi Issues • Hull motions to accommodate proven riser tensioningsystems • Constructability of new hull forms and/or critical components • Minimize risks of new technologies “All new technologies that will, by the end of Select (i.e. prior to FEED), have been proven either through field trials, extensive testing, or successful application in a parallel industry, shall be considered.” 2011 Chevron U.S.A., Inc.  All rights reserved.

23. Concluding Remarks • Deep water will require a large portfolio of projects to be developed with floating production systems. • Development opportunities often call for floating system concept evaluation and selection. • A more standardized concept selection process is needed. • Focus on new developments of enabling/ enhancing concepts, and be open to new technologies. • Dry trees and/or platform drilling arelikely to become more important, to increase recovery and reduce cost. • Operation’s input early and throughout the floating system project will pay significant dividends. 2011 Chevron U.S.A., Inc.  All rights reserved.

24. Thank You! • New floating system technologies are required to address ever increasing water depth and large topside challenges • Experience, technology and perseverance enable us to overcome challenges and deliver value • Collaborative and productive partnership will accelerate technology development and deployment Questions? 2011 Chevron U.S.A., Inc.  All rights reserved.