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Tengizchevroil WCS RFP Clarifications

Tengizchevroil WCS RFP Clarifications. Schlumberger Response 3 rd September 2008. TCO Confidential. General Discussion Points. Schlumberger Response Agree – the Amendment is currently with Chevron Houston and Schlumberger Houston. Agree. Agree with the following points noted:

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Tengizchevroil WCS RFP Clarifications

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  1. Tengizchevroil WCS RFP Clarifications Schlumberger Response 3rd September 2008 TCO Confidential TCO Confidential

  2. General Discussion Points Schlumberger Response • Agree – the Amendment is currently with Chevron Houston and Schlumberger Houston. • Agree. • Agree with the following points noted: • The cost escalation start point is the 1st April 2008. • Drastic commodity price changes will be resolved by mutual agreement. • In the event that Schlumberger is awarded all 11 PSL’s, we are happy to revisit this proposal and modify it accordingly so that it fully complies with TCO’s requirements. • SLB has not yet signed the Kazakh Country Specific Amendment. • Travel re-imbursement from Point of Origin to Atyrau is based on economy class airfares for both international and domestic sectors. • In the weeks following today’s meeting, TCO will provide index based cost models for future price adjustments • These cost models will not have specific commodity adjustment mechanisms since the overall prices for these quoted services and materials will be adjusted prior to TCO commencing significant drilling activity • SLB comment: it was noted in the meeting that the Schlumberger Corporate Proposal had not been factored into our tender evaluation. This proposal for (a) an In-Touch system, (b) an Operations Support Centre and (c) a harsh environment R&D project was valued at $8 million over the 5 year contract term and was contingent upon the full award of all 11 PSL’s to Schlumberger. TCO Confidential

  3. Additional Questions Not Covered in Aug. 18 Meeting • In the SLB proposed “New Technology Introduction Initiative”: • Commercial tools and services that are selected as potential technologies that are covered by the attached Reference Price Lists will be charged at a special introductory rate of twice the applicable discount during the pre-defined evaluation period. All mobilization/demobilization charges will be at cost +25%. Lost in Hole charges will apply. • SLB requested to define “pre-defined evaluation period”. • TCO proposes mob/demob charges of cost + 15%. • LIH charges will apply per IMA. Schlumberger Response The 3 responses shown below apply specifically to the New Technology Introduction Initiative. • The pre-defined evaluation period is defined as 3 months from date of arrival in Tengiz field. • Agree. Equipment rental charges will also apply to/from Tengiz field. • Agree. TCO Confidential

  4. Cased Hole Wireline & Pipe Recovery – Clarification Points Schlumberger Response • Confirmed. • Survey charges are per each run. • Mob charges are for each time the unit is mobilised to Tengiz i.e. for call out jobs or for extended periods. This is not charged per use. • Agree if unit is taken on long term rental rate then no minimum acquisition applied. • Agree. • Agree to waive the deviation surcharge. In the event of Pipe/Tubing Conveyed Logging, the TCL surcharge will apply. • Agree. • Sensaline, DTS 800 pricing • SLB to confirm no incremental cost for long term deployments; • SLB to confirm survey charges are one time run charges, not per month per well; • High mob charges (SLB to confirm that this is a one time fee, not per use); • If TCO agrees to dedicated system, then minimum acquisition fee needs to go away • SLB to confirm that specialist engineers will be charged as per the Call-Out Daily Rate for CH engineer unless they are placed on a monthly rotational basis, then the monthly rate will apply. • TCO takes exception to surcharges for deviation. • TCO proposes a single surcharge for temp above 175 deg C and that surcharge should not be more than 15%. TCO Confidential

  5. Cased Hole Wireline & Pipe Recovery – Clarification Points Schlumberger Response • It is important to reiterate the following other notes that were associated with this proposal made in the Cased Hole Wireline & Pipe Recovery PSL before generalizing it to other PSL’s: • “a maximum of 1 Cased Hole truck is available on Call-Out basis at any one time.“ • “Call off equipment is subject to availability. The greater the notification period provided the more likely the tools will be available.” • As for TCO’s request to shorten the monthly dedicated equipment minimum rental period to 6 month in the other PSLs, SLB agrees providing that the equipment in question is existing equipment in the field. For new equipment, we propose a 12-18 month minimum rental period, depending on the type of equipment and its CAPEX intensity. • SLB proposed dedicated equipment call off will require a minimum of 3 months notification if out of country and 1 month if in country. Minimum call-off period is 3 days for Call-Out equipment and 6 months for monthly dedicated equipment. TCO finds this generally acceptable & expects similar terms for most other PSLs. TCO Confidential

  6. Cased Hole Wireline & Pipe Recovery – Clarification Points • Pipe Recovery Explosives will be charged at cost +15% - SLB to clarify what explosives are expected to be utilized and the associated cost to TCO. TCO Confidential

  7. Cased Hole Wireline & Pipe Recovery – Clarification Points Schlumberger Response • Items are currently in field testing and the proposals will be provided upon commercialization of the tools. See preliminary technical specs attached. • Technical details for the slim ERS are attached as well as the commercial proposal that was included in the tender submission. • Agree. • No. The $16.5k is existing PCE in the field. A second PCE unit will be charged at $25k as it will have to be sourced from outside the country. • At this time, there is no alternative to the DEFT available. • Any new trucks will be new SLB units. Existing units in Tengiz to be replaced one year after contract start date. • TCO would like a Commercial & Technical Proposal for Streamline Cable and EMIT tool. • TCO would like a Commercial & Technical Proposal for Slimline Electrically Releasable Sub. TCO asked for this in the market basket (thru-tubing) and expects this to be the same price as the regular one as it is the same technology, only smaller. • TCO expect the inline spinner to be included in the standard PLT tool basket when it is run in lieu of or as a replacement of the full-bore spinner at no additional cost, extra rates only if run in tandem with the full-bore spinner. • SLB quoted $16.5k for single 10k pressure control system and $25k for a second unit. SLB to confirm that $25k price is for two units. • Can SLB provide a capacitance tool to run in place of the DEFT probes? If yes, please provide commercial and technical proposal. • We assume a new SLB (ASEP not acceptable – TCO clarified that the logging cab is too small to hold the number of people on a typical logging job) combo truck would be provided in Tengiz if a new contract were awarded. TCO Confidential

  8. Streamlined Slick Cable Applications Primarily indented for cased hole market. Reinforced outer polymer jacket of the cable eliminates or drastically reduces the amount of grease required to seal during wireline pressure operations acting as environment friendly “Green Cable”. Among other important features and benefits are less torque, prevention of gas migration between armor wires, low drag in high velocity fluids allows to pull more with the same weight/strength ratio. Specifications Nominal OD Temperature rating 1 hour 8 hours 24 hours Min Temp 0.3300 in 8.382 mm 375 degF [191 degC] 375 degF [191 degC] 375 degF [191 degC] -60 degF [-51 degC] Voltage rating Current rating Pressure rating Weight (air) Safe Working Load 36 pF/m 1.6 A 20,000 psi 156 lbf/1,000 ft [232 kg/m] 5000 lbf [22,2 kN] Product Status Under Field Testing TCO Confidential

  9. Pipe Integrity Scanner Applications The tool uses remote eddy field current (RFEC) technology from both mandrel coils and image coils to produce average and azimuthal measures of metal thickness. The tool can be run thru/in tubing in all fluid types. Specifications Temperature rating Pressure rating Length Weight Tension Diameter; Hole Size 302°F [150°C] Standard: 15,000 psi [103 MPa] High pressure: 20,000 psi [138 MPa] 20.00ft [6.10 m] 85 lbm [40 kg] Not yet tested * 2.125 in. [5.40 cm]; 2.30 in. [5.80]—min*.; 9.625 in. [24.45 cm] —max. * Tension and minimum restriction to be defined during ENP field test Product Status Under Field Testing TCO Confidential 9/25/2014

  10. Electrical Release Sub Applications The Electronic Release Sub is an electrically operated release assembly for use with any monocable head. The monocable head functions as the weakpoint while the ERS-AA functions as an electrically operated release just below the head. By using the ERS-AA, a monocable rope socket can be built at maximum strength with the capability of withstanding higher pulls and shock loads. Yet, when needed, the assembly can be released from the surface using only low tension at the head. Specifications Temperature rating Pressure rating Length Weight Tension Diameter 350°F [176°C] High pressure: 20,000 psi [138 MPa] 16.5” [0.42 m] 10 lbm [4.53 kg] 8000 lb 1 11/16” Product Status Commercialized * Note:- this sub is not rated for H2S services Commercial Proposal Notes: Activation charge of $16,400 will apply for each activation of ERS. TCO Confidential 9/25/2014

  11. Cased Hole Wireline & Pipe Recovery – Clarification Points Schlumberger Response • The new pricing options required in the RFP ask for unlimited logging so any combination can be run for the flat price if TCO chooses the unlimited logging option (Option A), or the flat pricing per well option (Option B). The $16k in the old contract was for a special PSP option on Memory. Memory services were not requested in the RFP but are detailed later in this clarification. • CH Field Service Manager would be charged as per the price for the OH Wireline Manager - $45k/month. • This is not applicable to Cased Hole services. • Our current contract OK25015 allows us to run the PSP XY caliper with GR for a about $16000. Would TCO get discounted pricing for running multiple tools on a single string (PSP XY caliper and GR)? • What would be the cost for separate Cased Hole Wireline Manager if OH and CH were awarded separately? • Please clarify how the following applies: Run Charge is applied corresponding to the deepest point reached. Run charges for two or more services performed in combination on one descent into the well are cumulative. TCO Confidential

  12. Cased Hole Wireline & Pipe Recovery – Clarification Points • SLB requested to propose a low cost MPLT solution that reduces our incentive to purchase tools (as TCP (TCO typo) has done with memory gauges). Schlumberger Response TCO Confidential

  13. Coil Tubing – Clarification Points Schlumberger Response • Our quoted prices were for 3rd party products (TAM Single Set Inflatable Bridge Plug, Part # 169-SS04). We propose to sell this product and its accessories at documented landed cost plus 15% markup (landed cost includes shipping, handling, and any applicable duties or taxes from supplier point of origin to Tengiz). See attachment #1 – TAM Sample Invoice. • Agree. • Revised run charges based on RIH (downward direction only) are as follows:- 1.50” Coil - $ 1.56/ft 1.75” Coil – $1.69/ft • We quoted zero mob and zero demob for the first dedicated CT package, which includes an extensive list of high value and specialized equipment and as such the minimum rental period was proposed. However, we accept to reduce the minimum rental period to 18 months for this high CAPEX item. • SLB proposed Inflatable Bridge Plug prices are well above market rates. • Pumping acid or other materials supplied by third parties outside this PSL through or around the coiled tubing attracts a charge of 318.00 USD/m3 – quoted at 511 USD/m3 under additional CT Tools. $318/m3 is inline with market prices and any reference to the $511/m3 should be replaced. • SLB proposed Coiled tubing running charges are more than double market rates. • SLB proposed minimum rental period of 36 months is too long. TCO proposes a 6 month minimum rental period. TCO Confidential

  14. Coil Tubing – Clarification Points Schlumberger Response • Agree. • As per our pricing notes, mob and demob charges for the first dedicated CT unit are zero. • As per our proposal, mob and demob for an additional CT unit on call out is also zero. Daily rental charges apply from date of departure from point of origin until return to point of origin. • For additional dedicated CT units, we propose revised mob/demob charges of 1 month rental for mob and 0.5 month rental for demob. Rental charges for dedicated CT units begin when the unit arrives in Tengiz field and cease when the unit leaves the field. • For CT equipment, we propose to reduce from 36 months to 18 months. • SLB proposed motor redress charges to be charged at the total incurred cost (shipment, custom duties, taxes,…) plus a 25% administrative charge. TCO proposes 15%, as SLB has in existing contract and proposed elsewhere in SLB’s current RFP submittal. • SLB’s proposed mob charges of $75,800/ea if from CIS countries, $119,300/ea if from Europe, $173,600 if from elsewhere. Mob charges are at least double market rates; demob should be minimal. • Early Termination clause should go away after 6 months, not 36 months as SLB proposed. TCO Confidential

  15. Coil Tubing – Clarification Points Schlumberger Response • Agree to reduce minimum call-out period to 7 days but we maintain the minimum notice of 6 weeks as this specialised equipment comes out of Europe or the USA. Call-out rental charges will apply from the time the tool leaves the point of origin of the Inflatable tools supplier until the time it is returned to the same point. • Agree. • There will be no additional charges for running 3rd party inflatable packers on SLB coiled tubing so long as the packers are supplied by SLB. For SLB in-house Inflatable Packers technology to be run on 3rd party Coil Tubing, a 3rd party surcharge will apply. We propose to reduce this surcharge from $ 5.60 /ft run to $ 3.50 /ft run. • SLB proposed minimum call out period for Call-Out Releasing tools for Inflatable packers and Inflatable Bridge Plug (include 2 sets) of 4 months with a minimum notice of 6 weeks is too long. TCO proposes a minimum for Call-out of 7 days and minimum notice of 2 weeks. • Minimum call out period for Dedicated Releasing tools for Inflatable packers and Inflatable Bridge Plug (include 2 sets) is 4 months. A minimum notice of 6 weeks is required and subject to availability. TCO agrees to SLB proposed term for dedicated tools. • SLB proposed that setting Schlumberger Well Services provided inflatable packers on third party coiled tubing attracts a third party setting charge of 5.60 USD/ft run. TCO refuses to pay SLB additional third party charge if third party sets SLB packers. TCO Confidential

  16. Coil Tubing – Clarification Points Schlumberger Response • Agree. • Agree. • $5,630 is the monthly rental charge for this tool on dedicated rental. If the tool is on call out, the charge is $890/run. • SLB proposed minimum call out period for Additional Pumping Equipment of 15 days. Call out starts from calendar day (or fraction) of departure till calendar day (or fraction) of return to base of departure. TCO proposes a 7 day minimum call out period. • If Schlumberger Well Services is requested to provide third party services they will be recharged at the total incurred cost plus 25% administrative fee. TCO proposes 15%, as SLB has in existing contract and proposed elsewhere in SLB’s current RFP submittal. • SLB to verify $5,630 cost for alternative acid deployment tool is a monthly rental charge and there is no incremental rate per run charge. TCO Confidential

  17. Coil Tubing – Example Job SLB to provide sample invoice for following acid stimulation through Coiled Tubing: • General well information: 2. Treatment main parameters: Schlumberger Response – see attachment #2 – Coiled Tubing Sample Invoice – for CTU acid stimulation across the perforated interval for well T-419. The placement design is based upon our previous Tengiz experience including full displacement of all the well bore fluids containing H2S with sweetened crude, thus allowing a reduced corrosion inhibitor loading. A brief outline of the job procedure and calculated fluid compositions and volumes is shown below (duplicated in attachment #3). TCO Confidential

  18. Gauges – Clarification Points Schlumberger Response • See attachment #4 for revised pricing. • See attachment #4 for revised pricing. • Agreed. • Schlumberger Completions will work with TCO to enable this “just-in-time” process upon award. Our large resource base in the Caspian makes this possible. • Lower pricing is correct. See attachment #4 for revised pricing. • Since TCO clarified that the column headings are 11-20, 21-30, 31-40, 41-50, we have re-priced the quantity discounts. • The wellhead outlet (WHO) at $15,717 is the exact model as is currently being used in the field. • SLB proposed Personnel Rates are very expensive. • SLB proposed prices for gauges, mandrels, cable clamps, wellhead and tubing hanger fittings are more expensive than competition. • TCO requests availability of consistent call-out personnel for a call-out campaign. • TCO does express interest in permanent down-hole gauge “just-in-time” proposal. • TCO request SLB to clarify pricing for cable clamps for tubing retrievable SCSSVs (currently more expensive for quantities of 11-50 than 1-10). • TCO request SLB to clarify why a quantity discount for market basket materials was not proposed. • 718 Wellhead Outlet was quoted as $15,717 in market basket, but at $38k in pricing notes. SLB to clarify. TCO Confidential

  19. Gauges – Clarification Points Schlumberger Response • 48 Well Option Surface Data Acquisition: 1) Purchase 48 Gauge ARCONN System: $342,580 (all equipment required for rack mounted system ready to communicate to SCADA). 2) Option for “Just-in-Time” $193,540 for base unit (base unit includes 12 gauges). + $4,878 for each gauge installation additional over 12. • TCO requests SLB to submit a commercial proposal for the “Uniconn” 48 well connection option. TCO Confidential

  20. Directional Ops – Clarification Points Schlumberger Response • SLB package already includes 2 X non-mag DC (the one used for the MWD tool and the backup). We propose any extra NMDC at a discounted rate of $1,800 / hole section; $1,500 / hole section will be charged for Pony NMDC. • Mob and demob charges only apply for dedicated equipment. Transportation charges (cost + 15%) will apply for call out equipment. • We propose 3 days for mobilizing local personnel. • Agree. Personnel dayrates apply from date of departure from point of origin until return to point of origin. • TCO requests 3 non-mag. drill collars per directional package. SLB to confirm this can be provided at no additional charge. • Mob & Demob rates for SLB are way high, need to verify that mob & demob only apply to dedicated DD/MWD equipment and does not apply for call-out since SLB states that they have adequate equipment already in Kazakhstan. • SLB proposed mobilisation time for personnel is 7-days. TCO accepts 7 days if mobilizing from international location, but requests fewer from within country. • SLB proposed dayrates start when Personnel are first available at TCO written request and end when Personnel are demobilised from Tengiz. TCO requires rates to start day of departure at earliest, regardless of departing location. TCO Confidential

  21. Directional Ops – Clarification Points • Lumpsum charges for the "Directional Package" (Motors + MWD) for the 17 1/2", 12 1/4" and 8 1/2" sections are quoted on the assumption that all three packages are taken per well, per rig. TCO requires that DD/MWD package quantities are independent of rig count and at TCO discretion to determine number of packages required to support drilling operations. • Monthly Rate per Unit is charged for every rig that client requires services. This fee is charged every month that rig is “assigned” irrespective of activity (ie) drilling, completion, rig move, etc. TCO will only pay a monthly charge for actual DD/MWD packages in Tengiz, not per rig. • SLB proposed minimum of 3-months charge to be applied for each "Directional Package" contracted. TCO will accept for dedicated units only. • SLB proposed Mobilisation / Demobilisation fee to apply each time a monthly charge is selected or cancelled for each rig. TCO will accept for “each set of dedicated equipment” not “each rig”. Schlumberger Response • Our proposal for the provision of Directional Services is a fully integrated package that includes all equipment and personnel required for all well types drilled from all rigs as per the drilling program and workscope provided. In the event that there is a significant change anticipated in well types or activity levels, we will be pleased to submit a revised proposal in order to service TCO in the most cost effective manner. • Agree. • Agree. TCO Confidential

  22. Post 18th August meeting - Clarification #1 Date: Tue, 19 Aug 2008 13:01:03 +0100From: "Hogg, Greg" <GregHogg@chevron.com>Subject: RE: TCO WCS SLB: Question / Clarification # 1To: Paul Lonsdale <Lonsdale1@atyrau.oilfield.slb.com>Cc: Dwayne Leismer <dleismer@atyrau.oilfield.slb.com>Paul, please see the response below to your questions:1)  As you know, we have seen some problems in Tengiz with H2S in the SCSSV control line and SLB is working with us to determine the route cause in the investigation that is under way.  TCO requests SLB to provide performance and reliability information about these valves for H2S well environments similar to the Tengiz field in other locations.2)  The primary item in your proposal that resulted in your overall lack of competitiveness was that your submitted pricing on Completion Isolation Valves was more than double the competition.From: Paul Lonsdale [ mailto:Lonsdale1@atyrau.oilfield.slb.com] Sent: 19 August 2008 11:45To: Hogg, GregCc: Chris Labbett; Ihab Toma; Jim Hodges; Dwayne LeismerSubject: TCO WCS SLB: Question / Clarification # 1Greg, we have the following Questions on the Flow Control PSL: TCO comment page 23:"SLB is expensive and TCO is aware of significant issues with SLB's SCSSV's in the Caspian region. What has SLB done to address these problems".1)  We are surprised by the comment on the SLB SSV's "significant issues in the Caspian region", can you please be more specific about these issues so that we can address a response.2) There is a general comment that the Flow Control PSL is too expensive.  The other PSL responses were more specific in identifying the price differences regarding areas of concern. It would be very helpful to have a better understanding of the pricing issues in order for us to evaluate, address, and respond accordingly. TCO Confidential

  23. Post 18th August meeting - Clarification #2 Date: Wed, 20 Aug 2008 07:28:40 +0100From: "Hogg, Greg" <GregHogg@chevron.com>Subject: RE: TCO WCS SLB: Question / Clarification # 2To: Paul Lonsdale <Lonsdale1@atyrau.oilfield.slb.com>Cc: Dwayne Leismer <dleismer@atyrau.oilfield.slb.com>Paul/Dwayne,The column headings proposed by you (1-10, 11-20, 21-30, 31-40, 41-50) are acceptable.Thanks, GregFrom: Paul Lonsdale [ mailto:Lonsdale1@atyrau.oilfield.slb.com] Sent: 19 August 2008 20:07To: Hogg, GregCc: Dwayne LeismerSubject: TCO WCS SLB: Question / Clarification # 2Greg, we have the following Question on both the Gauges PSL and the Flow Control PSL:For the TCO comment on page 20:"TCO request SLB to clarify why a quantity discount for market basket materials was not proposed"Schlumberger stated in our clarifications to the PSL, "Please note that the column headers under Quantity Discount appear to be incorrect. We do however recognize the intent of these columns and are fully willing to consider a Quantity Discount following a further discussion with TCO on this matter."Please confirm that the column heading for quantity that are in our PSL labelled 1-10, 1-20, 1-30, 1-40, 1-50 are actually 1-10, 11-20, 21-30, 31-40, 41-50. This will then enable us to provide a Quantity Discount. TCO Confidential

  24. Flow Control - SCSSV – Clarification Points Schlumberger Response • See attachment #5 for revised pricing. • “Significant Issues” with the SSV’s. What is SLB doing to address these? SLB has been working with both the TCO Atyrau office and the TCO Tengiz field group. Our Caspian QA/QC manager visited the Tengiz field and reviewed and measured at the wells information our engineering group requested. Our engineering group will have a formal report of their findings and recommendations ready by the 17th September 2008. In the interim, we are ready at any time, to discuss this issue. As part of the close out process, we are organising a visit of our engineering experts to Tengiz to explain our findings. • Similar field reviews have shown no control line contamination reported. This discussion is contained in the engineering report to be provided above. • If SLB is awarded one PSL, we propose the DESC engineer for $48,000 per month based in Atyrau with competancies in Gauges, Packers and Flow Control services. • SLB is expensive and TCO is aware of significant issues with SLB’s SCSSV’s in the Caspian region. What has SLB done to address these problems? • Clarification by TCO - main expensive item is the Completion Isolation Valve • Clarification by TCO - SCSSV issue is control line contamination issue • Clarification by TCO - a list of similar field conditions where our valves have been run and their history. • SLB proposed that if they win both completions categories, then TCO gets a free DESC engineer. How much would a dedicated DESC engineer cost if SLB is only awarded one of these PSLs? TCO Confidential

  25. Mud Logging – Clarification Points • SLB requested to provide to whom they will be subcontracting this PSL? • SLB requested 36 month continuous rental as a minimum. TCO proposes a 6 month minimum. Schlumberger Response • PetroAlliance, which is a 100% owned Schlumberger Company. • For new Mud Logging Units i.e high CAPEX, we propose to reduce from 36 months to 12 months minimum rental period. TCO Confidential

  26. Open Hole Logging – Clarification Points Schlumberger Response • Air gun and compressor pricing is shown on the next slide. Vibrator will be charged at cost plus 15% and provided by a third party. • Agree. • Agree to waive the deviation surcharge. In the event of Pipe/Tubing Conveyed Logging, the TCL surcharge will apply. • Agree. • Seismic Prices do not include Seismic Source. SLB requested to provide list of available seismic source equipment in Kazakhstan and commercial proposal. • A new service charge is assessed after each interruption of more than 10 hours. TCO requests service charge after 12 hours as TCO is paying people for 12 hour shifts. • SLB proposed a Deviated Well Surcharge. TCO takes exception to surcharges for deviation. • SLB proposed two High Temp. Surcharges. TCO proposes only 1 high temp. surcharge of 15% (on operation charges) for temps above 175 degrees C (this was corrected from degrees F that was incorrectly communicated during the meeting). TCO Confidential

  27. Open Hole Logging – Clarification Points • Seismic Prices do not include Seismic Source. SLB requested to provide list of available seismic source equipment in Kazakhstan and commercial proposal. Schlumberger Response: "Call off equipment is subject to availability. The greater the notification period provided, the more likely the tools will be available. For planning purposes dedicated equipment call off will require a minimum of 3 months notification if out of country and 1 month if in country. Minimum rental period is 3 days for Call-Out equipment and 6 months for monthly dedicated equipment."For the Mob and Demob charge this is applicable for both the dedicate or call out options. TCO Confidential

  28. Open Hole Logging – Clarification Points H2S Tools Proposal Pricing: As SLB developed H2S tools for TCO, TCO agreed to higher operational costs until the SLB achieved $5.4MM of revenue, after which the operating charges reverted to the cost of conventional tools plus a 10% surcharge. • The $5.4MM was reached in August 2005 and the lower pricing was continued thru the contract extension. In SLB’s current proposal, H2S tools are offered at the original contract higher rates (inclusive of engineering & development cost recovery). • TCO proposes the rates should be at the lower rate (conventional rate + 10%). Schlumberger Response • We propose to follow the same pricing model as per the previous contract: • conventional +10% for operating charges. • $150K rental per month per set. • cable run charge. • If a third H2S tool set is built, or any additional tools are built, then these should be covered by a mutually agreed accelerated cost recovery mechanism as per the original contract. Note: the sample job invoice #4 for H2S services is shown using the original pricing provided in our tender. In the event that our alternative proposal shown above is acceptable to TCO, we will be happy to submit a revised sample invoice. TCO Confidential

  29. Open Hole Logging – Clarification Points New technology: • Initially SLB presented an offer with technology from yesterday, i.e. used in 20th century. In clarification questions TCO SME asked about price of current technology which we were using during last 3-4 years of operations. This technology included in the final price benchmarking will be out-dated at time of operation start-up. Offer refers all new technology pricing to the Price Catalog – 20% discount. • TCO requests a greater discount off price book for tools outside the market basket (current agreement is 35% discount). Slimhole tools: • SLB offered a set, but the stock and availability is very limited worldwide (had problems with back-up tools, replacement, etc). TCO has concerns about SLB’s ability to provide slimhole tools on a call-out basis in a satisfactory time frame to support TCO needs/requirements. Schlumberger Response • All clarifications for alternate technologies were made with greater discounts than 20% over price book. Please see updated technologies and pricing on the next slide. • For all remaining items that may be required to be used in the future, we propose an increased discount of 25%. • A dedicated set can be maintained to alleviate the problems with delays caused by logistics for a call out set. All attempts will be made to improve the planning and execution for bringing in the back up set. TCO Confidential

  30. Open Hole Logging – Clarification Points TCO Confidential

  31. Open Hole Logging – Example Job 1 SLB to provide sample invoice for following OH Logging run Conventional Logging Program – Platform Logging Interval : 5,000m- 4,000m Note: Pricing is as per latest clarification pricing and technologies. TCO Confidential

  32. Open Hole Logging – Example Job 2 SLB to provide sample invoice for following OH Logging run Platform Deepening –Logging Program - Slimhole Tools Logged interval: 4,500m - 3,900m Note: HNGT is not available slim SGTC has been included, DSI is for BHC mode only. TCO Confidential

  33. Open Hole Logging – Example Job 3 SLB to provide sample invoice for following OH Logging run Flank Well Logging Program with conventional tools (same for E- TCL) Interval logged : 6,000m - 5,000m Note: Pricing is for standard electrical line conveyance. TCO Confidential

  34. Open Hole Logging – Example Job 4 SLB to provide sample invoice for following OH Logging run Flank CHCD wells Logging Program – H2S tools Interval Logged: 4,500m- 5,500m Pricing is based on the initially submitted offer, not the alternative pricing suggestion made earlier in this clarification document. Note: Pricing is based on the initially submitted offer, not the alternative pricing suggestion made earlier in this clarification document. Pricing also includes H2S cable and head tension charges per run. TCO Confidential

  35. Perforating – WL & TCP – Clarification Points Schlumberger Response • PURE perforation will be charged at 50% over the ticket for the equivalent standard perforating. • P4 pricing is attached. • SAFE pricing is already included in the Tender proposal. • This will be the same as per the deployment CH pricing tables. • There is no depth charge for wireline perforating. • There are 3 charges for the WXAR – a run charge, a release charge and a monthly rental charge. • Agreed on the condition that SLB is awarded the OH, CH and PERFO PSLs. • SLB requested to provide a pricing proposal PURE/P4 and Safejet Gun Systems. • SLB requested to propose pricing for Wireline deployment for perforating. • SLB to confirm that only one depth charge will be invoiced per perforating job. • SLB requested to clarify the two proposed WXAR charges in the Wireline Perforating market basket. • SLB proposed cancellation charge of 35% of meterage charges will be applied for guns that are loaded for any job which is subsequently cancelled. TCO does not agree to this proposed cancellation fee as TCO would be paying for dedicated TCP personnel and Wireline perforating personnel if SLB were awarded Open Hole Wireline in addition to Perforating PSL (if SLB only wins Perforating PSL, then TCO agrees to revisit this charge). TCO Confidential

  36. Perforating – WL & TCP – Clarification Points • SLB requested to provide a comprehensive list of perforating charges (grains, SLB model numbers, type, etc.) that are included in market basket prices. SLB must contend that their charges offered in the market basket at no incremental cost meet the requirement of "Premium Perf Charge Capable of 135 deg C in Hole up to 1 Week". • Schlumberger response:- Charges offered in the market basket are HMX premium perforating charges and are capable of being exposed to 135 degrees C for up to 300 hours. TCO Confidential

  37. Perforating – WL & TCP – Clarification Points • SLB requested to provide a pricing proposal PURE/P4 and Safejet Gun Systems. TCO Confidential

  38. Perforating – WL & TCP – Clarification Points • SLB proposed charge for explosives ordered by TCO and not utilized after 3 years will result in a restocking fee of 45% of applicable meterage charge. TCO proposes to pay the cost of the explosives only (not meterage charge, which also includes cost of gun, primer cord, detonator, etc.) and the explosives must be removed from country for this charge to apply. • SLB proposed that the cost of providing back-up guns and/or guns requested but not used will be charged at 25% of above rates and that guns run in the hole but not shot will be charged at full price. TCO proposes this charge will not apply if these guns are used by TCO within 90 days on a subsequent job, and only if the guns are actually dismantled and restocked. Guns run in hole but not shot will only be charged if guns not shot due to TCO stoppage, not CONTRACTOR equipment failure. Schlumberger Response • We propose cost + 15%. Plus any fees required to dispose of the explosives in country - we will not be able to export them from Kazakhstan. • Agree. TCO Confidential

  39. Pumping – Clarification Points Schlumberger Response • Upper hole sections - local source cement supplier is Shymkent Cement. • Other hole sections - imported cement supplier is Dyckerhoff. • We propose that the 35% discount off the pricelist will apply to locally sourced cementing and stimulation materials so long as they are of Kazakh origin and not subject to import duties. • Agree. • Bulk plant operation and maintenance will be covered by same equipment operators assisting on the cementing jobs (under the supervision of the bulk plant Supervisor). This is normal practice since both activities do not occur simultaneously. • SLB requested to provide information (location) regarding cement material sources. • SLB proposes that non-market basket cementing and stimulation materials will receive a 35% discount off price book delivered as FCA Antwerp, if delivered DDP Tengiz then the discount applicable is 5%. TCO wishes to clarify that for locally sourced cementing & stimulation materials, the 35% discount still applies. • TCO will provide the personal H2S equipment for CONTRACTOR employees while on TCO location, but the remainder of the PPE is the responsibility of the supplier. • SLB to clarify how personnel assigned to the bulk plant will also be assigned to support the rigs. TCO Confidential

  40. Pumping – Clarification Points Schlumberger Response • SLB will provide acid from local companies whenever applicable, in line with local content enhancement objective. If SLB is pumping SLB provided fluids, SLB will pump as directed by TCO (plant, wellhead or another contractor's CT unit) at no additional fluid surcharge. If TCO sources acid or chemicals directly and requests SLB to mix or pump using SLB equipment and personnel, there is a fluid pumping surcharge. If TCO sources acid or chemicals from another contractor and requests SLB to mix or pump, there is a fluid pumping surcharge. If TCO contracts another service provider to provide pumping services through a SLB provided CT unit, there is a fluid pumping surcharge. All fluid pumping surcharges will be $318/cubic meter. • Agree. • SLB proposes a volume charge of 320.00 USD/m3 if required to pump fluids through a third party coiled tubing. TCO will not pay 3rd party charges for pumping fluids that TCO is buying. • SLB proposes a charge of 426.00 USD/m3 for bulking acid for third parties outside this PSL. TCO will not pay 3rd party charges, especially where there are local content opportunities. • Schlumberger Well Services proposes to provide third party services at total incurred cost plus 25%. TCO proposes cost plus 15%. TCO Confidential

  41. Pumping – Clarification Points Schlumberger Response • We propose a 12 month minimum rental period. • SLB will provide acid from local companies whenever applicable in line with local content enhancement objective. If SLB is pumping SLB provided fluids, SLB will pump as directed by TCO (plant, wellhead or another contractor's CT unit) at no additional fluid surcharge. If TCO sources acid or chemicals directly and requests SLB to mix or pump using SLB equipment and personnel, there is a fluid pumping surcharge. If TCO sources acid or chemicals from another contractor and requests SLB to mix or pump, there is a fluid pumping surcharge. 3rd party Fluid pumping surcharges for Plant work only (caustic neutralization, Boiler and Pipe Cleaning) will be $295/cubic meter. • SLB proposes minimum call-out durations of 24 months for 15,000 gal Acid Storage Tank and 500 bbl Water Storage Tank, and the following 24 month early termination clause: • In the eventuality that the project is terminated in the first 24 months from arrival of the equipment in Kazakhstan then an early cessation charge will apply. The early cessation charge is (24 - X) * 2 *monthly rental rate where X is the number of months during which that particular pumping package has been on rental to TCO. • TCO proposes 6 month minimums for all of the above • SLB proposes no mixing / corrosive / caustic charge other than a third party charge of 295.00 USD/m3 for third party products or pumping products supplied by third parties. TCO will not pay 3rd party charges, especially where there are local content opportunities; TCO is not currently paying this charge. TCO Confidential

  42. Slickline – Clarification Points Schlumberger Response • Agree. • Agree. • Agree to the 6 months for existing equipment in the field. For new Slickline Units, we propose a 12 month minimum rental period for this high CAPEX item. • Agree. • SLB proposes a calendar month starts from the first day of the month and terminates on the last day of the same calendar month. No proration will apply for any monthly rental. The full rental will still apply if any package is utilized in part of the month. TCO proposes that monthly rental begins first day equipment arrives in Tengiz; one month is 30 consecutive days, not a calendar month. • SLB proposes for the first dedicated Slickline Unit, the monthly rental applies from the date the contract is awarded or the date the COMPANY requests CONTRACTOR to have equipment ready, whichever is the earliest. TCO requires that “earliest” should read “latest”. • SLB proposes for the first Dedicated Slickline Unit, a minimum monthly rental period of 24 months per mobilization will apply. The minimum rental per mobilization will still apply in full if the package is demobilized upon COMPANY’s request before the end of the minimum rental period. TCO proposes a minimum of 6 months. • SLB proposes notice period for Slickline units 1, 2 and 3 is 3 weeks. After 3 weeks from date of notice given by COMPANY, or if equipment is in country whichever is earlier then monthly rental will commence. TCO proposes that rental commences when equipment arrives in Tengiz. TCO Confidential

  43. Slickline – Clarification Points Schlumberger Response • Agree. • Agree. • Agree to 6 months for existing equipment in the field. For new Combo Units, we propose an 18 month minimum rental period for this high CAPEX item. • Agree. • Agree. • SLB proposes notice period for Slickline units 4, 5 and 6 is 6 months. After 6 months from date of notice given by COMPANY or if equipment is in country whichever is earlier then monthly rental will commence. TCO proposes rental commences when equipment arrives in Tengiz. • SLB proposes For the First Dedicated Combo Unit, the monthly rental applies from the date the contract is awarded or the date the COMPANY requests CONTRACTOR to have equipment ready, whichever is the earliest. TCO requires that “earliest” should read “latest”. • SLB proposes For the first Dedicated Combo Unit, a minimum monthly rental period of 24 months per mobilization will apply. The minimum rental per mobilization will still apply in full if the package is demobilized upon COMPANY’s request before the minimum rental period is due. TCO proposes a 6 month minimum. • SLB proposes Notice period for Combo units 1, 2 and 3 is 3 weeks. After 3 weeks from date of notice given by COMPANY, or if equipment is in country whichever is earlier then monthly rental will commence. TCO requires rental commences not before equipment arrives in Tengiz. • SLB proposes Notice period for Combo units 4, 5 and 6 is 6 months. After 6 months from date of notice given by CLIENT or if equipment is in country whichever is earlier then monthly rental will commence. TCO requires rental commences not before equipment arrives in Tengiz. TCO Confidential

  44. Slickline – Clarification Points Schlumberger Response • Agree. • Slickline and braided line wire are purchased through a 3rd party supplier and would be recharged as per quote at time of ordering at total documented cost +15%. Example: current quote from Danum Well Services (26th August 2008) (a) 0.125” GD31MO alloy Slickline 25,000ft $29,000 (b) 7/32” Formed GD31MO alloy well service strand 25,000ft $77,873 • SLB proposes any additional personnel, not defined by COMPANY in the tender document will be charged as per Price List CAG-2008 less 10% discount attached to our proposal. Charges for such personnel will be from the day, they leave their originating country, until the day the are back to the same, with a minimum of two weeks to apply per person per mobilization. TCO proposes callout personnel should have a 7 day minimum. • SLB proposes all slickline wire and braided line are for purchase by CLIENT and prices will be supplied on request. TCO requests SLB to provide price list and discount for slickline wire and braided line purchases. TCO Confidential

  45. Slickline – Clarification Points Schlumberger Response • Confirmed. • Agree. • Agree. • Agree. • SLB proposes management and operation of TCO owned gauges are offered at cost + 25%. SLB later communicated in clarification email cost + 20%. Please confirm clarification email is accurate (+ 20%). • SLB proposes any third party item, requested by COMPANY will be charged at actual documented cost + 25%. Schlumberger has no liability for any manufacturing delays of any third party items including cross overs. TCO proposes cost + 15%. • SLB proposes the cost of repair or replacement of any damaged equipment beyond normal wear and tear will be charged to COMPANY at documented cost +25%. COVERED IN IMA, NEEDS TO BE REMOVED FROM TCO CONTRACT. • SLB proposes the cost of replacement of slickline tools lost in hole will be recharged at documented cost +25%. COVERED IN IMA, NEEDS TO BE REMOVED FROM TCO CONTRACT. TCO Confidential

  46. Well Testing – Clarification Points • SLB requested to provide a sample monthly invoice for the following: • Number of wells tested in one month = 3 • Days on location for each well = 5 (includes one day of rig up and one day of rig down for each well, plus one extra day/well for operational issues) • Days of actual testing through the MPM = 2 per well (total of 6 days of actual testing through the MPM for all 3 wells) • Samples taken = 12 (4 per well) to be stored for 6 months each. These are downhole pressurized samples. Schlumberger Response TCO Confidential

  47. Well Testing – Clarification Points Schlumberger Response • The surface sampling and monophasic wellhead sampling monthly charges cover the cost of the equipment to perform sampling and there is no incremental cost to capture samples. However any bottles required would be charged rental at prices submitted and charges for the Sampling Specialist would also apply. • Agree. • SLB requested to confirm that under compensation for additional services, the surface sampling services and monophasic wellhead sampling services have no incremental charge other than the monthly standby rate to actually run/operate. • SLB proposes that a calendar month starts from the first day of the month and terminates on the last day of the same calendar month & No proration will apply for any monthly rental. The full rental will still apply, if any package is utilized in part of the month. TCO requires that rates commence when equipment arrives at Tengiz and that a month lasts 30 consecutive days and is not a calendar month. TCO Confidential

  48. Well Testing – Clarification Points Schlumberger Response • For new Well Testing equipment, we propose an 12 month minimum rental period for these high CAPEX items. • For new Well Testing equipment, we propose an 12 month minimum rental period for these high CAPEX items. • This definition is to cover any possible item which could be requested from the pricelist , therefore the item could be small or extremely large such as a separator. Therefore it is not possible to provide a blanket fixed mob charge. • Agree. • SLB proposes no Mobilization is applied for first package with COMPANY supplied equipment (as per our proposal) provided that the minimum rental per mobilization is of a minimum of 24 months. The Minimum rental per mobilization will still apply in full if any package is demobilized upon COMPANY’s request before the minimum rental period is due. TCO proposes a 6 month minimum. • SLB proposes no Mobilization is applied for second package with CONTRACTOR supplied equipment (as per our proposal) provided that the minimum rental per mobilization is of a minimum of 12 months. The Minimum rental per mobilization will still apply in full if any package is demobilized upon COMPANY’s request before the minimum rental period is due. TCO proposes a 6 month minimum. • SLB proposes that the monthly rental covers only equipment, requested by COMPANY, as per their quantities and their technical specifications, listed in the Tender Document. Any additional equipment required by COMPANY during the Contract term, will be charged as per the Price List CAG-2008 attached to our proposal less 10% discount. Mobilization for such additional equipment , is charged equivalent to 2 weeks Price List Rental less 10% discount. SLB requested to provide a fixed mob charge. • SLB proposed the cost of repair or replacement of any damaged equipment beyond normal wear and tear will be charged to COMPANY at documented cost +25%. COVERED IN IMA, NEEDS TO BE REMOVED FROM TCO CONTRACT TCO Confidential

  49. Well Testing – Clarification Points Schlumberger Response • Schlumberger will manage the return process to ensure minimum charges for TCO. • Agree. • Agree. • SLB proposed that a Sampling Bottles Daily In Use Charge will commence from the day the bottle is filled and will continue until the day the bottle is discharged upon a written confirmation from COMPANY to discharge the bottle, and that the bottle is returned to Schlumberger base Aktau, Kazakhstan. TCO requests SLB to clarify who manages the return process to ensure prompt delivery? • SLB proposes that any third party item requested by COMPANY will be charged at actual documented cost + 25%. Schlumberger has no liability for any manufacturing delays of any third party items including cross overs. TCO proposes cost + 15%. • SLB proposes that any additional personnel, in excess to quantities requested by COMPANY in the tender document will be charged as per the Price List CAG-2008 attached to our proposal less 10% discount. Charges for such personnel will be from the day they leave their originating location, until the day they are back to the same, with a minimum of two weeks to apply per person per mobilization. TCO proposes a minimum of 7 days per mobilization. TCO Confidential

  50. Well Testing – Innovative Proposal • Schlumberger is well aware of Chevron’s drive for First Cost Reductions and Total Cost of Ownership benefits. At the time of tender submission, we were unaware of the upcoming RFP for the provision of a Well Cleanup System. • We believe that there are substantial synergies and cost savings available to TCO in delivering an efficient and cost effective Well Cleanup System in conjunction with our current Well Testing proposal. • We estimate that crew charge savings (approx $1.6 million) and rental efficiency reductions (approx $2.7 million) will result in total savings in excess of $4 million over the 5 year contract term. • Please see attachment #6 for our Well Cleanup proposal document. TCO Confidential

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