Offshore Conference - Esbjerg. Presentation. Oil Gas Denmark. 18 June page 1

Transcription

1 Offshore Conference - Esbjerg Presentation Oil Gas Denmark 18 June 2013 page 1

2 Topics for today OGD People in the pipeline as an industry area of main focus Potential in the North Sea challenges ahead Lifecycle of a field Manpower requirements in the oil and gas industry challenges and way forward page 2

3 OGD is representing oil companies and service companies in the Danish upstream oil and gas sector Board OGD Secretariat SERVICE AND SUPPLIERS OIL COMPANIES Service industry Suppliers Dong E&P HESS Mærsk Oil&Gas Noreco Subcontractors Wintershall 200+ members Shell Chevron Total Bayerngas Nordsø Fonden June 19, 2013 PA Resources VNG page 3

4 Geographical span On longer term the aim is to establish collaboration with Greenland and the Faroe Islands Source: Energistyrelsen June 19, 2013 page 4

5 Strategy Vision To enable the upstream oil and gas sector to enhance value for the industry and society Steer from Board on top priorities Mission To be the trusted voice of the Danish oil and gas sector, promoting understanding and recognition of the sector s role in the Danish society To develop/represent sector views, optimize business opportunities, develop/support new initiatives to strengthen HSE, and strive to enhance value creation for the sector and society Core topics A Sector development B Infrastructure & C HSE D services Skills & capabilities A.1 Value creation from oil & gas A.2 Rammevilkår A.3 Brownfield A.4 Innovation & technology A.5 Unconventional oil & gas B.1 Value chain B.2 Internationalization C.1 Health and safety C.2 Environment C.3 Industry recommended practices (IRPs) C.4 Cost of HSE compliance C.5 EU D.1 Image building D.2 Grow recruiting base & people pipeline D.3 Subject relevance D.4 Strengthen existing labor pool Services Research & Publications Partnerships Networking, events & training Communication Values 1. Meet the industry needs 2. Engage our members & stakeholders 3. Seek impact 4. Lean organization 5. Agile mindset & setup 6. Learning culture Source: OGD team analysis June 19, 2013 page 5

6 Danish oil and gas era commenced in 1962 when A.P. Møller was awarded sole rights to exploration and production 2004: Oil output in Denmark reached a peak Gas production Oil production 1963: DUC was founded by Maersk and Gulf Oil. Later, Shell joined the consortium 1966: First offshore discovery (Kraka) 1984: Most existing oil and gas fields are now discovered : A.P. Møller was awarded sole rights to explore and produce oil on the Danish shelf 1972: Oil production in Denmark started, when the Dan field came on-stream 1984: First gas produced on danish shelf (from Tyra) 2012: The Danish North Sea Fund takes a 20% stake in DUC licenses Source: The Danish Energy Agency

7 Self-sufficiency of oil and gas from 1991 to 2020 with the current production estimates Oil and gas production and consumption in Denmark ( ) mmboe 200 Consumption Production 150 Current estimates indicate that Denmark will be self sufficient in petroleum products until Source: The Danish Energy Agency Period as self sufficient

8 Challenge # 1 The oil is mainly deposited i tiny pores in limestone with low permeability and low porosity Recovery rate average 27% page 8

9 Energy consumption in Denmark ( ) Share of total energy consumption in Denmark (per cent) 100% Change from '90 to '10 (percentage points) Change from '10 to '22 (percentage points) 90% 80% 43.3% 38.7% 40.4% Oil -4.6% 1.7% 70% 60% 50% 10.0% 20.6% 16.9% Gas 10.6% -3.7% 40% 30% 20% 10% 39.9% 18.1% 22.5% 14.7% 28.0% Coal Renewables -21.8% -3.4% 15.8% 5.5% 0% 6.8% Source:The Danish Energy Agency: "Danmarks olie- og gasproduktion 2010"

10 Significant potential depending on investments in exploration, technology and field development Historical and future production volume of oil and gas mmboe Exploration resources Technological resources Gas production Oil production Source: The Danish Energy Agency

11 Actual production has exceeded most prognoses made by the Danish Energy Agency The Danish Energy Agency: "Historically, the Danish oil and gas sector has been innovative in improving their production methods to increase recovery rates and thus the total production is above the expectations of the energy agency" prognosis Actual production 2000 prognosis 1995 prognosis 1990 prognosis Deviation between actual forecasted production 2010 Volume (mmboe) Value (bndkk)* * Assuming an oil price of 79.5 USD/barrel; USD/DKK = 5.5. Source: The Danish Energy Agency

12 Shelf complexity has been handled proactively by the sector through a clear focus on prolonging the life time of the Danish shelf Development in oil recovery rate* Per cent and change in percentage points Levers to further enhance oil recovery rate Per cent % A study from Technical University of Denmark (DTU) indicates that it is possible to increase recovery rate with 10 percentage points in some fields through large scale CO2 injection without risking destroying oil flow or the subsoil conditions. Study was performed under controlled lab conditions, actual potential might deviate in real geological environment** 26% 36% recovery rate CO2 Injection in Danian chalk CO2 Injection in Maastricht chalk Opportunity for enhanced oil recovery rate One percentage point increase in recovery rate is estimated to yield ~133 mmboe of oil equivalent to more than DKK ~50 billion - total increase through EOR is thus estimated to yield up to DKK 800 billion** * Relative amount of resources possible to extract from total shelf volume ** Using 2011 oil and gas prices (Brent oil price = USD/boe 110 and USD/DKK exchange rate of 5.5. Calculation method approved by ENS Source:The Danish Energy Agency; BP Statistical Review; DTU study (Professor Erling Stenby)

13 A rough estimate indicates that significant additional tax revenues and jobs can be created by exploiting the remaining technical and unexplored resources Main assumptions Total tax revenues from the oil and gas sector bndkk Aggregated tax revenue estimated at DKK 135 billion The analysis is based on extraction of 50 % of the resources conditional on new exploration or technical development (estimated by The Danish Energy Agency) 0,4 0,8 1,3 1,7 2,6 3,1 2,8 3,8 4,6 5,3 6,1 6,9 7,0 7,1 7,1 7,1 7,0 7,1 7,2 7,1 7,1 7,0 6,5 5,8 5,0 4,3 3,9 Ø5,0 Fixed multiplier between number of employees and OPEX and CAPEX, respectively Fixed multiplier between production value and total tax revenues No timing of investments Constant share of oil vs gas (70 % oil, approximately today s level) Indirect employees Thousand employees 6,2 6,3 6,4 6,5 6,4 6,3 6,5 6,5 6,4 6,5 6,4 5,5 5,9 4,8 5,2 4,1 4,6 3,5 3,9 3,5 2,2 2,6 2,8 1,2 1,6 0,4 0, Operations Investments Ø4,6 Source: The Danish Energy Agency; Wood Mackenzie; Quartz+Co estimate

14 The indirect activities driven by the oil and gas sector create significant personal income tax revenues Direct and indirect sector personal tax DKK millions, average Indirect 3,200 2,500 Historical oil and gas sector direct and indirect personal income tax contribution Index, 100 = Direct employment 1992 Indirect Direct 1,400 1,200 1, Historical production and average salary cost per employee Index, 100 = 1992 OPEX Production volume 400 CAPEX CAGR '92-'10 (per cent) 5.4% 5.0% CAGR '92-'10 (per cent) Direct % 4.2% 3.1% Note: Direct and indirect figures are related to the Danish oil and gas sector Source: Statistics Denmark National accounts

15 The majority of people directly employed in the sector work in Esbjerg Main oil and gas employment areas in Denmark Distribution of employees (average ) Number of employees (per cent) ~1, % Copenhagen ~680 (40%) ~680 Copenhagen Esbjerg ~1,020 (60%) Esbjerg ~1,020 Source: Statistics Denmark "Registerbaseret arbejdsstyrkestatistik"

16 Employees have significantly higher educational levels than the average Danish employee Highest completed educational level per employee comparison of the oil and gas sector to DK average employee, 2009 Per cent 32.4% 30.1% All Extraction of oil and gas 22.0% 23.0% 18.9% 20.2% 13.0% 14.6% 13.6% 7.1% 2.3% 1.0% 0.5% 1.3% Elementary school Upper secondary education Standardised basic training and apprentice levels Short-term higher education 54% of employees within "Extraction of oil and gas" have completed a higher education compared to the national average of 35% Source: Statistics Denmark "Registerbaseret arbejdsstyrkestatistik" Medium-term higher education Long-term higher education PhD-level education

17 The largest suppliers to the oil and gas sector Indirect Direct Top-10 supplier industries by indirect oil and gas-driven employment, 2008 Number of employees 4,795 5,095 ~1,700* 1, Extraction of oil and gas Architectural and engineering activities Business consultancy activities Wholesale Employment activities Mining support service activities Information technology service activities Civil engeneering Manufacture of other machinery Other Selected sector examples * is the average number of employees in Extraction of oil and gas based on financial statements from Source: Statistics Denmark National accounts, Greens.dk

18 Life cycle of a green field years page 18

19 Key metrics One FTE employed directly in the oil and gas sector indirectly generates eight jobs in other sectors Each one million barrels produced generates a government income of DKK 170 million Each employee with direct employment in the oil and gas sector generates DKK 40 million GVA Every one billion DKK invested in the oil and gas sector, creates ~1.400 jobs in the Danish supplier industry Every one billion DKK in operational costs in the oil and gas sector, creates ~750 jobs in the Danish supplier industry Source: Statistics Denmark National accounts

20 Key Challenges ahead (1): Is a technical or scientific education a compelling value proposition? + Are young people attracted to the industry? Fewer candidates for increased number of positions o Increasing level of activity offshore and onshore o Large number of employees retire o Descending youth cohorts

21 Key Challenges ahead (2): Global competition for talent Overall requirement in 2020 in Denmark for engineers around 25,000 (according to IDA) Long lead time for people pipeline Geographical challenges (Copenhagen vs Esbjerg vs international career)

22 Way forward: Prioritized strategic area for Oil Gas Denmark in close collaboration with the industry, including e.g. Offshoreenergy.dk, Danish Offshore Academy, World Careers etc. Collaboration between Oil Gas Denmark and University of Copenhagen, DTU, University of Southern Denmark, University of Aalborg Maskinmesterskoler etc. Focus on increased communication and image building (education and industry) Oil Gas Denmark has established collaboration with government

23 Further information Martin Peter Næsby Managing Director Mobile Esben Mortensen Head of Secretariat Mobile Ulla Lena Head of Communication Mobile Thank you! page 23