AN INTRODUCTION TO CAIRN IN SENEGAL CAIRN ENERGY PLC SENEGAL DELIVERING VALUE FROM DISCOVERY AND DEVELOPMENT

Transcription

1 CAIRN ENERGY PLC SENEGAL AN INTRODUCTION TO CAIRN IN SENEGAL DELIVERING VALUE FROM DISCOVERY AND DEVELOPMENT

2 In Senegal, Cairn operates through Capricorn Senegal Limited, a wholly owned subsidiary of Cairn Energy PLC. CAIRN ENERGY PLC IS AN INDEPENDENT OIL AND GAS EXPLORATION AND DEVELOPMENT COMPANY LISTED ON THE LONDON STOCK EXCHANGE. Visit us online at Cajun Express drilling rig, offshore Senegal.

3 1 CAIRN HAS ITS HEADQUARTERS IN EDINBURGH, SCOTLAND WITH ADDITIONAL OFFICES IN SENEGAL, LONDON AND NORWAY Cairn has discovered oil and gas in a variety of locations throughout the world. Today the business holds a balanced portfolio of exploration and development assets and is focused on three geological regions: the Atlantic Margin, North West Europe and the Mediterranean. Cairn operates in partnership with host governments and where appropriate works with national oil companies, such as La Société des Pétroles du Sénégal (Petrosen) along with international oil companies. Cairn has a successful track record in frontier exploration and has demonstrated an ability to manage and deliver complex exploration, drilling, development and production projects, whilst minimising the impact on local communities and the environment. Cairn is fully committed to conducting its operational activities in accordance with the Government of Senegal requirements, regulations and standards. In Senegal, Cairn operates as Capricorn Senegal Limited, a wholly owned subsidiary of Cairn Energy PLC. The Production Sharing Contract (PSC) in place with the Government of Senegal covers an area of ~7,000km 2 and consists of three blocks in Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore. The Joint Venture (JV) consists of Cairn as the Operator (40% working interest), Petrosen (10%), ConocoPhillips (35%), and FAR (15%).

4 2 Senegal is a great example of Cairn s business model delivering. We had a strong technical belief in the potential acreage and this belief has been realised with success in both wells drilled to date. Simon Thomson, Cairn CEO FROM DISCOVERY TO DEVELOPMENT Cairn entered the country in March 2013, acquiring an interest in three blocks held by JV partners FAR and Petrosen and becoming Operator. ConocoPhillips subsequently acquired an interest in the blocks. In late 2014, Cairn and its JV partners drilled two wells offshore Senegal representing a multi million dollar investment. Oil was discovered in both wells, opening a new hydrocarbon basin on the Atlantic Margin. These were the first wells to be drilled offshore Senegal in more than 20 years and the first deepwater wells. The success of the programme and the discoveries have attracted the attention of the global oil industry. Cairn is excited about the exploration opportunity of this world class asset and has presented a forward investment plan to the Government which is the first offshore evaluation programme of its nature in Senegal. The objective is to build a resource base from the initial discoveries towards development and lay the foundation for a long-term multi-field, multi-phase plan to maximise the value which can be created for Senegal as a country and the JV investors. The evaluation work plan presented to the Government, comprises a sequence of exploration and appraisal wells to be drilled offshore Senegal commencing in 2015, together with the acquisition of a further 2,000km 2 of 3D seismic and an array of geo-scientific and engineering studies. Cajun Express drilling rig, offshore Senegal.

5 3 Thiès Dakar SENEGAL Diourbel ATLANTIC OCEAN Mbour SENEGAL RUFISQUE Offshore Foundiougne Kaolack Passi FAN-1 Well Sokone SANGOMAR DEEP Offshore SNE-1 Well SANGOMAR Offshore Toubakouta GAMBIA

6 4 Cairn discovered oil in both wells in its Senegal exploration programme, opening a new hydrocarbon basin on the Atlantic Margin. FOLLOWING CAIRN S TWO DEEP WATER WELL DISCOVERIES IN Q4 2014, FUTURE OPERATIONS ARE PLANNED TO COMMENCE IN Q The 2014 discoveries provide strong encouragement that further evaluation and exploration drilling could lead to integrated developments within the Senegal Basin. Based on initial results, the SNE-1 discovery appears the most attractive and will be the first priority of the evaluation programme. The programme aims to confirm the resource volumes, the areal extent of the field, its production potential and the presence of nearby fields. The initial phase of the drilling programme in 2015 will include two SNE evaluation wells and one Shelf exploration well and a 2,000km 2 seismic data acquisition campaign over the Sangomar and Rufisque blocks. The subsequent phase planned for 2016 will include two further SNE evaluation wells and one FAN/Basin well. These will be subject to ongoing FAN studies and the results of the first two SNE evaluation wells. Simon Thomson, CEO and Macky Sall, President of Senegal.

7 On board the Cajun Express drilling rig, offshore Senegal. 5

8 6 We have made discoveries in two separate plays, which have the potential to be transformational for Cairn and Senegal. Right now we are focused on working on appraisal and further exploration programmes to fully establish the value of our large acreage position. James Smith, Cairn CFO A NUMBER OF FURTHER PROSPECTS AND LEADS HAVE BEEN IDENTIFIED AND CONTINUE TO BE MATURED These potential opportunities are over all three PSC blocks. Further work will be required to progress these opportunities to drillable prospects with the ability to add significant resources if drilling is successful. Pursuing exploration and evaluation activities in parallel with the engineering planning for future design and construction should allow a phased integrated development of the full Senegal basin to be achieved. The evaluation programme has been designed to meet the objectives of a comprehensive work plan that efficiently establishes the commercial character of the discoveries made by the SNE-1 and FAN-1 wells whilst understanding and modelling the subsurface nature of the fields. Dakar port, Senegal.

9 Cajun Express drilling rig. 7

10 8 WORKING RESPONSIBLY Wherever Cairn operates it looks to employ local people and services where possible and where it is safe to do so. Cairn has set up an office in Dakar and a supply base in the port and works with local service providers. Cairn works responsibly with the authorities and other stakeholders to ensure it understands the environment and communities where it operates and to provide assurance that it will operate safely. We have hosted a series of capacity building seminars alongside the Senegal authorities to increase understanding of key technical procedures. Prior to commencing operations in 2014, a Public Consultation and Disclosure Plan identified key stakeholders and guided how the company engaged with interested groups. An Environmental and Social Impact Assessment plan was also approved by the regulatory authorities and successfully implemented. Cairn is pleased to report that all operations to date have been conducted to a very high standard, including the drilling of the two wells and the completion of site and environmental surveys. Cairn is looking forward to working closely with the Government of Senegal and its JV partners to realise the full potential from this large acreage position offshore Senegal. The 3Rs OUR BUSINESS PRINCIPLES ARE BASED ON THE CORE VALUES OF THE 3RS RESPECT We act with respect for people, their communities, the environment, human rights and the law. RELATIONSHIPS We act honestly, transparently and with integrity to develop strong, lasting relationships with all our stakeholders. RESPONSIBILITY We behave fairly, ethically and are accountable for our actions. We believe in and act on our responsibility to care for people, society and the environment.

11 9 PROTECTING PEOPLE, THE ENVIRONMENT AND COMMUNITIES Corporate Responsibility remains at the heart of our business, to deliver and protect for all our stakeholders. Cairn looks to deliver value through the discovery and development of hydrocarbons and our challenge is to do so in a safe, secure and environmentally and socially responsible manner. Corporate Responsibility is based on our core values of building respect, nurturing relationships and acting responsibly. These are central to our business objectives. We have Business Principles and Responsibility Policies in place which are regularly updated; most recently in 2014 to reflect changes in our business including our increased focus on risk management and the importance of the role of contractors and non-operating partners. During 2015/16, we will continue to prioritise the health, safety, security and wellbeing of people while promoting safe behaviours of contractors. We remain committed to protecting the environment in the areas in which we operate. Good governance is also important with our commitment to meeting all of our obligations in a transparent manner. We uphold and support the ten principles of the United Nations Global Compact and Cairn is a Participating Company of the Extractive Industries Transparency Initiative (EITI). In this way Corporate Responsibility is at the core of our business to deliver and protect value for all our partners and stakeholders. Cajun Express drilling rig, offshore Senegal. Bourbon Topaz, supply vessel, offshore Senegal.

12 10 OPENING A NEW ATLANTIC MARGIN BASIN Along the underexplored coast of North West Africa, Cairn s acreage position has been created in the deeper water areas adjacent to shelf edge acreage where a number of early wells were drilled during the 1960s and 1970s. Many of these wells encountered petroleum in some form, demonstrating the potential for a working hydrocarbon system but without confirming any commercially viable discoveries. 1 Exploration Seismic Seismic surveys are carried out to develop a picture of geological structures below the surface. This helps identify the likelihood of an area containing hydrocarbon reservoirs and helps to optimise where to drill. Now, utilising modern 3D seismic data and the drilling capability available through dynamically positioned rigs, Cairn s recent programme and success in Senegal has opened a new and emerging hydrocarbon basin. The oil and gas business is by nature long-term. The key stages of Cairn s future exploration, appraisal and development activity in Senegal in 2015/16 and beyond are outlined here. 2 Site Survey Before commencing drilling activity, baseline site surveys are carried out to gain more detailed information on the area where an exploration well may be drilled and to confirm that the selected drilling location is safe and that any sensitive environments can be avoided. The process involves taking geological and environmental samples from the seabed and may involve carrying out shallow seismic surveys.

13 11 3 Exploration Drilling Exploration wells are drilled to determine whether hydrocarbon reservoirs are present. This phase can be accompanied by a step change in activity and visibility locally as exploration drilling involves a drilling rig, supply vessels and helicopters for transporting personnel. Exploration drilling is preceded by various assessments to understand potential health, safety, environmental, social, security and human rights impacts. These assessments identify appropriate steps to reduce impacts, manage risks and assist in operating responsibly. 5 Development If appraisal wells show technically and commercially viable quantities of oil and gas, a development plan is prepared and submitted to the relevant authorities for approval. This includes rigorous assessment of the potential risks and a long-term assessment of environment and social impacts covering a time frame of ten years and potentially up to years. The plan will also detail projected benefits to local communities, for example employment and supplier opportunities, as well as proposing how to manage impacts such as specialist workers from outside the local community. 4 Evaluation/ Appraisal Drilling If promising amounts of oil and gas are confirmed during the exploration phase, appraisal drilling is then conducted. This establishes the size and characteristics of the discovery and provides technical information to determine if the discovery is commercial and subsequently optimises the best method for recovery of the oil and gas. 6 Production A variety of options are available for the production of oil and gas. During this phase, which can last many decades, regular reviews are made of social and environmental performance to ensure impacts identified in the assessments are mitigated. Safe operations remain an ongoing focus, which means personnel are competent and good Health, Safety and Environment behaviours are in place and equipment is properly maintained and operated.

14 12 As you would expect exploration activity in new basins is higher risk and not every well is going to be successful; however, this delivery of exploration success in Senegal is evidence of our strategy working. Simon Thomson, Cairn CEO BENEFITS IN SENEGAL Energy is essential to social and economic development and at present fossil fuels such as oil and gas form a significant part of the short and medium term global energy supply. Cairn s role is to contribute to global energy supply through finding potential new sources. Sourcing new energy resources globally is challenging. Finding a significant source of oil and gas offshore Senegal would benefit businesses as well as the national economy, local communities and the Government of Senegal, providing valuable taxation revenues whilst also creating longer term national energy security and potential export revenues. There is increasing global industry interest in Senegal which is believed to have oil and gas potential and is considered to be underexplored. Oil and gas exploration in Senegal started it the 1950s with more than 140 wells drilled to date. Whilst hydrocarbon systems have been proven in Senegal as well as in Mauritania to the north and Guinea-Bissau to the south, there is currently no oil production and only one small producing gas field onshore. Discovering further domestic energy resources would be of national benefit and help address the imbalance between energy supply and demand in Senegal. Whilst there remains a risk that exploration efforts will not always result in a discovery which can be developed commercially, the activities of oil companies at this early stage are crucial; in terms of prospect generation, investment of risk capital and exploration drilling to unlock the potential of the region. Further advancement in technology and geological modelling now available is strongly supporting the industry s move into offshore Senegal which helps to balance the risk in this frontier region. Dakar, Senegal. Base supply provider contractors, Bolloré Africa Logistics, Senegal.

15 Cajun Express drilling rig, offshore Senegal.

16 MORE INFORMATION If you have any questions or would like more information on any of Cairn s activities please Cairn on: senegal@cairnenergy.com Visit us online at