DUG Permian Basin. Robert Manelis General Manager, Permian Production Unit 21 May 2014

Transcription

1 DUG Permian Basin Robert Manelis General Manager, Permian Production Unit 21 May 2014

2 Disclaimer Forward-looking statements This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events, conditions, circumstances and the future financial performance of BHP Billiton, including for capital expenditures, production volumes, project capacity, and schedules for expected production. Often, but not always, forward-looking statements can be identified by the use of the words such as plans, expects, expected, scheduled, estimates, intends, anticipates, believes or variations of such words and phrases or state that certain actions, events, conditions, circumstances or results may, could, would, might or will be taken, occur or be achieved. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this presentation. For more detail on those risks, you should refer to the sections of our annual report on Form 20-F for the year ended 30 June 2012 entitled Risk factors, Forward looking statements and Operating and financial review and prospects filed with the U.S. Securities and Exchange Commission. All estimates and projections in this presentation are illustrative only. Our actual results may be materially affected by changes in economic or other circumstances which cannot be foreseen. Nothing in this presentation is, or should be relied on as, a promise or representation either as to future results or events or as to the reasonableness of any assumption or view expressly or impliedly contained herein. No offer of securities Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell BHP Billiton securities in any jurisdiction. Reliance on third party information The views expressed in this presentation contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This presentation should not be relied upon as a recommendation or forecast by BHP Billiton. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 2

3 Key Themes One of the world s largest corporations, diversified global portfolio of assets A large, high quality resource base concentrated in Australia and the US Conventional and Unconventional Committed to ongoing improvement in our HSEC performance and a good neighbor in the communities where we operate We have successfully refocused drilling activity on our liquids rich acreage Progressing development in the liquids rich Permian We will continue to optimize our investment program for value Pursuing significant productivity opportunities targeting cost and resource recovery Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 3

4 25th largest company in the world by market cap Apple Exxon Mobil Google Microsoft Berkshire Hathaway Johnson & Johnson General Electric Wells Fargo Royal Dutch Shell Wal-Mart Roche Nestle Chevron Novartis Procter & Gamble JP Morgan Chase Pfizer IBM Verizon HSBC BHP Billiton (25th) Rio Tinto (61st) Glencore Xstrata (114th) Vale (123rd) Anglo American (276th) Market capitalisation at 30 th April 2014 (US$ billion) Other Diversified Miners Sources: Bloomberg, BHP Billiton. Petrochina, Ind & Commercial Bank of China, China Mobile and other enterprises have been excluded due to high percentage of non free float shares.

5 An outstanding global portfolio of assets, diversified by commodity, geography and market Aluminium, Manganese and Nickel A global producer and supplier of primary aluminium, alumina and nickel and manganese ore and alloys. Coal A global producer of thermal coal and the largest global supplier of seaborne traded hard coking coal. Copper A leading global explorer and producer of copper, silver, lead, uranium and zinc. Iron Ore A premier global supplier of iron ore. Petroleum A global leader in oil and gas exploration, production, development and marketing. Potash Development Option Focused on potash project development. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 5

6 A 670 Mboe/d Petroleum business comprised of high-quality Conventional and Shale assets Shale (42%) Eagle Ford Permian International (11%) Fayetteville Haynesville UK Shenzi Neptune Trinidad and Tobago Algeria Pakistan Australia (34% of FY13 production) Atlantis Mad Dog Gulf of Mexico (13%) NW Shelf Pyrenees Bass Strait Source: BHP Billiton analysis. Macedon Stybarrow Minerva Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 6

7 Australia and the US remain our core regions FY14 BHP Billiton capital and exploration expenditure BHP Billiton Petroleum United Kingdom Petroleum other Shale Australia Gulf of Mexico Exploration other Onshore US Gulf of Mexico Trinidad & Tobago Algeria Pakistan Australia Bubble size represents resource of one billion barrels of oil equivalent. Note: Please refer to BHP Billiton Investor Briefing Day 2 lodged with the ASX on 11/12/2013. The material assumptions underpinning the estimates presented above are unchanged. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 7

8 Committed to sustainable development Be the safest company in industry Protect the land where we operate Safeguard and manage water resources Minimise air emissions Be a good neighbor to our communities Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 8

9 To be the safest company in the industry Recordable Injuries per Million Feet Drilled (US H&P rig fleet) H&P Onshore US rig fleet average BHP Billiton Onshore US H&P rigs US Onshore business is very challenging; Relatively inexperienced workforce; BHP Billiton Recordable Injuries per Million Hours Worked (TRIF, 12 month moving average) Petroleum TRIF Shale TRIF 2012 Contractor selection is critical; Hazard identification is a key focus area; Material risks identified and managed; Regularly host safety workshops (safety stand-up) Source: Helmerich & Payne, Inc.; BHP Billiton. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 9

10 Community; Being a Good Neighbor Creating a Community Reference Group (CRG) in Pecos. The CRG is composed of 15 local civic leaders that meet monthly to discuss current events and get an update on BHP Billiton activities. Supporting local DARE projects such as repairing senior citizens homes and summer camp for at-risk-kids. Granting college scholarships to high school students based on their community involvement. Community Reference Group Meeting Provide equipment and training for First Responders. DARE high school students rehabilitating a home in Pecos Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 10

11 Significant presence in premier US shale plays We hold 1.5 million net acres 1 across four highly productive US shale plays and three US states: BHP Billiton Onshore US shale plays Black Hawk (Eagle Ford) condensate rich; Hawkville (Eagle Ford) mix of condensate and gas with NGL; Permian liquids rich but geologically complex; Haynesville prolific dry gas wells with premier acreage position; Fayetteville long term, low technical risk, dry gas option. Houston liquids focused area dry gas focused area 1. As at 30 June Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 11

12 Shale development plan will be continually optimised for value We are prioritizing investment in the liquids rich, high return shale assets. pursuing accelerated development in the prolific Black Hawk area; timing Hawkville development for liquids content and lease retention; large scale development of the Permian will extend our liquids production profile; We are preserving the value of our dry gas shale assets. current drilling the Haynesville delivers 30%¹ rates of return; Fayetteville investment limited to strong non-operated opportunities with 25%¹ rates of return; We have flexibility in our Shale portfolio to time investment for maximum value. 1. Rate of return after tax, based on September 2013 futures prices. BHP Billiton Onshore US shale plays Houston liquids focused area dry gas focused area Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 12

13 Extending our high return liquids profile Efforts underway to expand our Permian land position in our core focus area. 100,000 net acres in identified focus areas; acquiring acreage in highly prospective areas and divesting acreage elsewhere; testing multiple productive horizons. Focus area Pearsall Houston First shale exploration well drilled in October 2013 in the emerging Pearsall play. successfully accessed an option across 100,000 net contiguous acres; evaluation ongoing to determine liquids production potential; Pearsall 100,000 net acres Permian 100,000 net acres Black Hawk 58,000 net acres Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 13

14 Permian we have defined a highly prospective focus area BHP Billiton acreage in the Permian basin Focus area Under evaluation Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 14

15 Approximately 4,000 feet thick Wolfcamp Bone Spring Permian unique multiple horizon potential Large liquid bearing column creates the potential for multiple economically productive horizons. A vertical well program followed by targeted horizontal wells has been used to appraise the play. Avalon 1st Extensive appraisal program given the large areal and vertical footprint. 2nd 3rd Lease ownership interest can vary by depth and horizon. Upper Middle Lower Schematic for representative purposes Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 15

16 Acreage position appraised through vertical program Appraisal program designed to delineate acreage position spatially and vertically. Vertical test wells drilled through subject intervals with mini-fracs placed in multiple prospective horizons. Frac d zones flowed back and correlated to observed horizontal well performance. Subsequent horizontal laterals followed up to confirm encouraging vertical frac flowback results. Results informed development plan. Spatially Vertically A B C D E Wells A C D E Tested Horizons B Schematic for representative purposes Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 16

17 Permian targeting a 100 kboe/d development Well results support planned 100 kboe/d development within the focus area with approximately 60% liquids. Production rate recent wells in focus area (boe/d, 100% basis) 1,800 1,600 Process of acquiring and consolidating our acreage position. Testing multiple productive horizons. Significant productivity upside with lower well cost and higher recovery as we have demonstrated in Black Hawk. 1,400 1,200 1, (days) Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 17

18 Learning to get better faster Benchmark relentlessly Build upon best-in-class performance Utilize models to drive trials and pilots Apply design of experiment principles to accelerate feedback Invest in diagnostics to validate models and gather insights Leverage learnings across organization Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 18

19 Improving speed and reducing cost BHP Billiton Black Hawk drilling time performance 1 (days) productivity 40 improvement of ~26% Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 BHP Billiton Black Hawk drilling cost performance 2 (US$ million) productivity 8 improvement of ~24% Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 1. Drilling time from spud to rig release string well design. Balance drilling focus between time improvements and cost improvements. Tendered key contracts for tangibles and services. Continual review of well specification and procedures to ensure fit for purpose design. Eliminating waste and wait time in process. Reduce variability in drilling performance. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 19

20 Gas Rate Utilize models to diagnose performance issues Pressure Gas rate history (mmcfd) X History -- Model Flowing BHP Billiton match (psi) Rate restricted Apparent boundary dominated flow X History -- Model Hyperbolic/terminal decline Days Time (days) Lab based pressure dependent permeability (md ratio vs psi) Time (days) Proppant placement model (feet) Source: BHP Billiton. Smackover Haynesville Bossier Poorly propped in upper layers Propped in lower layers 0ft 5000ft Length (Idealized Case) 0.0 lb/ft lb/ft lb/ft lb/ft lb/ft 2 Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 20

21 Uniform fracture geometry is ideal Previous Design Longer stage length Microseismic Production Log Schlumberger BroadBand Microseismic and production logging confirm disproportionate contribution by cluster. Using diversion techniques to improve stimulated rock volume and create a more uniform distribution across clusters. Early results encouraging. Source: BHP Billiton, Schlumberger. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 21

22 Uniform fracture geometry is ideal Concept Shorter stage length Microseismic Production Log Schlumberger BroadBand Microseismic and production logging confirm disproportionate contribution by cluster. Using diversion techniques to improve stimulated rock volume and create a more uniform distribution across clusters. Early results encouraging. Source: BHP Billiton, Schlumberger. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 22

23 Benchmarking performance to measure effectiveness Production, bo Production, mbo Production, mboe Production, mbo BHP Billiton (226 wells) A (227) B (642) C (333) D (162) BHP A Billiton (235) (192 wells) B (558) C (265) D (154) BHP Billiton (161 wells) A (154) B (435) C (176) D (120) BHP Billiton (57 wells) A (48) B (167) C (52) D (52) Source: BHP Billiton analysis. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 23

24 Summary One of the world s largest corporations with a strong portfolio of Conventional and Shale assets. One of the most active unconventional operators in North America. Success in Unconventionals requires organizations to learn quickly. Analytical and numerical models help target trials and accelerate learning. Benchmarking is an important tool to allow you to build upon the success of others. Robert Manelis, General Manager Permian Production Unit, BHP Billiton Petroleum, 21 May 2014 Slide 24

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