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Schlumberger Confidential
LBS Annual Global Energy Summit:
Resources Efficiency and Security
London, England
November 27th, 2014
1
© 2014 Schlumberger Business Consulting. All Rights Reserved.
Decline in oil and gas discoveries have been reverted, but most are
technically complex and expensive to develop
5-YEAR AVERAGE OIL DISCOVERED VOLUME (2P DISCOVERIES)
Bn bbl
Onshore and shallow water
Deep and ultra-deep water
Major contributors of last
decade’s discoveries:
Oil
Gas
50
45
 Iran, China, Russia,
Turkmenistan,
Mozambique,
Australia, US and
Canada
40
Billion bbl
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 Brazil, Angola and
Kazakhstan
55
35
30
-8%
25
20
+2%
15
10
5
0
1980
1985
1990
1995
2000
Source: IHS Edin; Rystad Energy; SBC analysis
2005
2010
2013
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Companies faces four main challenges
SBC’S VIEW ON COMPANIES INTERNAL CHALLENGES
Cash from
operations
 Operations Excellence
 Maximizing production and optimizing OPEX, safely
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 Maximizing cash from operations
 Ensuring capital discipline
Capital Efficiency
 Increase project value
 Increase operators and service providers collaboration
Talent shortage
Local content
development
 Managing the shortage of senior staff while adapting
to the changes in the industry’s demography
 Promoting long term industry development in the
countries hosting oil & gas operations
Source: SBC analysis
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© 2014 Schlumberger Business Consulting. All Rights Reserved.
Cash from operations
Production efficiency has been declining consistently and causes are easy
to manage individually
NORTH SEA PRODUCTION EFFICIENCY
MAIN SOURCES OF LOSSES
%
% of Maximum Production Potential
Benchmark
85%
Compression train
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Tanks/ vessels
Wells
80%
Efficiency is not
correlated with
facility age
75%
Power generation & distribution
Wellhead & subsea equipment
Safety systems
Flowlines/ pipelines/ risers/ exports
70%
Instrumentation & control systems
TAR overrun
65%
Pumps
Artificial lift systems
60%
Injection
Metering
55%
Other surface equipment and facilities
04
05
06
07
08
09
10
11
12
Source: 4 years over 180,000 boed North Sea production (3 companies); DECC; SBC analysis
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Cash from operations
Main project challenges are internal to Oil & Gas companies
MAIN CHALLENGES FACED BY COMPANY
Normalized % of Survey replies
Internal to O&G companies
Supply chain
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.
Safety & environment
Technical & economic challenges
6%
8%
External stakeholders
8%
People & organisation
30%
 Talent availability / skill
pool management
 Team alignment
28%
20%
Governance
Availability & quality:
 Critical equipment
 Engineering service
 Contracting and
Procurement
 Assurance & risk
management
 Framing, decisionmaking and FEL
 Aggressive targets
Source: SBC Capital Projects Survey 2013; Post-Survey Interview notes
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Capital Efficiency
Many industries have faced similar challenges in the last twenty years,
and had to undergo complete transformations
1990
Now
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Lower costs
Faster developments
Higher quality
Photographs from Renault, Airbus, Ariane Espace, northjersey.com
© 2014 Schlumberger Business Consulting. All Rights Reserved.
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Capital Efficiency
The two key drivers of these transformations were the improvement of
Project Management, and the integration of suppliers
AUTOMOTIVE COMPANY
WHAT THEY DID:
 Too many models late, low
quality and too costly
1. Improve Project Management:
 Toyota challenging all players
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 Competition ahead in terms of
quality and development cycle
times
– Create a Central Project Group, or a Central
Competency Center for Program Management
– Create a Project Manager career track
– Codify Program Management practices, activities
and milestones
– Align all internal projects on the same IT
AEROSPACE COMPANY
 Increasingly large programs
 Series of large programs late,
over-budget and unprofitable
 No common Project
Management practices
 Advanced collaborative design
systems but with incoherencies
2. Increase the integration with the key suppliers:
– Tighten the relationships with tier-one suppliers
– Integrate suppliers on a common IT platform
– Formalize the co-development process
– Develop long term agreements based on
continuous improvement and reliability, rather
than systematic tendering based on costs
– Increase transparency and best practice sharing
with suppliers
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© 2014 Schlumberger Business Consulting. All Rights Reserved.
Talent shortage
Changes on industry demography lead to three distinct challenges, one for
each age segment
PTPS PER AGE BRACKET ON A GLOBAL BASIS
Percentage of PTPs
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Note: Excluding China and oilfield services companies
Retirement rate: 20% for 55y-59y, 50% for 60y-64y, 70% for 65y+
Recruitment targeted inputted in the demographic profiles as follows: 40% in 20y-24y, 60% in 25y-29y
Attrition at 2% (people leaving the E&P industry)
Source: SBC O&G HR Benchmark 2013
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Talent shortage
For mid-career PTPs, the game is about productivity
PTPS BY DISCIPLINE VS. RESERVES AND OPERATED PRODUCTION1
2012, # of PTPs, Reserves in MMboe, Operated Production in kboe/d
# of PTPs
n3
Reservoir
&
Production
Eng.
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Oilweighted2
Product
effect
R² = 0.96
0
Drilling
&
Completion
Eng.
Gas-weighted
n2
R² = 0.95
R² = 0.92
0
n1
R² = 0.95
G&G Eng.
0
5000
10000
15000
2P reserves (mmboe)
EXPLORE
19000
0
5000
10000
14000
1P reserves (mmboe)
DEVELOP
4700
0
Operated Production (kboe/d)
PRODUCE
Note: 1 For confidentiality reason, company data and numbers of PTPs have been modified to mask sensitive information
2 Oil-weighted: oil production >50% of total production
Source: SBC O&G HR Benchmark 2013
© 2014 Schlumberger Business Consulting. All Rights Reserved.
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Local Content Development
Industry can forecast future employment potential and education
requirements
EXAMPLE: JOB CREATION IN A SUBSAHARAN AFRICAN COUNTRY
Cumulative number of people (FTE)
ILLUSTRATIVE
EDUCATION AND TRAINING TIMELINE
Years
Craftsmen
Craftsmen
Operators
Welders pipe
Civil Craftsmen
Operators
Machine Operator
Driver heavy duty
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Engineers
Technicians
Technicians
Mechanical
Engineers
Mechanical
Electrical
2015
Source: SBC analysis
2020
2025
2030
Today
Formal education time when needs to be supported
Lead time to certify/train to work in industry
Time to start recruitment for training/certification
Time to start work
10
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Local Content Development
And analyze supply and demand for target industries
ILLUSTRATIVE
QUANTITY GAP ANALYSIS
QUALITY GAP ANALYSIS
Demand & supply of hazardous waste disposal
Tons per month
Gap ~150%
500
400
Supply requirements
 Local environment authority's license and
environmental certificate required to dispose
hazardous waste
300
200
100
Range of today’s supply (+/- 10% )
 Authorized dumping sites listed by local environment
authority's
0
2013 2015 2017 2019 2021 2023 2025 2027 2029
Quantity gap: >100% of current supply at peak
11
Quality gap: Far below O&G standards
Source: SBC analysis
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Demand requirements
 Compliance with Operator’s HQ standards and
certifications on hazardous waste transportation and
disposal
600
Companies faces four main challenges
SBC’S VIEW ON COMPANIES INTERNAL CHALLENGES
Cash from
operations
 Operations Excellence
 Maximizing production and optimizing OPEX, safely
Schlumberger Confidential
 Maximizing cash from operations
 Ensuring capital discipline
Capital Efficiency
 Increase project value
 Increase operators and service providers collaboration
Talent shortage
Local content
development
 Managing the shortage of senior staff while adapting
to the changes in the industry’s demography
 Promoting long term industry development in the
countries hosting oil & gas operations
Source: SBC analysis
12
© 2014 Schlumberger Business Consulting. All Rights Reserved.

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