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Seafloor Engineering

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In the ongoing battle for U.S. Energy self-security, the

Deepwater region is a stable source of domestic oil supply (along with Alaska and the Permian Basin for onshore oil). Compared to the 1990's, the ranks of lead- ing players has expanded beyond the original Super

Majors (Shell, BP) to include leading Independents such as Kerr-McGee (now part of Anadarko) and Murphy Oil (operator of two spars). The world-class potential has also attracted foreign headquartered companies such as

Petrobras, the world's largest Deepwater producer with extensive heavy oil reserves in Brazil, and European com- panies Total of France (prior Elf) and Eni of Italy.

With the growth of production and facilities in the

Deepwater has come increased emphasis on system reliability to optimize production and continued strong emphasis by industry on safety, health and the environmental stewardship, which is important for gov- ernment and citizen shareholders. Industry is focused on managing operating costs through the application of best practices and new technologies.

Ziff Energy's study will focus on operations in offshore fields located in greater than 1,000 ft. of water depth and encompass the various development systems being used currently in the Deepwater Gulf of Mexico: floating pro- duction systems (spars and TLP's), fixed platforms and subsea wells. While the 6th Edition study will analyze operating cost data for calendar year 2006, the results will also feature extensive trend analysis both on a field and company level. The 5th Edition included, for the first time, metrics related to operating efficiency/reliability (e.g. causes of production downtime) and G&A costs directly related to supporting the asset (e.g. facilities and reservoir engineers).

Data collection will begin during February, so there is still time for additional Deepwater operators to partici- pate in the initiative. "Ziff Energy's database of historical costs in the

Deepwater, which goes back to the early fields operating in l998, allows companies to examine cost trends over nearly a decade, covering the life cycle of a number of fields. The study will also analyze effectiveness of pro- grams such as chemical use, boats vs. helicopter strategies, well servicing, and production optimization," said Richard M. Tucker, Ziff Energy's Vice President. "The study will identify key opportunities to lower unit operating cost in these areas as well as from improved reli- ability and production optimization."

Further information about the Deepwater initiative is available from the Ziff Energy Group offices in Houston at (713) 985-5183.

Email Richard Tucker, VP Marketing [email protected]

GOM OCS Deepwater Production (WD>1,000 ft.)

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