BSEE OCS Region Update

Lars Herbst, Regional Director Agenda

Regulatory Update Gulf of Mexico Activity Focus on Loss of Well Control Questions?

2 Regulatory Update

Published proposed rulemaking Oil and Gas Production Safety Systems – Subpart H Published August 22, 2013, comment period was extended and closed December 5, 2013 Includes: safety and pollution prevention equipment lifecycle analysis, production safety systems, subsurface safety devices, and safety device testing In preparation, due out mid-2014 Blowout Prevention Systems Arctic (joint with BOEM)

3

Upcoming Proposed Rules

Suspensions of Production and Operations

Natural Gas Fluids Measurement

Oil Spill Mechanical Recovery

4 Drilling Permits

Shallow Water < 500 ft. Deepwater > 500 ft. Total Year New Well Bypass Sidetrack New Well Bypass Sidetrack Approved 2013 72 51 120 57 34 23 357 2012 67 42 108 112 25 23 377 2011 71 40 87 38 19 22 277 2010 72 32 92 32 19 23 270 2009 95 28 70 76 26 46 341

5 GOM Wells

Gulf of Mexico OCS Region Total Wells Drilled by Year 1600

1400

1200

1000

800

600

400

200

0

Wells Drilled 6 Rig Activity All Water Depths

# of Rigs in All Depths – Gulf of Mexico OCS 140 120 100 80 60 40 20 0 Mar Mar Mar Mar Mar July Nov July Nov July Nov July Nov July Nov May May May May May Sept Sept Sept Sept Sept Jan Jan '09 Jan Jan '10 Jan Jan '11 Jan Jan '12 Jan Jan '13 # of Rigs in All Depths

7 Drilling Rigs Working in U.S. Gulf of Mexico

Semi-submersible = 20

Jack-up rig = 25 Platform Rig = 24

Drillship = 19 8 U.S. Gulf of Mexico New Deepwater Rigs

Deepwater Rig & Type Operator Quarter Expected

Seadrill West Auriga drillship BP Noble Don Taylor drillship Shell 3rd Qtr. 2013 Seadrill West Vela – drillship BP 4th Qtr. 2013 Stena IceMAX – drillship Shell Diamond Offshore Ocean Onyx – rebuilt semi Apache Atwood Advantage - drillship Noble Energy 1st Qtr. 2014 Maersk Viking – drillship ExxonMobil Sevan – cylinder hull LLOG Exploration Diamond Offshore Ocean Blackhawk - drillship Anadarko Noble Bob Douglas - drillship Anadarko 2nd Qtr 2014 Maersk Valiant - drillship ConocoPhillips Pacific Sharav – drillship Chevron Diamond Offshore Ocean BlackHornet – drillship Anadarko Deepwater Invictus – drillship BHP Billiton 3rd Qtr. 2014 Noble Sam Croft – drill ship Freeport McMoran Rowan Resolute – drillship Anadarko Seadrill West Neptune – drillship LLOG Exploration 4th Qtr 2014 Rowan Reliance - drillship Cobalt Intl. Energy st Noble Tom Madden - drillship Freeport McMoran 1 Qtr 2015 ENSCO DS-90 – drillship Conoco Phillips 3rd Qtr 2015 9 Deepwater Appraisal Activity

Deepwater Prospect Operator Map Area

North Platte Cobalt Intl. Energy Garden Banks 959 Stampede(Pony)*Sanction ‘14, 1st prod.–’16 Hess Corp Green Canyon 468 Stampede(Knotty Head)*Sanction ‘14, 1st prod.–‘16 Hess Corp Green Canyon 512 Big Dog (Mad Dog B) BP Green Canyon 825 Appomattox Shell Mississippi Canyon 806 Vito Shell Mississippi Canyon 984 Gunflint Noble Energy Mississippi Canyon 948 Hadrian North ExxonMobil Keathley Canyon 918 Buckskin/Moccasin Chevron Keathley Canyon 872/736 Kaskida/Tiber/Gila BP Keathley Canyon 292/102/93 Shenandoah Anadarko Walker Ridge 52 Coronada Chevron Walker Ridge 98

10 Production Facilities

Shallow Water Deepwater Production Facilities Production Facilities (less than 500 ft) (greater than 500 ft) 2647 73 Fixed Fixed SPAR

Single Caisson

FPSO TLP

4 Pile Caisson 11 New Gulf of Mexico Deepwater Projects

Deepwater Project Operator 1st Production Expected

Olympus TLP (Mars B) {**subsea} Started production Shell Mississippi Canyon 806 1st Qtr. 2014 Jack – St. Malo Chevron 2014 Walker Ridge 718 Big Foot Chevron 2014 Walker Ridge 29 Lucius (oil/gas)/S. Hadrian (gas) Anadarko/ 2014 Keathley Canyon 875 ExxonMobil Tubular Bells Hess 2014 Mississippi Canyon 725 Delta House LLOG Exploration 2015 Mississippi Canyon 254 Olympus TLP (Mars B) {**platform} Shell 2015 Mississippi Canyon 806 Heidelberg Anadarko 2016 Green Canyon 860 Stones (**2nd FPSO in GOM) Shell 2016 Walker Ridge 508

12 Gulf of Mexico OCS Oil Production Total vs. Deepwater

MM Bbls /Day

2.000

1.800 1.6 1.600 1.5 1.6 1.5 1.6 1.4 1.5 1.400 1.4 1.3 1.3 1.3 1.3 1.3 1.3 1.2 1.3 1.2 1.200 1.1 1.2 1.0 1.0 1.0 1.0 0.9 1.0 1.0 1.0 0.9 1.000 0.9 0.9 0.8 0.9 0.9 0.9 0.800 0.7 0.6 0.600 0.4 0.400 0.3 0.2 0.2 0.200 0.1 0.1

0.000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total Deepwater Portion (> 1000 ft) (est) Gulf of Mexico OCS Gas Production Total vs. Deepwater

BCF / Day 16.0 14.2 14.4 14.0 13.5 13.9 13.6 13.9 14.0 13.0 13.3 12.4 12.1 12.0 11.0 10.0 8.7 8.0 7.7 8.0 6.7 6.4 6.2 6.0 5.0 4.2 3.5 3.9 3.8 3.6 4.0 3.2 3.3 3.0 3.0 2.7 2.8 2.5 2.9 2.3 2.3 2.0 1.6 1.7 2.0 0.8 1.1 0.3 0.4 0.5 0.0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total Deepwater Portion (> 1000 ft) (est) Loss of Well Control in GOM 2009-2013

1.6015% = Percentage of Loss of Well Control Per Well Drilled from 2009-2013

400 342 10 358 9 9 350 332 Wellof Loss Per Control 8 300 268 261 7 6 250 6 200 5 4 4 150 4

2 3

100 Year

Number Of Wells Drilled Drilled Wells Of Number 2

50 1 0 0 2009 2010 2011 2012 2013 Wells Drilled Loss of Well Control

15 ST 220 A / Hercules 265 Walter Oil & Gas - 23 July 2013, LWC, Surface

Water Depth – 154 feet

Distance to Shore – 55 miles

Days to complete relief well – 74

Product – Gas

Development Well

LWC Occurred – POOH with TCP gun

16 SS 225 B ERT/ Talos - 7 July 2013, LWC, Surface

Water Depth – 146 feet

Distance to Shore – 65 miles

Product – Gas and condensate

Development Well

LWC Occurred- Abandonment procedure

17 MP 295 #1 / ENSCO 87 #1 Apache - 5 February 2013, LWC, Underground / ENS CO 87 5 #1 / ENSCO 87 5 #1 / ENSCO 87 Water Depth – 218 feet

Distance to Shore – 20 miles

Product - Gas

Exploratory Well

LWC Occurred- Kick from inclusion in salt

18 VR 356/ Rowan Louisiana En Ven Energy Ventures -30 January 2014 LWC, Shallow Gas Diversion

Water Depth – 262 feet

Distance to Shore- 97 miles

Product – Gas

Development Well

LWC Occurred – POOH for wiper trip

19 Reporting Requirements Loss of Well Control

GOM Loss of Well Control

10 8 6 The Bureau requires that all loss of well control be reported by 4 2 immediate oral report, per 30 CFR 250.188(a)(3) 0 2006 2007 2008 2009 2010 2011 2012 2013 Trends Over the 8-year timeframe (2006-2013), the GOM averaged 5.25

Loss of Well Control per Well Drilled LWC a year. That is the equivalent of having one LWC incident

0.03 every 70 days. 0.025 0.02 2011 was a record low for LWC incidents since the release of the 0.015 0.01 incident reporting rule. However, the lowest incident rate per well 0.005 drilled was 2006. 0 2006 2007 2008 2009 2010 2011 2012 2013 LWC Types (2006-2013) Flow Underground: 8.6% GOM LWC per Million Barrels of Oil Produced Flow Surface: 34.3% 0.02 Diverter Flow: 11.4% 0.015 Surface Equipment Failure: 45.7% 0.01

0.005 In 2013, the Agency saw an GOM LWC for every 0.026 GOM wells drilled. 0 2006 2007 2008 2009 2010 2011 2012

20 Synopsis of Data

BSEE has 288 unique loss of well control incidents captured in our database from 1956 – 2010. Additionally, BSEE has 18 additional cases in TIMS from 2010-2013 which are not accounted for in this synopsis:

69 of 288 Incidents had a duration of 5 days (24%) 55 of 69 occurred in water depth < 300 feet (80%) 42 of 69 occurred within 50 miles of shore ≥(61%) 31 fatalities in 5 of the 69 incidents 84 injuries in 7 of the 69 incident 8 incidents were oil blowouts (12%) Max duration of the oil blowout – 141 days, 10 relief wells drilled

21

Four fatalities, thirty six injuries, lost platform and 2 drilling rigs, minor amounts of oil on beaches. 53,000 bbls estimated to be spilled.

10th and final relief well killed blowout on April 7th, 1971. Thank you for your attention.

Website: www.bsee.gov