OTC PREVIEW

OTC 2001: The offshore odyssey continues

Preview of the technical program for the 33rd Annual Offshore Conference, Houston, April 30 – May 3

or the 33rd consecutive year, the Offshore Technology Conference (OTC) will meet in Houston, Texas, April 30 through May 3, in Reliant Park (formerly the Astrodomain). Since its first meeting in 1969, when it hosted 4,200 attendees and 125 exhibitors, OTC has reflected the ebb and flow of an evolving industry, serving as the world’s foremost event for presenting the latest technological developments in offshore exploration, drilling, production and environmental protection. Through more than three decades of technical progress, political changes and economic volatility, the OTC continues its role as the premier forum and showcase for industry executives, engineers, managers, scientists, technicians and students.

A brief period of higher oil and gas prices in the early 1990s allowed for a higher level of technical innovation, as major projects were undertaken in ultra-deep waters and the harsh seas of the Northern Hemisphere. By the mid-1990s, oil prices once again slumped, and industry slowdowns and corporate mergers became the norm. But the volatility of oil and gas prices – and the need to find resources in harsher, deeper, more expensive areas – still drive the industry to re-invent itself. This year’s OTC certainly reflects that process.

For the first time, this year’s conference will feature three industry breakfasts to enhance the comprehensive information exchange that characterizes OTC.

With 49 technical sessions (including two general sessions and encompassing 310 papers); eight topical luncheons; three panel discussions, three new industry breakfasts; and the prestigious awards luncheon; this year’s OTC reflects the optimism that accompanies current industry activity.

OTC 2001 features no less than 12 technical sessions devoted to deepwater topics, including aspects of risk, technology, structures and economics. This year’s featured active arena is the Gulf of Mexico, and several of the 49 technical sessions focus on specific efforts there, such as FPSOs, deepwater subsea systems, and exploration. Two general sessions examine different economic aspects of the offshore industry, each spawned by recent high-tech developments – deepwater commercialization and e-commerce prospects in the petroleum industry. The distinguished awards luncheon in the middle of the conference (Tuesday) remains a special tradition that serves as the appropriate centerpiece for this assembly of innovative and industrious offshore professionals.

With this lineup of technical / general sessions, breakfasts, luncheons and exhibitions, OTC 2001 is sure to continue as one of the 10 most-attended professional meetings and one of the largest annual trade shows in the U.S.

Attendance / Exhibits

Recent increases in oil and gas prices point to a bump in corporate and individual attendance from previous years, with expected numbers to exceed those of last year. Almost 2,000 companies will be exhibiting their products and services, and last year’s overall attendance of 43,785 is sure to be exceeded – there are hopes that overall attendance will top 45,000. All of the 375,000-plus sq ft of exhibition space will be packed indoors and outside with new and novel, as well as "tried and true," offshore equipment and services. Exhibits are open from 9:00 a.m. to 5:30 p.m. Monday through Wednesday, April 30 – May 1, 2, and close at 2:00 p.m. on Thursday, May 3.

Active Arena

Each year, the OTC Active Arena focuses on technology, opportunities and developments in an extremely active area of the world. This year’s focus is on "Deepwater Gulf of Mexico." Three sessions will examine the challenge of a marginal industry infrastructure supporting deepwater intervention and maintenance work while facing a growing need for such services.

A Tuesday morning technical session will focus on the Diana / Hoover project and a Tuesday afternoon technical session will discuss GOM Deepwater Subsea Production System Development and Standardization. A Wednesday topical luncheon will address Deepwater and Other Trends in the Gulf of Mexico and New Plans in the Eastern Gulf.

General Sessions

For the "big picture" of key issues facing offshore professionals, two general sessions provide a platform for spontaneous discussion and unrehearsed presentations. Topics this year are deepwater commercialization and e-commerce prospects in the petroleum industry. The general sessions will explore the futures of these endeavors via expert perspectives and global examinations.

Session 1, on Tuesday afternoon, will address Commercialization of the Ultra-deep: What Will It Take? The next frontier of deepwater development is found in water depths of 5,000 to 10,000 feet – generally called the "ultradeep." The panel will address technical and operational barriers that must be overcome, and the economic targets that must be met to make ultra-deep development feasible and profitable. The discussion will be strategic and global, and centered on critical issues like development and operating costs per barrel, flow assurance, well intervention and drilling in high-pressure regimes.

Session moderator Andrew J. Szescila is COO of Baker Hughes, and he will be joined by panelists Jose Coutinho Barbosa, E&P director, Petrobrás; Matthias Bichsel, director, Deepwater Services, Shell International Exploration and Production, Inc.; Emil Peña, deputy secretary, U.S. Department of Energy; Robert A. Solberg, president, Commercial Development, Worldwide E&P, Texaco; J. Michael Talbert, president and CEO, Transocean Sedco Forex; and David H. Welch, vice-president, Upstream, Houston, BP.

Session 2, on Wednesday afternoon, will examine the recent phenomenon of e-Business Impact on the Petroleum Industry: Evolution or Revolution? Recent studies predict that e-business will cut E&P industry operating costs by $4 billion to $6 billion per year in the short-to-medium term through applications connectivity, bandwidth availability and knowledge management. The panel will address how e-business cost-savings, efficiencies and newly-enabled processes are likely to impact petroleum operations and technology. Panelists also will examine how the industry is likely to change in structure and operations as e-business evolves. Focussing on strategic and global perspectives, the panel will comment on when and how e-business initiatives are likely to become profitable in E&P.

Moderator Art J. Schroeder Jr., president and CEO, Energy Valley, will be joined by panelists Michael LaMotte, managing director, Banc of America Securities; Steve Peacock, vice-president, Digital Business, BP America, Inc.; Satish Pai, president, iReservoir: Schlumberger Information Solutions; Robert P. Peebler, vice-president, e-Business Strategy and Ventures, Halliburton; Linda A. Sarandrea, vice-president, Global Hub Operations, PetroCosm; and Greg Vesey, vice-president, e-Business, Texaco.

Technical Sessions

This year’s 49 technical sessions include two general sessions, three panel discussions and 310 papers. During the OTC’s three-and-one-half days, sessions will run concurrently each morning and afternoon in locations to be specified.

For convenience, the table below provides date and time of each technical session, and categorizes them into operational functions. (Be aware – some topics could fall under more than one category.)

While there are plenty of sessions on deepwater techniques, drilling / production topics, subsea technology, facilities and activities, as well as geophysical and reservoir issues, this year’s agenda reflects increased concern about management and economic issues – 15 of the 49 sessions deal with such matters. The approximately 310 papers represent firms active in the U.S., Gulf of Mexico, North Sea, offshore Brazil, offshore western Africa and offshore Canada. The papers describe myriad facets of offshore operations, ranging from exploration to drilling to production to transportation.

Several countries and/or their major offshore development projects are covered in their own sessions, such as Terra Nova (Canada), Canterell (Mexico), Ekofisk (North Sea), and Roncador (Brazil).

Topical Luncheons

OTC 2001 presents eight Topical Luncheons that bring specific issues or emerging world regions to a special setting for conference attendees. Topical luncheons include presentations and discussions about current and future offshore developments, industry challenges, best practices, new concepts, case studies and future opportunities.

   1. Terra Nova – Contributing to Newfoundland’s Emerging Offshore Oil Industry. Gary Bruce, vice-president, Offshore Development and Operations, Petro-Canada, presents an overview of Terra Nova, the first floating production, storage, and offload (FPSO) system to operate in North American waters and the first to operate in a harsh North Atlantic environment with sea ice and icebergs. Bruce, a major player in the industry offshore Newfoundland, will provide his perspective on the future potential for oil and gas development in that region. In the context of the global industry, his address will include the competitive factors that will influence the continuing growth of Newfoundland and Labrador’s emerging offshore industry – both oil and natural gas – and what is needed to achieve success.

   2. Whale-Friendly Seismic: A Scientific and Environmentally Responsible Approach to Seismic Data Acquisition. Jack Caldwell, senior scientist, Geco-Prakla, will answer such questions as, "How does the oil industry, specifically the seismic segment, impact noise in the oceans? What are the effects on marine mammals?" Knowledge about the effects of noise on marine mammals is limited. Nonetheless, regulations and mitigation measures are imposed on those who potentially contribute to ocean noise. Caldwell’s presentation will briefly review the state of knowledge on the effect of noise on marine mammals, what mitigation measures are employed (and where), and the status of the renewal of the Marine Mammal Protection Act in the U.S., scheduled for 2001.

   3. Dual-Activity Drilling: Past Year’s Experience. Dennis Heagney, executive vice-president, TransOcean Sedco Forex, will review the successes (and failures) of this new drilling concept. In 1995, engineering and operations personnel conceived the idea of dual-activity drilling, which includes two complete drill stations under a single derrick. The idea became reality in December 1999, when the first of three dual-activity rigs, the Discoverer Enterprise, began operations for BP in the Gulf of Mexico.

   4. Solving Our Energy Crisis: The Important Role Which the Offshore Oil and Gas Industry Must Play. Matthew R. Simmons, president, Simmons & Company International, answers key questions in today’s energy crisis. "How did our energy crisis happen? How bad is it really? How do we fix it?" The solution comes through expanding the capacity to create more energy in all forms while also beginning to rebuild our aging infrastructure. Simmons will show how deepwater oil and gas developments are at the heart of solving the energy gridlock that threatens our worldwide economies. Simmons also will address some of the difficulties of making this come true in an environment of higher energy prices.

   5. Strategic Retention and Magnetic Recruiting: How Halliburton Delivers the Best People in a Tight Labor Market. Margaret Carriere, vice-president, Human Resources, Halliburton, will show how the company built its reputation for reliability and operational success by developing the talent and dependability of its people. The combination of the cyclical nature of the oil and gas industry and an ever-tightening labor market has made traditional methods of attracting and retaining top employees increasingly ineffective. Carriere will demonstrate how Halliburton has met that challenge with a unique approach.

   6. Deepwater and Other Trends in the Gulf of Mexico and New Plans in the Eastern Gulf. Chris Oynes, regional director, Gulf of Mexico OCS Region, Minerals Management Service, discusses the new geologic ventures in deepwater regions that indicate a long-term fruitful resurgence of the Gulf of Mexico. With continuing regulatory fine-tuning, MMS remains concerned that offshore activities unfold in a safe manner, using a well-trained workforce. The upcoming Eastern Gulf Sale 181 shows great promise in its geologic potential. The interests of the states of Florida and Alabama are critical to this sale, as are activities by the U.S. Department of Defense.

   7. Evolution of Subsea Production Systems. Dalton Thomas, president, Cameron, focuses on the development of subsea production technology over the last decade. Included in his discussion are the critical technical and commercial issues that will guide its continuing development in the future, plus subsea tree and control system technologies. Thomas will compare the merits and inevitable trade-offs involved in dry versus wet field development scenarios in the context of ultra-deepwater projects. Cameron’s own evolution, as a subsea system provider, will be used to highlight changes in technological, service and overall business demands on subsea systems’ suppliers.

   8. An Independent in Deepwater West Africa. Gene Van Dyke, president, Vanco Energy Company, explores how today’s rapidly changing markets are redefining the role of independent oil and gas companies. West Africa stands out from among these opportunities in terms of the number of large discoveries that have been made in recent years and the ability to work with enlightened host governments. Vanco Energy Company has emerged as a leader in West Africa deepwater exploration, holding 25 million gross acres in water depths as great as 10,000 ft. Van Dyke will discuss experiences related to this recent acreage capture and exploration process. Examples ranging from Morocco in the north, to Namibia in the south, are provided for illustration.

Awards Luncheon

The annual OTC Distinguished Achievement Award honors significant contributions to the offshore industry by an individual and by a single company, organization, or institution. As a centerpiece event, the OTC 2001 Awards Luncheon remains a special tradition at the conference.

This year’s Distinguished Achievement Award for an Individual goes to Howard L. Shatto, Jr., who, during his 55-year career, contributed to some of the most important milestones in offshore drilling and production. In 1960, he conceived the world’s first automatic control for dynamic positioning (DP) of Shell’s core drillship, Eureka. In addition to being one of the engineers who designed the first subsea wellheads using remotely operated vehicles, Shatto holds 35 patents and continues as a consultant with most of the major oil companies and their deepwater contractors. An author of numerous technical papers and industry articles, he has served on the technical advisory committee of the Joint Oceanographic Institution’s Ocean Drilling Program for the past 10 years. In 2000, Shatto was inducted as a Pioneer into the Offshore Energy Center Hall of Fame. A graduate of Yale University, with a BS in electrical engineering, Shatto is a member of the Institute of Electrical and Electronics Engineers and the Society of Naval Architects and Marine Engineers; he also is an MTS Fellow and founding chairman of the DP Committee.

The Distinguished Achievement Award for Companies, Organizations, and Institutions goes to Petrobrás for its Roncador field development. Roncador field is recognized for outstanding advancements to deepwater technology and economics. It had a timeline of 27 months from discovery to first oil production in a water depth of more than 1,800 m. This was made possible with a dynamically positioned early production system and a dedicated production system using steel catenary exporting risers, taut-leg polyester mooring and subsea production hardware.

The keynote speaker for the awards luncheon will be Dr. Rilwanu Lukman, former OPEC secretary general and current advisor on petroleum and energy to the President of Nigeria.

Industry Breakfasts

To further expand coverage of economic, financial and business aspects pertinent to key decision-makers, and to provide "sunup to sundown" information exchange, OTC 2001 is offering (for the first time) three specially designed industry breakfasts. They will present broad topics that appeal to offshore industry executives. Beginning Tuesday morning, each breakfast will occur 7:00 a.m. – 8:30 a.m. Complimentary shuttle service is available for all participants each morning from the 19 conference hotels to Reliant Park. The cost of each industry breakfast is U.S.$25. Reservations can be made when registering for the conference. The topics include:

   1. A Financing Alternative for Offshore Projects. Using the perspectives of the operator and the banking organization, this session will cover the fundamental issues associated with financing a large, offshore development project. Discussions will include the benefits of structured financing, challenges for both parties, the structure of the financing agreement, and project-reporting requirements. Presenters include Mit Buchanan, senior vice-president and manager, Lease Advisory and Origination, Banc One Capital Corp.; Ronald Dierker, first vice-president, Energy Division, Banc One Capital Markets; and Don Vardeman, director, Marine Facilities Engineering, Kerr-McGee.

   2. Monetizing Gas Resources with Electric Power: Current Issues and Trends. A representative panel will discuss relevant issues and offer commentary on key considerations, major developments and events impacting how value is extracted from abundant gas resources through power generation strategies. Among the topics planned are procurement of fuel supply, financial structuring, how governments can provide investment frameworks, and whether emerging trends hold up under the scrutiny of project economics. Panelists include Mark Croke, managing director, International Government Relations, El Paso Energy International; Mike Flinn, senior vice-president, Marketing and Origination, Dynegy; and Michelle Foss, director, University of Houston Energy Institute.

   3. Business Opportunities in Kazakhstan Oil and Gas Projects. This session focuses on the emergence and potential of fields in the northern Caspian Sea, as well as related business opportunities for service and equipment companies hoping to establish a position in the promising region. Presentations from Kazakhstan government representatives, major oil companies in the region, and procurement specialists are planned. The session, organized by the U.S. Department of Commerce, the Petroleum Equipment Suppliers Association, and the U.S.-Kazakhstan Business Association, will be followed by individual business meetings with procurement representatives and interested companies.