Devon Energy Corporation · NYSE:DVN

Devon Energy — Corporate Update (October 2003)

49 slides from Devon Energy's corporate update, October 2003

  1. Slide 1: Proposed Beaufort Sea Offshore Exploratory Drilling Program

    Proposed Beaufort Sea Offshore Exploratory Drilling Program Program Introduction & Workshop Update ~October 2003~

  2. Slide 2: Outline

    Outline • Introduction • History – Project Area (Licenses) – Project/Engineering Activities • Drilling Program Status • Regulatory Status • Baseline and Research Projects • Public Involvement/Issues Identification Workshop • Questions

  3. Slide 3: Introduction

    Introduction The purpose of the presentation today is as follows : - To provide an outline of our proposed offshore drilling program in the shallow offshore waters of the Canadian Beaufort Sea - To ask for your input with regard to this program so that we can ensure that your comments / concerns are

  4. Slide 4: Background: Marine Seismic Program

    Background: Marine Seismic Program •August 2000 – Awarded 4 offshore exploration licenses (EL 408, 409, 410, 411) •Winter 2001 – Consultation for offshore 3D seismic program •Summer 2001 – Commenced 3D offshore seismic program •Winter 2002 – Consultation for 2nd year of 3D program •Summer 2002 – Com

  5. Slide 5: Background: Marine Seismic Program

    Background: Marine Seismic Program Seismic survey map

  6. Slide 6: Project Area: West Block

    Project Area: West Block Preliminary Targets Western Block •Devon is exploring for natural gas. •All five preliminary drill targets within landfast ice •All targets are between 9.0 and 12.2 m water depth

  7. Slide 7: Project Area: East Block

    Project Area: East Block Preliminary Targets Eastern Block •Four drill targets within the landfast ice regime •Offshore targets are between 6.8 m and 12.0 m water depth •One drill target is onshore

  8. Slide 8: Background: Regulatory/Licenses

    Background: Regulatory/Licenses •August 2000 – Must drill 1 well on each of the 4 exploration licenses by August 2005. •Spring 2002 – Initiated regulatory process (Submission of the Beaufort Sea Exploration Program Project Description to the National Energy Board and the Canadian Environmental Asses

  9. Slide 9: Drilling For Gas

    Drilling For Gas Devon’s exploratory drilling program is focused on gas exploration: • The first generation of drilling in the Beaufort Sea, 1970-80’s, was focused on the search for oil. • Today the search is for gas. • Devon’s acreage has historically been gas prone with offset gas discoveries at M

  10. Slide 10: Winter vs. Summer Drilling

    Winter vs. Summer Drilling SUMMER DRILLING 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr • Limited open water season for floating vessels of around 100 days dependent on ice conditions and available ice class support • The short summer operating season is really only suitable for the drilling of relatively shallo

  11. Slide 11: Winter vs. Summer Drilling

    Winter vs. Summer Drilling WINTER DRILLING 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr • A drilling season of between 120 - 150 days is available thus suitable for the drilling & evaluation of deeper targets • Operations are essentially insensitive to weather conditions • Drill systems need to be totally self s

  12. Slide 12: Winter vs. Summer Drilling

    Winter vs. Summer Drilling Devon’s exploratory drilling program will be completed within the landfast ice zone and this offers the following benefits: • A stable, well known operating environment • A lengthy drilling season that will accommodate a full and proper evaluation of Devon’s drill targets

  13. Slide 13: Winter vs. Summer Drilling: Hind cast Ice Study

    Winter vs. Summer Drilling 11 Year Hind cast Ice Study • On advice from local stakeholders, Devon has completed an 11 year hind cast ice study to ascertain the current status of landfast ice conditions across the Devon acreage. • This work showed that landfast ice is forming later and breaking up sl

  14. Slide 14: Winter vs. Summer Drilling

    Winter vs. Summer Drilling Field Data Incorporated Into Operational Planning The 11 year Hind cast Ice Study data has been directly incorporated into Devon’s operational planning thus ensuring that Devon’s operations are completely in step with the current environmental conditions in the Beaufort Se

  15. Slide 15: Key Project Planning Parameters

    Key Project Planning Parameters Some of the key project planning parameters that pertain to the Devon Offshore Beaufort Sea drilling program are as follows: • The focus of drilling operations is the search for gas • The Devon acreage is historically gas prone • Drill targets have been evaluated / de

  16. Slide 16: Preliminary Drill Targets

    Preliminary Drill Targets Nayak N. Nayak S. Pullen N. Kekertak Paktoa Nipterk N. Tuwak Tiggak Kidluit Kidluit WESTERN BLOCK EASTERN BLOCK LARGE PROSPECTS SMALLER PROSPECTS REQUIRING STANDALONE IN FUTURE PIPELINE CORRIDOR PIPELINE

  17. Slide 17: Background: Drilling Systems

    Background: Drilling Systems Review of Arctic Drilling Systems: •SSDC (Single Steel Drilling Caisson) •Molikpaq Deep Drilling Caisson •CIDS (Concrete Island Drilling Structure) •Tarsuit Concrete Caissons •CRI (Caisson Retained Island) •Sacrificial Beach Islands (SBI’s) •Spray Ice Islands •Explorer S

  18. Slide 18: Drilling Systems

    Drilling Systems Drilling System Options: •Steel Drilling Caisson (SDC) •Spray Ice Islands •Landfast Tender-Assist Drilling (LTD) System

  19. Slide 19: Drilling Systems

    Drilling Systems Single Steel Drilling Caisson (SSDC) •Owned by Seatankers and is available for either sale or lease •Currently mothballed in Herschel Basin •Water depth range 7.6 - 24.4 m •Suitable unit for a significant portion of the Devon acreage •Spray ice pad proposed as relief well capability

  20. Slide 20: Drilling Systems

    Drilling Systems Spray Ice Islands •Spray Ice Islands have been successfully utilized in water depths out to 8 m •Relatively short drilling season ~80 days thus potentially only suited to the drilling of shallow wells •Considerable logistics component can significantly increase the risk associated w

  21. Slide 21: Drilling Systems - LTD Drill System

    Drilling Systems - LTD Drill System Rig / Accommodation Consumables • A small, purpose built caisson (~50 x 50 x 24 m) • A mezzanine deck to store drilling consumables, fuel • A large crane capable of assembling rig package • Main deck storage for a stacked rig / accommodation • A built-in ice spray

  22. Slide 22: Drilling Systems - LTD Drill System

    Drilling Systems - LTD Drill System View from Above Mud Ice Module Pad H Casing Racks Drilling Substructure

  23. Slide 23: Drilling Systems - A Seal's View

    Drilling Systems - A Seal’s View In an attempt to differentiate between these drilling systems from an environmental standpoint, Devon has looked at it as follows : • Each of the structures is similar in that they are all bottom-founded and they sit within the stable landfast ice zone. So from an en

  24. Slide 24: Infrastructure Requirements

    Infrastructure Requirements Winter based drilling operations require less in the way of infrastructure requirements than would a summer drill program. Some of the key infrastructure requirements are as follows : • Consumables will be mobilized directly to the location via ice road in the case of an

  25. Slide 25: Infrastructure Requirements

    Infrastructure Requirements • The decision as to whether to stage our operations out of Tuk or Inuvik has not yet been made. It is however our intent to attempt to operate without the need for a formal base camp and rather rely on overflow accommodation in the event of delays in crew change operatio

  26. Slide 26: Regulatory Framework

    Regulatory Framework • The last applications for offshore drilling occurred >10 years ago (Kulluk and Isserk), which were processed through the Inuvialuit Environmental Review Process. • Present Environmental Review Processes: •Inuvialuit (EISC/EIRB) •Canadian Environmental Assessment Agency (Compre

  27. Slide 27: Regulatory Framework/Schedule

    Regulatory Framework/Schedule

  28. Slide 28: Baseline Field Studies

    Baseline Field Studies Require current information to provide an adequate knowledge base to: • Understand existing environmental conditions (e.g., abundance, seasonal distributions, habitat use, environmental quality) • Predict environmental effects • Support environmental protection plans • Support

  29. Slide 29: Background: Baseline Studies

    Background: Baseline Studies •Gap analysis : Spring 2002 •Devon Research : Summer 2002 •Wildlife (marine mammals, birds) •Aquatic (fish, benthos, plankton) •Physical conditions (coastal,oceanographic) •Devon Research : Winter 2003 •Ice (hindcast, movement measurements) •Geotechnical testing (seabed)

  30. Slide 30: Traditional Knowledge Study

    Traditional Knowledge Study • TK is recognized as an important knowledge base for impact assessment and mitigation planning • We are now working with local communities to determine: – How would they like to see TK done? – How would they like to be involved? – How we should proceed to ensure communit

  31. Slide 31: Physical Oceanography and Ice Conditions

    Physical Oceanography and Ice Conditions • Objectives of study were to: – describe the relevant physical oceanographic conditions – describe relevant sea ice conditions – assess potential effects of changes in the sea ice conditions in the general Beaufort Sea area • All of Devon Canada’s proposed d

  32. Slide 32: Chemical Oceanography

    Chemical Oceanography • Purpose of the program was to: – measure baseline concentrations of hydrocarbons and metals in seawater, sediments, and biota emphasizing the site- specific locations of the ten primary drill targets (within EL 420) – compare the current baseline data with historical data for

  33. Slide 33: Coastal Processes

    Coastal Processes • Coastal process studies conducted to: – assess potential effects of near shore and on-shore drilling on the coastline – assess a reasonable worst case scenario spill and its effects on the coastline and cleanup strategy • Reconnaissance conducted August 27-28, 2002 at 8 sites by

  34. Slide 34: Fish, Benthos and Plankton

    Fish, Benthos and Plankton • Studies were designed to: – assess the spatial distribution and relative abundance of fish, benthos and plankton within the study area – obtain site-specific data from locations that may be affected by drilling program activities – integrate site-specific and existing in

  35. Slide 35: Marine Mammals

    Marine Mammals • Aerial surveys (Twin Otter) were flown to document marine mammal distribution and movements in and near EL 420 during July 8 to 13 2002 • Beluga whales and ring seals observed • 109 sightings of 206 individual beluga whales (4.9 sightings/100 km and 9.0 individuals/100 km) • Belugas

  36. Slide 36: Marine Mammals

    Marine Mammals • Ringed seals and polar bear are the only species that are likely to be present in the Lease Area during the proposed exploration drilling program • Logistical support and other activities in summer could interact with beluga whales and bowhead whales

  37. Slide 37: Birds

    Birds • Objectives were to document: – distribution, abundance and species composition of marine and shoreline bird communities – migration patterns and seasonal use of the southern Beaufort Sea by marine and shoreline birds • Surveys conducted on the Devon license and in coastal areas using a Twin

  38. Slide 38: Birds

    Birds • Over 5,000 sightings, about 75,000 individual birds, and more than 50 species recorded • Waterfowl (geese, swans, and ducks) accounted for almost 66,000 (~88%) of observations • Vast majority of waterfowl were diving ducks and geese, scoters (21,127, 32%), geese (18,465, 28%), scaup (7,272,

  39. Slide 39: Birds

    Birds • Over half of waterfowl numbers were recorded along the Tuktoyaktuk Peninsula, followed by the Western Lease Area survey region, Eastern Lease Area survey region and Yukon survey region • Important areas for marine and shoreline birds were Phillips Bay, outer Mackenzie Delta, northeast Richar

  40. Slide 40: Socio-economic Conditions

    Socio-economic Socio-economic Conditions • Socio-economic baseline statistics were collected focusing on issues that affect community wellness – Regional economy – Demographics – Labour force and income – Economic activity by sector – Social service programs and facilities – Family and community con

  41. Slide 41: Socio-economic Conditions

    Socio-economic Socio-economic Conditions • Baseline results were validated through interviews in communities • Regional Study Area (RSA) was defined that encompassed the communities in the Inuvialuit Settlement Region and the Gwich’in Settlement Area that may be affected by the drilling program • Ei

  42. Slide 42: Comprehensive Study

    Comprehensive Study •Air Emissions •Underwater & surface noise •Discharge of treated effluents •Accidental spills of materials •Sedimentation •Localized modification of currents •Disturbance to permafrost •Loss of benthic habitat •Sensory disturbance of biota & human use •Wildlife-human interactions

  43. Slide 43: Public Involvement

    Public Involvement Phase I – Preliminary Stakeholder Communications Primary focus is to lay the foundation for the consultation program Phase II – Issues Identification & Scoping Identifying key issues of concern in relation to the offshore exploratory drilling program, as well as concerns about the

  44. Slide 44: Public Involvement

    Public Involvement Phase III – Environment & Socio-economic Impact Assessments Assessment of environmental and socio-economic impacts and the determination of impact significance. Stakeholders will be given an opportunity to provide advice and feedback on the specific approaches and methods that wil

  45. Slide 45: Issues Identification Workshop

    Issues Identification Workshop •Socio-Economic Issues –Affect of the program on the sports hunt •Quotas •Problem bears –Jobs & training opportunities –Bank services & financial management skills –Impacts to families & lifestyles –Affects on services & infrastructure –Partnerships with governments &

  46. Slide 46: Issues Identification Workshop

    Issues Identification Workshop •Physical & Natural Environment –Polar Bears –Seals –Fish –Birds –Waste management – both drilling wastes & camp wastes –Climate change issues, including ice –Noise

  47. Slide 47: Wildlife Compensation

    Wildlife Compensation Devon will work with the Inuvialuit Game Council to develop Harvester Claim Resolution Agreements that will contain compensation plans in the event that the project generates adverse impact on the wildlife harvesting of the Inuvialuit.

  48. Slide 48: Contact Information

    Contact Information Other Ways to Get Involved: •Website – www.dvn.com •Email – beaufortsea@devoncanada.com •Phone – 1-866-977-3866 (toll free) •Contact you local HTC or Community Corporation with your questions, comments or concerns

  49. Slide 49: Questions?

    Questions?

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