Mature Field Redevelopments: How to Stay Relevant for the Foreseeable Future

1. 13 – 14 FEBRUARY 2017 KUALA LUMPUR, MALAYSIA MATURE FIELD REDEVELOPMENTS: HOW TO STAY RELEVANT FOR THE FORESEEABLE FUTURE?

3. INTRODUCTION CHEAH WAI SENG Managing Director Digital Lead for Energy, ASEAN Accenture Consulting ARNOLD VOLKENBORN Managing Director Head of Asia Pacific Accenture Strategy Energy Copyright © 2017 Accenture All rights reserved. 3

6. DIGITAL TECHNOLOGY MATURITY CURVE DIGITAL TECHNOLOGY MOVES FASTER THAN AN ADVANTAGE Digital3 1 2 3 4 6 7 today 5 Cumulativecapability 1950 20201960 1970 1980 1990 2000 2010 2030 Amazon.com Founded 1994 Public Internet 1991 System/390 1990 System/360 1964 Mainframe Client-Server and PCs Web 1.0 eCommerce SAP founded 1972 PC 1977 Sales of PCs peak 2010 ARPANET 1969 Server- Host AWS launched 2006 Web 2.0 2005 Web 2.0, Cloud, Mobile Salesforce.com Founded 1999 Public Cloud Mainstream iPhone 2008 Self driving car 2010 IoT and Smart Machine IoT, M2M 1999 ? Cognitive IBM Deep Blue 2007 Big Data, Analytics, Visualization Big Data 1997 4.4 Zettabytes of data in 2014, IDC Blockchain 2008 Digital vs. technology: disruption vs. speed Source: ASE Analysis Copyright © 2017 Accenture All rights reserved. 6

9. DISRUPTIONS IN THE ENERGY SPACE DISRUPTION TYPE Disruption of the “What” Disruption of the “How” Rise in EVs and Self Driving Cars Growth in Renewables Non-Tech Tech • Processes need to be lean & dynamic • Massive data , real-time for advanced analytics • Fluid organizations • Augmented decisions • Open ecosystem • Shared knowledgeAutomation & Speed Machine Learning Connectivity Lean & Dynamic Operations Re-designed Organization & Capabilities Operator, Vendor, Customer Ecosystem Stricter Regulations • 70% of petroleum used in transportation • EV growth 70% (from 2014/15) • Drop in cost for renewables since 2010: 70+% for solar and 50+% for wind Oil demand for transportation • Paris agreement: power gen to account for 40% reduction of global GHG over next 30yrsNatural Gas demand Millennial Workforce Short-Cycle Investment Free Market KEY DISRUPTIONS IMPACT Copyright © 2017 Accenture All rights reserved. 9

10. THEMES AND INITIATIVES FOUR PRIMARY THEMES WILL BE DISRUPTING THE O&G INDUSTRY Note: 1)On-demand Fuel delivery Source: World Economic Forum, Accenture Strategy Energy Themes Initiatives Sub - Initiatives Digital Asset Lifecycle Management Circular Collaborative Ecosystem “Beyond the Barrel” Energizing New Energies New Era of Automation Advanced Analytics & Modeling Connected Worker Digital Information Sharing & Operational Transparency Real Time Supply / Demand Balancing Digital Customer Services Omni-Channel Retail & Experience based Services Consumer Energy Choices Autonomous Operations & Robots Remote Operations Center Predictive/ Prescriptive Maintenance Operations Optimization Cognitive Computing Block-chains / Smart Contracts 3D Printing/Additive Manufacturing Wearables Targeted Digital Marketing Hyperlocal Mobile Fuel Options1 Alternative Energy Choice & Platforms Copyright © 2017 Accenture All rights reserved. 10

11. PRELIMINARY VALUE AT STAKE DIGITAL TRANSFORMATION UNLOCKS UP TO $1.6- $2.5 TRILLION OF VALUE USD Bn Cumulative Industry Impact – 2016-2025 – USD bn1 TotalStartups 1 Downstream 779 535 MidstreamUpstream 90 153 WORK IN PROGRESS Note: (1) Impact to Earnings before Interest and Taxation (EBIT); mt refers to Million tonnes. Source: World Economic Forum, Accenture Strategy Energy Analysis, Cumulative Societal & Customer Impact – 2016-2025 108K Barrels of Oil Spills avoided in Midstream Operations 24.1% reduction in accidents & injuries 120K Barrels of Oil Spills avoided in Upstream operations $637bn total Societal impact 791 Mn Gallons of water usage reduced 2,195 mt CO2 equivalents, 4.89 mt SO2, 1.13 mt NOX, & 11.48 mt CO emissions avoided $5.2 bn in potential productivity improvement from 556 mn hours of time savings $945bn total business impact Copyright © 2017 Accenture All rights reserved. 11

12. HALF OF THE O&G COMPANIES WILL INCREASE THEIR DIGITAL SPEND ROBOTICS, AI AND WEARABLES ARE THE MAIN AREAS EXPECTED TO SEE INCREASED INVESTMENT 38% 36%36% 57% 31% 44% 13% 23% 22% 20% 35% 12% 16% 28% 38% 30% Mobile devices Artiﬁcial intelligence IoT Robotics & drones Cloud Collaboration & social tools Wearable technology Big Data/ Analytics +15% +7% +10% Less or don’t know same amount more signiﬁcantly more 56% 46% 45% Faster and better decisions Real-time decision making Better asset management 80% 30% 36% 14% 20% Source: Accenture + Microsoft survey Copyright © 2017 Accenture All rights reserved. 12

13. EXAMPLE: APPLICATION OF DIGITAL AND ANALYTICS HAS SIGNIFICANT IMPACT ON OPERATIONS Copyright © 2017 Accenture All rights reserved. 13 “In the past we just reported on data. Analytics has transformed that by creating value from that data. We can now analyze and predict outcomes.” Shaun Gregory Senior Vice President of Science, Technology and Strategy

14. ASPIRATION: WHAT IF THE FIELD OPERATED LIKE UBER AND THE WELL WAS THE “CUSTOMER”? THE BRAIN AI-based hub of operations Hauling, roustabout, workovers Multi-skilled technicians … … with support apps: Mobility smart glasses virtual reality Summon help for artificial lift failure Dispatch tech; virtual reality assists with instructions Auto artificial lift optimization Update algorithm Remote multi-asset hub of operations Cross-assets analytics; dispatch of robots Call maintenance technician if issue Saltwater disposal Pre-programmed drone surveillance route Virtual learning Each day, intelligent well reports health & requests support to Skynet Predictive algorithms design location-based route prioritization for multi-skilled crew Wells reprioritize real time as issues arise; directly call for support as needed Drones provide remote surveillance support and “drop off” robotic tech support Skynet manages the field (eg optimizes production, predicts failures, pre-plans workovers, rates tech performance) CAPABILITIESEMERGING DIGITAL UNCONVENTIONAL

15. DIGITAL IN MATURE FIELDS DIGITAL TRANSFORMATION COULD BE A GAME CHANGER TO MATURE FIELDS Source: ASE Analysis What is Digital’s role in a lean, nimble and asset focused mature field operations? Why mature fields are the best candidates for Digital Transformation? Abundance of historical data Easily scalable to multiple assets Production at stake is small Empowers decision making towards the bottom of the organization Drives the culture of continuous improvement to the organization Enables tighter integration between functions and with suppliers Streamlines reporting processes and speeds up decision making Simplifies organization to focus on key value-adding activities Analytics “ Generates insights through analysis and visualization” Cloud “Enables greater visibility to a single source of information” Automation “Executes routine and time consuming tasks by design ” Mobility “Reaches out and interact with people on business needs” IoT “Connects everyone in a collaborative ecosystem” Copyright © 2017 Accenture All rights reserved. 15

16. INTEGRATED OPERATIONS: DIGITALIZING A NEW WAY OF WORKING IO, POWERED BY DIGITAL, CAN DEMONSTRATE THE CRITICAL CHARACTERISTICS REQUIRED TO ADDRESS THE DYNAMIC NATURE OF OPERATIONS … • Activity planning • Logistics scheduling • Material management • Manpower requirements • Well monitoring • Reservoir surveillance • Interventions • Artificial lift Integrated Planning & Execution Well & Reservoir Management • HSE compliance • Process/equipment failure • Defect identification • Turnaround tracking • Production surveillance • Bottlenecks identification • Hydrocarbon allocation • Blending optimization Production OptimizationOperations & Maintenance BRAINS OF THE OPERATIONS IO Offshore Ops Logistics Procurement Warehouse Onshore Ops Projects Subsurface CHARACTERTICS Real-Time • Real-Time surveillance and performance tracking • Faster response / optimization Predictive • Big Data, Analytics enabling scenario-driven analysis • Focus on proactive intervention, optimization Automated • Remote operations • Data-backed decisions • Minimized human error Insight-driven • Leverage institutionalized data allowing look-back into solution performance • Actionable insights Seamless collaboration • Virtual collaboration, anytime, anywhere • Enabled by open platform, asset light model Real Time connectivity Real Time connectivity Seamless cross-functional collaboration anchored on value optimization and delivery Source: ASE Point-of-View Copyright © 2017 Accenture All rights reserved. 16

17. IOC: MOBILIZING THE POWER OF DIGITAL … DRAMATICALLY CHANGING THE WAY WE WORK AND DELIVERING TANGIBLE VALUE Total SavingsOptimizationSurveillance LowCase 3-5% 3% 2% Field Management 5% HighCase 2-3% 1% 7-12% 7% 2% 2-4% 2% 2% Impact for a typical effective IO Center Representative share of production opex and capex Well “The Customer”Field “The Uber” Centralized field management, based on digital intelligence, optimizes production, predicts failures, pre-plans workovers, rates tech performance AI & Analytics based Field Management Support Applications Multi-skilled Technicians Auto optimization Update algorithm Virtual learning Call maintenance technician if issue AI based operations center Call in tech for artificial lift failure Tech Virtual Reality to “see” instructions to repair Vendor Pool Remote multi- asset ops hub Pre-programmed drone surveillance route IOC Copyright © 2017 Accenture All rights reserved. 17

19. THE WORLD NEEDS O&G CO V.4 Analytics Capital Capability Productivity Regulation policy Development stage Global trade relation- ships New Products Economic activity Manufacturing Infrastructure Transport Security Health Care R&D Banking Subsidies Taxes Learning curves Collaboration Pricing Societal values Consumer preferences National gov’ts Tech. adoption Consumer behavior O&G Co V.4 Digital Downstream Energy Security Regional Growth Upstream Adjacent Businesses New Companies Source: Accenture Strategy Copyright © 2017 Accenture All rights reserved. 19

20. TO SUCCEED, THE MALAYSIAN ECOSYSTEM NEEDS WORK AS ONE PETRONAS and PACs Provide platform for collaborative thinking PETRONAS, PACs, Service Sector Utilise existing infrastructure Labs/ Incubators; Universities Develop concepts/ pilots Govt. bodies/ agencies Provide incentives, facilitate partnerships Service Sector Develop Proof-of-Concept PETRONAS Provide collective feedback on concepts Service Sector Implement and roll-out digital and technology applications MOGSC / MPRC Enable expansion of service sector Service Sector Bring in new/ proven ideas Financial Institutions Provide credit support PETRONAS Accelerate value realization Private Equity/ VCs Promote equitable, participation of service sector Source: ASE Analysis IDEATION PROOF-OF- CONCEPT OPERATE AND SUSTAIN CONCEPT DEVELOPMENT SCALE PETRONAS Provide stewardship on large scale disruption Copyright © 2017 Accenture All rights reserved. 20

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