36602_1 - 07.2002 - * 1 - Hydro MediaThe Ormen Lange Offshore Gas Projecton the Norwegian Continental Shelf Implementation of Systematic Management WorkProcesses when managing Deep water ProjectslSenior Vice President Bengt Lie Hansen, Norsk HydrolChairman of the Ormen Lange Unit Committee lThe World Petroleum ConferencelRio de Janeiro, September 1-5, 200236602_1 - 07.2002 - * 2 - Hydro Media OrmenOrmenOrmenLangeLangeLange36602_1 - 07.2002 - * 3 - Hydro Media OrmenOrmenOrmenLangeLangeLangeNorsk Hydro ASA Operating revenues 2nd quarter 2002Oil & EnergyOil & EnergyAluminiumAluminiumAgriAgriThe second largestproducer of oil andgas on the NorwegianContinental ShelfThe largest Europeanaluminium companyand among the topthree worldwideNOK 13.4 NOK 13.4 bnbnUSD USD 1.81.8 bnbnNOK 18.5 NOK 18.5 bnbnUSD 2 .5 USD 2 .5 bnbnNOK 9 NOK 9 bnbnUSD 1.2 USD 1.2 bnbnThe worlds leading supplier of plant nutrients36602_1 - 07.2002 - * 4 - Hydro Media OrmenOrmenOrmenLangeLangeLangeStoreggaSlide edgeStjrdalTrondheimKristiansundMoldeAlesundPL208Ormen Lange location36602_1 - 07.2002 - * 4 - Hydro Media36602_1 - 07.2002 - * 5 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmen Lange on the Atlantic Margin FeaturesOrmenOrmenOrmenLangeLangeLange36602_1 - 07.2002 - * 5 - Hydro Media36602_1 - 07.2002 - * 6 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmenOrmenOrmenLangeLangeLangeFactsLocation:Production start:Gas production:Recoverable gas reserves:Water depth:Field investments:Pipelines investments:Operator for developmentand construction:Operator for production:120 km northwest of Kristiansund200715 - 20 GSm3/yr400 GSm3800 1 100 metresNOK 35 - 40 bn (USD 4.7 5.4 bn)NOK 5 - 17 bn (USD 0.6 2.3 bn)Norsk Hydro ASAA/S Norske Shell36602_1 - 07.2002 - * 6 - Hydro Media36602_1 - 07.2002 - * 7 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmenOrmenOrmenLangeLangeLangeKey Project Milestones20071997Appraisal WellAppraisal WellJuly 2000July 2000Concept SelectionConcept SelectionEnd 2002End 2002Contract AwardContract AwardMedioMedio 2004 2004Prod StartProd StartEnd 2007End 2007Proven by Drilling Proven by Drilling 19971997Feasibility Study Feasibility Study 20002000Submit PDO/PIO Submit PDO/PIO End 2003End 2003Marine Install. Marine Install. End 2006/7End 2006/736602_1 - 07.2002 - * 8 - Hydro Media OrmenOrmenOrmenLangeLangeLangeKey Development ChallengesTechnologyTechnologynExtremely uneven seabed for subsea- and pipeline design and installationnMain production area in an avalanche / slide areanExtreme temperatures, minus 2C at seabednExtreme waves and winds nStrong currentsn1 000 metres water depthCommercialCommercialnTransition from joint sales to company based gas salesnShort term gas agreementsnNew gas transportation systemOrmenOrmenOrmenLangeLangeLange36602_1 - 07.2002 - * 8 - Hydro Media36602_1 - 07.2002 - * 9 - Hydro Media OrmenOrmenOrmenLangeLangeLangeDemand for Gas in UKlDecline expected in UK production from 2004lUK expected to increase import significantly (up to appr. 60 BCM after 2010)lUK demand expected to increase to more than 120 BCMDemandSupplyOngoing productionDemand36602_1 - 07.2002 - * 10 - Hydro Media OrmenOrmenOrmenLangeLangeLangeGas Supply and Demand in Europe010025035045060070080090019901995200020052010201520202025BCMExisting ContractsDEMAND(non weather corrected)36602_1 - 07.2002 - * 11 - Hydro Media OrmenOrmenOrmenLangeLangeLangePossible Gas Suppliers to EuropeOrmen Lange400 BCMReservesReservesand distancesand distances36602_1 - 07.2002 - * 12 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmen Lange provides new significant gas transport capacity:St. FergusKristiansundKollsnesKrstDornumStatfjordGullfaksTrollOsebergDraupnerEkofiskZeebrggeDunkerqueTrondheimFriggSleipnerEmdenOrmen LangeEuropipe II: 21 BCMEuropipe I: 13 BCMNorpipe: 14 BCMFranpipe: 15 BCMTotal capacity: 86 BCMVesterled: 10 BCMZeepipe: 13 BCM36602_1 - 07.2002 - * 13 - Hydro Media OrmenOrmenOrmenLangeLangeLangeThe Top Reservoir Structural Depth Map6305/1-16305/5-16305/8-16305/7-16305/4-1 drilled spring 2002GIIP prognosis confirmedFaults identified36602_1 - 07.2002 - * 14 - Hydro Media OrmenOrmenOrmenLangeLangeLangeThe Storegga Slide1200mMain production areaMain production areaThe The OrmenOrmen Lange field is located close to the steep back wall left Lange field is located close to the steep back wall left by the by the StoreggaStoregga submarine slide. submarine slide. 36602_1 - 07.2002 - * 15 - Hydro Media OrmenOrmenOrmenLangeLangeLangeLocal TopographyAutomatic Underwater Vehicle Automatic Underwater Vehicle (AUV) mapping of(AUV) mapping of seabed terrainseabed terrainThe Storegga slide was probably triggered by a major earthquake at the end of the latest glacier period (approx. 8 000 years ago)Local slide blocks of sizes up to 50 - 70 metres were left near the Ormen Lange Field Comprehensive slide investigations have been performed as part of the ProjectNo information so far indicates any risk of more slides36602_1 - 07.2002 - * 15 - Hydro Media36602_1 - 07.2002 - * 16 - Hydro Media OrmenOrmenOrmenLangeLangeLangePipeline installation down the slide escarpment36602_1 - 07.2002 - * 17 - Hydro Media OrmenOrmenOrmenLangeLangeLangeConcept Selection Late 2002Alternative 1 of 2:Alternative 1 of 2:Complete Subsea Production FacilitiesComplete Subsea Production Facilitiesin combination with Onshore in combination with Onshore Process and Process and Export PlantExport Plant36602_1 - 07.2002 - * 18 - Hydro Media OrmenOrmenOrmenLangeLangeLangeGas Treatment Terminal, Nyhamna36602_1 - 07.2002 - * 19 - Hydro Media OrmenOrmenOrmenLangeLangeLangePossible Subsea DevelopmentComplete Subsea Production Facilities in combination with Onshore Process and Export PlantPipeline End Manifold (PLEM)Production templatesProduction templatesTwo 30” pipelines bringing the gas up the escarpment and out of the Storegga area36602_1 - 07.2002 - * 20 - Hydro Media OrmenOrmenOrmenLangeLangeLangeConcept Selection Late 2002Alternative 2 Alternative 2 of of 2:2:Full Process andFull Process andGas Export Offshore PlatformGas Export Offshore Platform36602_1 - 07.2002 - * 21 - Hydro Media OrmenOrmenOrmenLangeLangeLangeFull Processing and Export Offshore PlatformThe Tension Leg Platform The Tension Leg Platform Concept (TLP)Concept (TLP)The “SPAR” Platform The “SPAR” Platform Concept AlternativeConcept AlternativeThe Semi The Semi submersiblesubmersiblePlatform ConceptPlatform Concept(SEMI)(SEMI)36602_1 - 07.2002 - * 22 - Hydro Media OrmenOrmenOrmenLangeLangeLangeConcept Selection Late 2002Full Process and Gas Export Offshore Full Process and Gas Export Offshore Platform Subsea Concept (SEMI case)Platform Subsea Concept (SEMI case)Satellite wells and manifoldsRisers36602_1 - 07.2002 - * 23 - Hydro Media OrmenOrmenOrmenLangeLangeLangeConcept Selection Late 2002Tension Leg Platform (TLP) with both wet (subsea) and dry (platform) wells, and condensate storage vessel”SPAR” Platform with both wet (subsea) and dry (platform) wells, and condensate storage vessel36602_1 - 07.2002 - * 24 - Hydro Media OrmenOrmenOrmenLangeLangeLangeConcept Selection Late 2002Semisubmersible (SEMI) Platform in combinationwith wet subsea wells concept36602_1 - 07.2002 - * 25 - Hydro Media OrmenOrmenOrmenLangeLangeLangeKey Project Management ProcessesORMEN LANGE GOVERNANCE PROCESSORMEN LANGE GOVERNANCE PROCESSDG3 +CONCEPTSELECTIONRISK MANAGEMENTSELECTIONSTAKEHOLDER MANAGEMENT/COMMUNICATION36602_1 - 07.2002 - * 26 - Hydro Media OrmenOrmenOrmenLangeLangeLangeGovernance Process20002001/200220032004FeasibilityStudy PhaseConceptSelectionPhasePreparationforExecutionExecutionOperationOctober 1st, 2007ProjectPhasesDecision GatesDecision Gates ReviewsApproval of ProjectInitiationApproval of ConceptShort ListApproval of Development ConceptPartnershipApproval to IssuePDO/PIOApproval toStartExecutionApproval to StartOperationPost Implementation Assessment123456736602_1 - 07.2002 - * 27 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmenOrmenOrmenLangeLangeLangeGovernance Processl lA common decision process accepted by A common decision process accepted by OrmenOrmen Lange Lange partners that:partners that:n nReplaces each partnersReplaces each partnersss own value assurance process own value assurance processn nIs owned by the Is owned by the OrmenOrmen Lange Management Committee Lange Management Committeel lProvides independent assurance at defined project Provides independent assurance at defined project milestones that:milestones that:n nGreatest value has been obtained, particularly during earlyGreatest value has been obtained, particularly during early stages of the projectstages of the projectn nAssesses the suitability of the project plans and strategiesAssesses the suitability of the project plans and strategiesn nAppraises the readiness of/justification for the project to Appraises the readiness of/justification for the project to proceed into the next phaseproceed into the next phasel lProvides a framework for work program, budgets and Provides a framework for work program, budgets and scheduling within the projectscheduling within the project36602_1 - 07.2002 - * 27 - Hydro Media36602_1 - 07.2002 - * 28 - Hydro Media OrmenOrmenOrmenLangeLangeLangeGovernance ProcessDecision Gate no. 1:Is there a basis to initiate a project?Decision Gate no. 2:Is the project effectively framed in relation to uncertainties? Do we have a realisticplan towards next Decision Gate?Decision Gate no. 3:Do we have an asset and a basis for selecting the right concept?Is there a realistic plan towards nextDecision Gate?Decision Gate no. 4:Do we possess the optimum plans and resources to start project execution?36602_1 - 07.2002 - * 29 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmenOrmenOrmenLangeLangeLangeGovernance ProcessKey Aspects: l lA Decision Gate Support Package prepared by the A Decision Gate Support Package prepared by the project ahead of Decision Gate Reviewsproject ahead of Decision Gate Reviewsl lDecision Gate Reviews undertaken:Decision Gate Reviews undertaken:n nIn accordance with agreed mandatesIn accordance with agreed mandatesn nBy a team comprising experienced senior personnel from By a team comprising experienced senior personnel from each partnereach partnern nWith a Team Leader with suitable qualifications, selected With a Team Leader with suitable qualifications, selected by the by the OrmenOrmen Lange Management Committee Lange Management Committeen nCovering Technical, Economic, Commercial, Covering Technical, Economic, Commercial, Organizational and Political issuesOrganizational and Political issuesn nAddressing the full development scope from reservoir to Addressing the full development scope from reservoir to marketmarket36602_1 - 07.2002 - * 29 - Hydro Media36602_1 - 07.2002 - * 30 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmenOrmenOrmenLangeLangeLangeSweeping statmentl lOrmenOrmen Lange is one of the worlds most Lange is one of the worlds most challenges deepwater offshore challenges deepwater offshore gasprojectsgasprojects under under developmentdevelopmentl lOrmenOrmen Lange is systematically meeting its Lange is systematically meeting its milestones to come milestones to come onstreamonstream as a major as a major European gas source in 2007European gas source in 200736602_1 - 07.2002 - * 30 - Hydro Media36602_1 - 07.2002 - * 31 - Hydro Media OrmenOrmenOrmenLangeLangeLangeSelection ProcessesEconomic DevelopmentEconomic DevelopmentEnvironmentalEnvironmentalProtectionProtectionSocial Social ResponsibilityResponsibilityOrmenOrmenOrmenLangeLangeLangeKey Value AreasKey Value AreasKey Value Areas36602_1 - 07.2002 - * 32 - Hydro Media OrmenOrmenOrmenLangeLangeLangeConcept Selection Identify CriteriaIdentify CriteriaSocietySocietyEconomicsEconomicsEnvironmentEnvironment Evaluate OptionsEvaluate Optionsagainst Criteriaagainst CriteriaOption Option 11Option Option 22CriteriaCriteria 1 1CriteriaCriteria 2 2CriteriaCriteria 3 3OrmenOrmenOrmenLangeLangeLange36602_1 - 07.2002 - * 33 - Hydro Media OrmenOrmenOrmenLangeLangeLangeSelection ProcessesOffshoreProcessingOnshoreProcessingSelectedConceptTransportSelectionprocessSelectionprocessSelectionprocessSelectionprocessSelectionprocessSelectionprocessSelectionprocessSelectionprocessOnshoreSiteConcept SelectionConcept SelectionTransport Transport SelectionSelectionSubseaSubsea to toLand (SSL)Land (SSL)Site SelectionSite SelectionFull Full Process Process (FPO)(FPO)Semi/SPAR/TLP SystemCondensate HandlingSubsea SystemFuture CompressionMid Mid 2002200236602_1 - 07.2002 - * 34 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmenOrmenOrmenLangeLangeLangeSelection ProcessesDry tree requirement ?Type of well completion ? (size & type)Well layout Principle ?No. of wells ?Do we have flow assurance ?Production level ?Swing production capacity (daily/monthly)Build-up of profile ? (1 or 2 steps)Future compression ? (when and how)Onshore or Offshore Field Development ?Power supply onshore plant ?Project functional descr. (OL/Mid Norway hub)Main Main DecisionsDecisionsWellWellTechnologyTechnologyFieldFieldDevelopmentDevelopmentDG3DG3DADADDDDADDDDG4DG4 DDDDG5DG536602_1 - 07.2002 - * 34 - Hydro MediaMain Decisions (Road Map)ExamplesExamples36602_1 - 07.2002 - * 35 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmenOrmenOrmenLangeLangeLangeRisk ManagementDEFINEDDEFINEDOBJECTIVES/MILESTONESOBJECTIVES/MILESTONES RISKRISKIDENTIFICATIONIDENTIFICATIONRISKRISKEVALUATION/EVALUATION/CLASSIFICATIONCLASSIFICATIONDEVELOPMENTDEVELOPMENTOFOFACTION PLANSACTION PLANSRESPONSERESPONSERisk Management Process on Ormen Lange36602_1 - 07.2002 - * 35 - Hydro Media36602_1 - 07.2002 - * 36 - Hydro Media OrmenOrmenOrmenLangeLangeLangeRisk ManagementPROBABILITYCONSEQUENCEOPPORTUNITYTHREATVery likely 50 - 100%Likely 20 - 50%Less likely 5 - 20%Unlikely 5%SignificantSmallMinimalVerySignificantSignificantSmallMinimalVerySignificantLevel 1 : MC Key RisksLevel 2 : Project Key RisksLevel 3 : Watch ListLevel 4 : Negligible RisksRisk Classification36602_1 - 07.2002 - * 37 - Hydro Media OrmenOrmenOrmenLangeLangeLangeStakeholder Management:Communication Plan, Processes and MethodologyWork method:Systematic Problem SolutionAdjustWhat are the key communication issues and our corresponding goals?Implementation:- Action Plans:Who does and says what to whom when and where?By which measures and strategies should we communicate?Who are our key stakeholders, and what are their goals, knowledge and attitudes?What are the probable risks if communication strategy fails?Evaluateour efforts36602_1 - 07.2002 - * 38 - Hydro Media OrmenOrmenOrmenLangeLangeLangeOrmenOrmenOrmenLangeLangeLangeKey Challenges AheadlVerify slide stabilitylEstablish Market and Transportation Strategy in a new commercial environmentlSelect Ormen Lange Development Conceptin 2002lSubmit Plan for Development and Operationto the Authorities autumn 2003lSelect and implement Project Execution & Procurement Strategy36602_1 - 07.2002 - * 38 - Hydro Media36602_1 - 07.2002 - * 39 - Hydro Media OrmenOrmenOrmenLangeLangeLangeThank you for your attentionOrmenOrmenOrmenLangeLangeLangeOrmen Lange- going further