TNK-BP operates 250 fields (the majority of those are mature water-flooded) with 2003 annualized average liquids production of 1.28 mln BPD and August 2004 record liquid hydrocarbons of 1.5 mln BPD. The Company's investment portfolio is dominated by wellwork program which compensates production decline and serves the purpose of maximising production and allows reaching planed growth targets. The wellwork program in 2003 included more than 4300 jobs and more than 5000 in 2004 on 15000 active producers with annualized average incremental oil rate of 189,000 BPD in 2003 and 224,000 BPD in 2004. This year program is of the same and even greater scale. All of the Company's wellwork activity is tracked in the WETS[TM] wellwork evaluation tracking process, a BP heritage tool. This process was implemented in Sidanco assets in December 2002 - February 2003 and in TNK assets in November 2003 - April 2004. The WETS[TM] wellwork evaluation database includes results of the following TNK-BP activity - drilling operations, rate addition wellwork on producers, and injector wellwork. This database has more than 9900 jobs as of January 2005. The results of less than a year of full implementation of the tool in TNK-BP are shown in this paper. This paper will illustrate how TNK-BP manages large scale upstream investment activities using the WETS[TM] wellwork evaluation tracking process.Examples of intra-company benchmarking will be explored to illustrate how major projects in the company are assessed and compared.This paper will also illustrate how historical performance is analyzed to underpin confidence in forward planning and ranking of projects.

TNK-BP Story (Introduction)

This was one of the largest direct foreign investment into Russian industry - in early 2003 BP and Alfa/Access/Renova agreed to create one of the biggest private oil companies in the world - "TNK-BP" - bringing together Upstream and Downstream assets of TNK, Sidanco and BP in Russia. The process of merger took about eight months - a record time to complete a merger of this scale. September 1st 2003 marked Day 1 for this new company.

TNK-BP operates 250 fields. The majority of those are mature water-flooded with naturally declining production. Because of this, wellwork programme has always been critical for TNK-BP subsidiaries. The company does about 450 wellwork jobs a month (this is taking into account rate addition jobs only, excluding maintenance wellwork such as pump change-outs, replacement of broken rods, etc. Maintenance wellwork accounts for two to three fold of the rate addition wellwork).

In the year previous to the merger it was decided in Sidanco to track performance of wellwork programme using BP's WETS[TM] wellwork evaluation tracking process. The process was implemented by the beginning of 2003 and specialists from subsidiaries were trained on how to use the system with help of BP specialist.

The wellwork evaluation tracking process was originally developed at Prudhoe Bay, Alaska in 1988 to assess the financial performance of a large scale wellwork programme (e.g. hundreds of wellwork operations per annum at cost of several hundred million US $)[1]. The earliest versions of the process were largely spreadsheet driven and limited in scope. Over time, the system was improved as business needs dictated more complex interpretations such as incorporating benefits from adding oil, as well as from eliminating unwanted gas and/or water. Now, the tool can track benefits associated with new wells, sidetracks and all types of wellwork (including wellwork on injection wells).

The tool proved to be valuable for Sidanco management with its ability to summarize easily wellwork statistics for the whole company. WETS[TM] evaluation database allows to compare these statistics to present the summary in a clear and understandable visual format. Realizing the potential of the WETS[TM] wellwork evaluation tracking process, TNK-BP decided in 2003 that the process would also be used in the new company. By end of January 2004 all TNK-BP Upstream subsidiaries had implemented the process. Since February 2004 TNK-BP Headquarters started collecting wellwork and new wells performance reports in the new format.

Also in February 2004 a wellwork performance evaluation expert group was launched, now consisting of more than 40 specialists in all TNK-BP subsidiaries - from head offices to specialists in the assets. TNK-BP headquarters continue to provide all necessary support, follow-up trainings, new versions of the tool, additional TNK-BP customized modules.

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