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With the push into ultra-deepwaters, the reservoir pressure and temperature generally increase, adding complexities for both the drilling operation and the processing equipment. Of the deepwater resources expected to go into production over the next five years, approximately 50% have a reservoir pressure above 500 bar (7,252 psi). For the deepwater resources, the equivalent ratio is only 15%. The high initial pressure and large pressure drop over the life of the reservoir brings increased need for injection capacity on the topside. In addition, the ultra-deepwater resources are in general further from shore than the deepwater resources, and due to the share volume of discoveries in presalt Brazil, the ultra-deepwater fields take longer to drill due to the salt layers.
On the positive side, due to the more mature nature of deepwater resources, many of the largest and most prospective fields have already been developed. This favors future ultra-deepwater fields in that the discoveries to be developed on average are larger than the deepwater discoveries. Over the next five years (2015-2019) close to 65% of the ultra-deepwater resources to be brought onstream come from fields larger than 1 Bboe. For the deepwater resources, the same ratio is 30%. In addition, early production tests for several of the Brazilian ultra-deepwater developments show significantly higher flow rates than Petrobras expected.
The oil and gas ratio also differs between ultra-deepwater and deepwater resources. Close to 70% of ultra-deepwater resources estimated onstream next five years are oil. For deepwater the oil ratio is only slightly above 40%, reducing the profitability of these compared to the ultra-deepwater developments.
Considering the different aspects of deepwater and ultra-deepwater, one can compare and contrast the robustness of the different resources. There are higher shares of ultra-deepwater resources with break evens below $60/bbl in all three five-year periods, indicating a higher robustness to oil price changes going forward. While approximately 75% of the resources to be put into production 2015-2019 are already sanctioned, most of the resources from 2020 onwards are not. This indicates that the short term effect of a weaker oil price is limited, while a prolonged period with lower oil prices might affect a substantial part of the projects going into the 2020s.
That ultra-deepwater is more robust than deepwater may be contrary to what many believe, but what we see here is that larger fields and higher oil/gas ratios of the ultra-deepwater fields out-weigh many of the increased costs that come with more water depth, higher reservoir pressure, longer drilling times, etc. Another important factor is that the some of the increased costs related to ultra-deepwater developments are coming down. For example, in 2006 the fastest Petrobras was able to drill a presalt well was 134 days. With increased experience, the company set a new record of 60 days in 2013. Not all presalt wells are ultra-deepwater, but the ratio is much higher than for deepwater.
Upcoming ultra-deepwater developments are more robust to changes in oil price than deepwater developments, primarily because of their size. This relates to the ultra-deepwater development boom lagging 15 years behind deepwater developments. Many of these ultra-deepwater developments are in Brazil, which might actually strengthen the robustness further, given that the decision to develop is not only driven by business rationale, but also by political decisions. Of course with everything equal, a deepwater development will be more profitable than an ultra-deepwater one. However, we are now in a situation where, due to size, the ultra-deepwater elephants seem to be cutting in line ahead of the deepwater discoveries and other developments with higher breakeven.
