Brazilian producer preparing for competition, privatization
Petrobras' Marlim and Roncador Fields
in Brazil's Campos Basin.
Petrobras has broken yet another deepwater record for both completions and production on its Marlim South-3 well in the Campos Basin. Petrobras has recently performed the subsea completion of the well at a water depth of 5,607 ft, making it the world's deepest producing offshore oil or gas well as well as the first production ever beyond the one mile water depth mark.
This breaks the previous water depth record of 3,369 ft also set by Petrobras on its Marlim-4 well. The production, originally set to come on-stream in early June, was delayed due to bad weather in the South Atlantic, and final hookup was completed in mid-June.
Production will be carried out through a floating production system using the upgraded FPSO II vessel which has been adapted for the pressures of greater depths. The vessel will be anchored with light weight polyester cables in 4,659 ft of water (which incidentally, is another world record). The subsea completion consists of a special guidelineless layaway christmas tree fed by an encased depth resistant bundle containing a flexible riser tubing and operated by control and other cables.
Roncador plansHowever, Petrobras is reluctant to let this new record stand for too long. The company is already in the planning stages to go even deeper with the development of the Roncador Field located in the northern part of the Campos. This field lies in water depths estimated to surpass 6,561 ft. According to appraisal well estimates, the field holds at least 1.3 billion in recoverable liquid reserves, 180,000 b/d peak oil production, and gas output could reach 4.8 million cu meters by the year 2000.
Production will be carried out from the Sana FPS which will be anchored in 4,291 ft (another record) of water. Twenty-six wells will be drilled for the pilot in depths of 4,590-6,230 feet. A deepwater production unit is already on order for the field with a 180,000 b/d capacity for service starting in 4th quarter 1998.
The Campos Basin, located off the northern part of Rio de Janeiro, tends to lend itself to record breaking. The basin covers an area of more than 100,000 sq km in water depth reaching 3,500 meters and provides approximately 70% of Brazil's total domestic crude production. It's size is comparable, if not greater than, the Louisiana part of the Gulf of Mexico. It is predicted that the region will yield approximately 1.6 million b/d by the year 2001. Sixty-one commercial fields have been discovered in the area with 36 currently in production.
Campos developmentDevelopment of Campos has led to numerous water depth records as well as an impressive list of prestigious awards and acclaim for Petrobras, including the coveted OTC Distinguished Technological Achievement Award. The Marlim South-3 itself has broken two records.
However, Petrobras stresses that the major achievement of the project is not breaking the records, but rather the technological ability to bring the well onstream in less than a year of the discovery. "Although records are nice and get attention, Petrobras is not in the business to break records. We consider our technological capability to reduce onstream time in the development of big new commercial oil strikes to be more important than setting records," said Petrobras Director of E&P, Antonio Carlos Agostini.
Agostini states that Petrobras's success in deepwater development is a direct result of giving top priority to research and development and technological cooperation programs with other companies and institutions. Agostini claims that this priority has led to such innovations as the use of horizontal wells for offshore exploration, rigid steel risers for floaters, submersed centrifugal pumping, and subsea separators. Petrobras is currently in developing a new deep water technological breakthrough, the seafloor multiphase pumping system which is expected to be field tested in deep waters next year.
CompetitionPursuant to its role as a leader in technological breakthroughs, Petrobras is also readying itself for its new role in the opening of the oil industry in Brazil. There have been many recent changes in Brazil's oil policy. The Brazilian constitution has been recently amended, ending the Petrobras monopoly mandate pending final Senate approval of the new Oil Regulation Law. Under this law, Petrobras will remain a state-owned company but will have to compete, on equal terms, with all qualified companies for future exploration and production and other concessions.
"Petrobras welcomes this competition and we are confident that we can thrive under the new conditions, as among other things we will be allowed to operate as a private enterprise," Agostini said.
Petrobras has been looking forward to this change for some time. Petrobras president Joel Mendes Renno has called for private enterprise partnerships with Petrobras for company projects. The company had initiated a Memorandum of Understanding (MOU) for the upstream associations process which offered private companies interested in immediate opportunities, as soon as the Regulatory Law allows, to get into the Brazilian oil industry as a Petrobras partner on 149 offered E&P projects.
A total of 991 proposals with offers for partnerships have been received since the initiation of the MOU. The offers have included appraisal, development, recovery, supply of equipment and service in exchange for production sharing, and strictly financing of good prospects. These offers are for both on, but mainly, offshore areas. The partnership agreements are in the form of farm-ins, joint ventures, and almost any other form of partnership with the partner being the operator of the project.
PrivatizationPetrobras is currently undergoing the second step in the process for privatization. They are selecting several of the most promising offers for each project and have entered into negotiations to sign the next document, the Agreement on Technical Assessment (ATA). The ATA is equivalent to a letter or intent or further interest in partnership.
However, none of these proposals can be finalized until the law is passed by the Senate and is put into effect. In addition, with the new law, open market concession bids will not require a Petrobras partnership and once prepared by the government any interested company can bid for the concessions and enter into direct competition with Petrobras.
Petrobras has also offered 150 of their own upstream projects for partnership in Brazil which has resulted in more than 150 reciprocal proposals from 68 groups of companies for partnerships in the major deepwater arenas around the world. This will help strengthen the company's international standing.
The ability to move fast and bring onstream new discoveries is still Petrobras main objective. This will help establish them in the list of the top majors in the industry. With the expansion of the Brazilian oil industry to foreign competition, Petrobras stands to gain a great deal. They will benefit by creating partnerships with these new interested parties and thus expanding their resources. They will also gain their first taste of competition in their own court, the Campos Basin. These factors will only aid to the success of Petrobras and push them towards the major consideration.
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