Most of the significant developments in deepwater exploration and production during the past 25 years have taken place in Brazil. And the pioneer has been state-owned oil company Petrobras. Ricardo Luis Beltráo, Petrobras Installation Technology and Engineering Group manager, here discusses the prime issues affecting the industry, including developing technology and effects of the Government opening up the sector to international companies.
Says Ricardo Beltráo, Pressed by the need to answer Brazils oil-production supply and demand, and to reduce the effect of oil imports on the countrys trade balance, Petrobras decided in the 1970s to concentrate its efforts on the offshore Campos Basin - the countrys largest beneath water depths of as much as 3,500m (11,500 ft) and reserves of 7.2 billion barrels of oil equivalent. First production from the basin started in 1977, and since then we have systematically solved all the offshore production challenges that have arisen.
Pioneering technology
Over the years Petrobras has overcome successive depth barriers, and in the process set a series of world records. In the past two years alone, the company has undertaken eight major and innovative development projects in the Campos Basin. As an example, the Roncador field development is presently the deepest oil production system in the worlds offshore industry, and is one of Petrobras most promising projects. Development plans consist of three phases beyond the already producing pilot production system, which involves the deepest dynamically positioned floating production, storage and offshore unit (FPSO) Seillean, producing 20,000 bpd through a drill pipe riser.
Roncador is located in ultra-deepwaters (between 1,500 and 2,000m) and is Brazils most important sedimentary basin. It covers about 132 km2. The first permanent production system will come on stream this year, only 40 months after discovery. In this phase the northern and eastern areas will be developed, pumping oil through 21 subsea wells. The second-phase development contract is to be awarded by the end of 2000, for producing in the southwestern region, in water depths ranging from 1,500 to 1,850 m. The third phase is for development of the deepest region, in the southeast.
Continues Beltráo, Increasingly, oil production from ultra-deepwaters has become the new challenge to be met by the industry. With the depletion of our onshore and shallow offshore reserves, the industrys unavoidable path has been to undertake oil exploration in ever-deeper waters. The new challenges have required new technological solutions to be found, either by adapting already existing technologies or by developing new alternatives, so as to make it possible to produce oil in extremely adverse conditions.
Company goals for the next few years are quite ambitious, as it plans producing at a rate of 1.5 million bpd by the end of 2000 - a 50 per cent hike over just two years. Most of that growth will take place in the Campos Basin, where the production is expected to increase 67 per cent. Beltráo explains, The majority of projects today use a mixture of shared technology. Ten or 15 years ago, a company with new technology was able to maintain its exclusivity for a number of years. Today, however, new technology is rapidly picked up and applied by other companies, within a year or two of its introduction.
Ground-breaking auction
Says Beltráo, Meeting the growing demand for oil products and natural gas is the most crucial challenge Petrobras faces. About 70 per cent of Brazilian oil and gas reserves are located in deep and ultra-deep waters. Operating as a monopoly, Petrobras decided to focus on developing offshore production technology, and achieved the necessary skill to accomplish its mission. However, as a result of the Governments recent decision to open up the market, Brazil has become an important and promising market for oil companies from all over the world, so oil and gas exploration is expected to grow significantly.
Brazils first international licensing round was held last summer, ending 46 years of monopoly. The Brazilian National Oil Agency recently announced plans to launch the second round of bids in May. Beltráo comments, Petrobras has demonstrated it is keeping pace with the rapidly changing oil industry and the prevailing economic climate by its willingness to develop partnerships. Recent mergers and acquisitions among the oil companies are making big companies even bigger, setting off a new cycle of competition.
As a result, the strategies of the past are no longer enough to stay at the forefront of the industry. Apart from adequate oil reserves, the qualifications for being a winner in the future international oil arena include multinational experience, technical leadership, global or regional infrastructure and financial creativity.