Last Month the DOF Group named on the largest anchor handling tug vessel (AHT) ever built in Brazil, the Skandi Iguaçu. The vessel has over 32,000 BHP installed and bollard pull of more than 300 tons. Having been built at the STX OSV shipyard accros the bridge from the city of Rio de Janeiro, in Niteroi, the vessel will be ready for delivery to Petrobras three to five months in advance of contract requirement. Skandi Iguacu was ordered from STX OSV shipyard, with financing from the Brazilian Merchant Marine Fund through the BNDES (Brazilian Development Bank). The Skandi Iguaçu is part of a new generation of high powered anchor handling vessels, designed for operations across a wide range of deepwater depths and environmental conditions. It is outfitted with the latest equipment for safe AHT operations, such as the largest AHT winches, cargo rail cranes with manipulators and new systems for handling rig anchors at the stern of the vessel, along with the latest DP (dynamic positioning) technology. To design the Skandi Iguaçu, the DOF group was careful about environmental preservation. The new vessel can achieve reduction in fuel consumption up to 30% using a hybrid propulsion system that combines a conventional diesel motor and an electric system directly connected to its gear. According to Eirik Torrensen, DOF Manager in Brazil, the Skandi Iguaçu represents the consolidating of the groups position in Brazil. “I am honored to say that of the 64 company vessels in worldwide operations, 24 are in the Brazilian coast and more than half the fleet carries the Brazilian flag”, said Mr. Torrensen. Present in Brazil since 2001, the Norwegian group DOF ASA, has already invested US$1 billion in the construction and operation of sips geared to the O&G industry, specializing in Deepwater operations. The company has a client list in Brazil composed of important operators such as Petrobras, Shell, Statoil, Chevron and Brazilian junior operator OGX. Presently the company employs 1,300 people in Brazil and has a local fleet of 28 vessels of various kinds, of which 24 are in operation (10 AHTs, 5 PSVs, 7 CSVs, 2 PLSVs) and has four other vessels in construction at local shipyards. Of the 24 vessels in operation 11 were built in Brazil. Before building the Skandi Iguaçu, DOF has already built the biggest Multipurpose vessel (MPSV, part of the CSV vessel category) in Brazil, the Skandi Vitoria, launched in 2010. Claudio Paschoa

With the work on its new shipyard underway, OSX, the shipbuilding and ship rental company belonging to the EBX Group, is planning on entering tenders in order to try and get a piece of the contracts for 21 drillers for Petrobras.  The OSX shipyard is being built within the Açu Port area (the Açu Port is also in construction and is also owned by the same EBX Group).

Sete Brasil is administering the construction of the 21 drillers, which will then be leased to Petrobras. Petrobras itself will oversee the tender process. Sete Brasil is one of the local companies participating in the tender and they have already been awarded the contract for construction of the seven first drillers, which are being built at the Atlantico Sul shipyard in the Brazilian northeast state of Pernambuco.

Sete Brasil is a recently established company, formed by the  Fundo de Investimentos e Participações –FIP Sondas (Investment and Participation Fund), which is administered by the Caixa Economica Federal (CEF), which is a Brazilian federal bank, holding a 90% interest in Sete Brasil. Petrobras is also present with a 10% share in Sete.

Petrobras plans to invest $224.7 billion between 2011 and 2015, with a good portion of this going towards building these deepwater drillers, which have never before been built in Brazil.

According to OSX, any tender involving the construction of drillers, FPSOs, MODUs and offshore vessels interests the company. OSX is investing 2 billion in the construction of the shipyard, which has HHI (Hyundai Heavy Industries) as a minority partner and will have the capacity to process 180 thousand tons of steel per year. The ambitious shipyard plans call for the OSX shipyard to be the biggest in the Americas. The stated priority of the shipyard is to build rigs, drillers and offshore vessels for OGX (the O&G exploration and developmentcompany of the EBX Group) but it is slated to have the capacity and conditions to supply demands from other clients, such as Petrobras.

Claudio Paschoa

Paulo Mendonça, CEO of OGX stated that the first quarter of 2011 was very important for the Brazilian operator. OGX has been intensifying the campaign to appraise its discoveries in the Campos basin, where 16 wells have been spud since the beginning of the year, of which 10 are appraisal wells for the accumulations Waikiki, Pipeline and Illimani (Campos Basin) and Fazenda São José (Parnaíba Basin), with the intent of converting 3C contingent resources into 2C and 1C, and thereafter into reserves.

OGX has ambitious plans for the coming months including:

-Production start-up to begin during the third quarter of 2011 through an ongoing EWT at  its Waimea play;

-Increasing the rhythm of its appraisal campaign, specifically in the Campos basin;

-Starting off the exploratory campaign in the Pará-Maranhão and Espírito Santo basins along the year;

-Delivering the vital and time sensitive declaration of commerciality to ANP (National O&G regulator), related to the discoveries in Campos, Santos and Parnaíba Basins.

On a more extended plane, they also intend to order 3 more FPSOs by 2015, at this point OGX has ordered 5 FPSOs, which will be ordered from OSX its sister company specialized in shipbuilding and ship leasing. Both OGX and OSX are part of the EBX group belonging to Brazilian mega entrepreneur Eike Batista, currently the 8 richest man in the world, according to Forbes magazine.

The first FPSO, OSX 1 is part of a deal with BW Offshore, which is managing its convertion in Singapore, since the OSX shipyard, in partnership with HHI (Hyundai Heavy Industries) is  still being built in north Rio de Janeiro. OGX will pay $263 thousand a day to its sister company for the use of the FPSO, a figure which is definitely below the market average for FPSO lease.

The OGX shallow water discoveries off the coast of Rio de Janeiro are very impressive as is its discovery success in the Campos Basin, which is near 100%. Another important aspect of their discovery campaign is the fact that OGX has uncorked a new shallow oil province in the south Campos Basin. We are looking at an impressive net potential of resources for OGX in the Campos Basin of 5.7 billion boe, of which a considerable amount will come from this new oil province.

Claudio Paschoa

Above: Paulo Mendonça - CEO of OGX, who was a top Petrobras geologist and executive for over 30 years, before joining the new Brazilian player.

It was recently announced that all of OGX´s geophysical and geological software applications will be moved to Landmark´s DecisionSpace Desktop, which is a Halliburton owned company.

"The integration of workflows and data such as rock, logs and seismic across domains in the DecisionSpace Desktop allows us to work more efficiently as we explore for hydrocarbons, improve our asset knowledge, and reduce our exploration risk.", said Marcos Amaral, OGX´s Executive Manager for New Technologies. 

"DecisionSpace Desktop's unique approach to reservoir description, known as Dynamic GeoModeling, is a no compromise, unified and dynamically updated interpretation and modeling system," said Gene Minnich, vice president of Landmark Software and Services. "Using proven science, unparalleled data management and easy to use interfaces, this software is helping our clients make better decisions faster."

The DecisionSpace Desktop workspace unifies workspaces for geosciences applications related to oil and gas E&P. The software is built on the most widely-adopted data management system in the industry: OpenWorks® software. The software makes it possible to access data across entire exploration areas, from a reservoir to the entire basin, along with managing and sharing one copy among many users and update the models with new data in real time.

This will undoubtedly be a handy software bundle for OGX, as they have basically uncovered a new shallow water oil province in the southern part of the Campos basin, composed of various reservoirs. If we look at the scope of what this software bundle offers, it will simplify the management of the reservoirs as a group, even though each reservoir has its own distinct characteristics.

According to Halliburton, the DecisionSpace Desktop workspace provides a common, flexible 1D, 2D, 3D workspace for the whole OGX exploration team, including seismic, logs, maps, sections and cubes. With the software, OGX exploration engineers and geologists will be capable of building and sharing workflows using the Project Designer.

The DecisionSpace software bundle is composed of:

-Base Software - Seamless integration and painless collaboration.

-Earth Modeling Software - Reservoir modeling software which enables geoscientists and reservoir engineers to construct accurate, high resolution, geocellular models.

-Geology Software - Provides geological interpretation, mapping and modeling for asset teams.

-Geophysicas/Seismic Interpretation Software - Provides seismic interpretation, mapping and modeling for asset teams.

-GIS software - Provides GIS data to image cultural data, set the geospatial context for interpretation, map play fairways, plan optimal well locations, and assess environmental impact.

-Stimulation software for fracture monitoring - Fracture monitoring, where engineers and geoscientists can visualize and analyze frac operations and microseismic data in real time.

-Well Planning Software - Well and field development planning team can integrate all relevant data from all domains in one unified 3D workspace.

Claudio Paschoa

Tests on a number of recently discovered adjacent wells, along with the first production well at Waimea Horizontal, support OXS´s claim that a new shallow water O&G province has been discovered at Block BM-C-41 in the southern Campos Basin.

It is very significant when an acclaimed Geologist such as Paulo Mendonça, General Manager (Director) of OGX, comments that “This is one of the best production tests I have ever seen in my life”. Mr. Mendonça worked for decades in Petrobras and actively participated in ALL the major hydrocarbon reservoir discoveries made by Petrobras in Brazil, including the early Campos Basin boom, along with spearheading discoveries at the Espirito Santo and Santos Basins. That´s just to name the most known Basins he helped discover and develop, because there are quite a few more Basins involved.

There is no real need at this point to go into final recoverable oil figures, as that would be hard to ascertain at this point but if the total potential is anywhere along the 3.6 bboe, originally predicted, they that would be awesome. It may swing for more or less than that in the end, but it´s still a major achievement. Shallow water drilling is way cheaper than deep water drilling to begin with and the plays are basically all within a hundred km from the coast, which simplifies logistic tremendously. In term of safety, shallow water drilling normally is less complex and demanding than deep water efforts but there definitely are risks, as there always will be when drilling for oil. At least shallow water drilling is something more easily understood after so many years of E&P.

The good side is that OGX is a new O&G player with different values than the old players and also a supposedly, very safety and environmentally conscious operation.  Then again, all O&G players claim to be very safety and environmentally conscious operations. In the end only time will tell.

Tests on a number of recently discovered adjacent wells, along with the first production well at Waimea Horizontal, support OXS´s claim that a new shallow water O&G province has been discovered at Block BM-C-41 in the southern Campos Basin.

It is very significant when an acclaimed Geologist such as Paulo Mendonça, General Manager (Director) of OGX, comments that “This is one of the best production tests I have ever seen in my life”. Mr. Mendonça worked for decades in Petrobras and actively participated in ALL the major hydrocarbon reservoir discoveries made by Petrobras in Brazil, including the early Campos Basin boom, along with spearheading discoveries at the Espirito Santo and Santos Basins. That´s just to name the most known Basins in Brazil that he helped uncork and develop, because there are quite a few more Basins involved.

There is no real need at this point to go into final recoverable oil figures, as that would be hard to ascertain at this point but if the total potential is anywhere along the 3.6 bboe, originally predicted, they that would be awesome. It may swing for more or less than that in the end, but it´s still a major achievement. Shallow water drilling is way cheaper than deep water drilling to begin with and the plays are basically all within a hundred km from the coast, which simplifies logistic tremendously. In term of safety, shallow water drilling normally is less complex and demanding than deep water efforts but there definitely are risks, as there always will be when drilling for oil. At least shallow water drilling is something more easily understood after so many years of E&P.

The good side is that OGX is a new O&G player with different values than the old players and also a supposedly, very safety and environmentally conscious operation.  Then again, all O&G players claim to be very safety and environmentally conscious operations. In the end only time will tell.

Claudio Paschoa

Part of the OGX Release concerning Waimea and the New O&G Province:

OGX concluded the drilling of the horizontal well 9-OGX-26HP-RJS (Waimea Horizontal) and, through a drill-stem test (DST), has identified excellent production index (PI) of 100m³/day/kgf/cm², similar to results obtained in the best wells in the country. Currently, the well is being equipped to perform an extended well test (EWT) which is expected to register oil flowrate of up to 20,000 barrels per day, and a higher flow rate during its definitive development phase. This result surpassed initial expectations related to the Waimea accumulation and provides a solid foundation for the initiation of OGX’s production phase. This well is located in the BM-C-41 block in the Campos basin and will be connected to the FPSO (Floating Production Storage & Offloading) OSX-1 during the EWT, which will begin in the middle of 2011.

“The result obtained in the drilling of this well represents a milestone in the Company’s history. The use of horizontal drilling technology in the well confirmed very high production indexes in the carbonate reservoirs in the southern Campos basin, proving that we do have, in fact, before us an extraordinary petrolific province,” commented Paulo Mendonça, General Director of OGX. “This is one of the best production tests I have ever seen in my life”, added Mr. Mendonça.

The drilling of the horizontal well 9-OGX-26HP-RJS utilized state-of-the-art technology. OGX’s technical team was responsible for implementing an approach which called for the drilling of a directional well to a depth of 3,746 meters in order to enable a horizontal entrance into the targeted reservoir. The successful execution of this approach resulted in a well with more than 1,000 meters of horizontal extension in the carbonate reservoirs of the Albian section of the Waimea accumulation, which was originally discovered through the drilling of the 1-OGX-3-RJS well on December 18, 2009.
Following the conclusion of the drilling process, a drill-stem test was performed, which confirmed production potential of 40,000 barrels per day of oil with gravity of approximately 20°API. A complex process of selective acidification was used in eight well intervals, permitting better stimulation of the more than 1,000 meters of the well’s extension, thereby maximizing the oil flow.
In addition to the results, further information was collected, such as features of the reservoir rock and of the fluids, which will be analyzed by OGX’s technical team in the coming months. These interpretations, along with the information from the EWT will permit a better understanding of the accumulation and will assist in the preparation of the development plan.

After a nearly perfect drilling campaign on various fronts in 2010, OGX start 2011 with new discoveries in the Campos Basin.

Although there was much skepticism at the start of OGX´s creation in 2007, after last year´s performance, the new Brazilian operator, which was created by Brazilian businessman and investor Eike Batista adding to the portfolio of his EBX Group can now easily be considered as a good investment, especially for those who bought in early.

Eike´s strategy to hire and partner with Petrobras´s extraordinary geologist and executive Paulo Mendonça was vital not only to gain market value as to bring in deep knowledge of where do drill and how to plan the E&P campaign.   It´s important to not that Petrobras´s exploratory success rate more than doubled after Mr. Mendonça took over the national operator´s exploration team.

Since its creation OGX has secured over 9 billion boe and 50 fields discovered (onshore and offshore). This year it has already discovered gas in a section of well 1-OGX-25-RJS in block BM-C-39 in the Campos Basin and oil in 1-MRK-3 4P also in the Campos Basin where it holds a share with Maersk as the main operator, however they did have one setback in the Santos Basin where the OGX-23 well had negative results for commercial oil. According to ANP, OGX is the biggest private investor in O&G exploration in Brazil, surpassing strong foreign competition.

The potential shown by OGX´s onshore blocks in the Parnaiba Basin (mostly gas) and the Para-Maranhão Basin (with a geological model similar to Ghana in WA) are also noteworthy along with the blocks it also owns in the Espirito Santo Basin which have already surpassed discovery volume forecasts.

This year it will be interesting to see how OGX´s drilling program unfolds and also how many of these recent discoveries it will be able to get online. The player is now dependant on getting the necessary assets such as FPSO´s and production rigs in place and pumping in order to quickly see more profits coming in. It´s also important to note that the drilling campaign will still be going on and that at this point they´ve basically uncovered a new O&G province in the south Campos Basin.

Claudio Paschoa