With the 11th round of tendering for O&G block in Brazil set to start next week, it is important to look at some of the serious risks involved in drilling for O&G in Brazil’s Equatorial Margin. Most of the offshore blocks being tendered in this 11th round of bidding are located along Brazil’s northeast and north coasts. This, according to the Brazilian government, is being done in order to de-centralize O&G production in Brazil, where most of the oil and gas E&P is done along the southeast coast, basically centered off the states of São Paulo, Rio de Janeiro and Espirito Santo.

This is all well and good, when considering the need to redistribute O&G wealth to other parts of the country, however, both the Brazilian government and the ANP (National Petroleum Agency) have been lax in researching the marine national parks that are located along this Equatorial Margin, which runs from the state of Rio Grande do Norte to Amapá, right on the border with French Guiana.

Of the 289 blocks on offer, 170 are located on the Brazil’s equatorial margin. Unfortunately the Brazilian government never got around to obtaining primary research data such as water temperature, tide variations, data on biodiversity and wind patterns for the equatorial margin and this is the main complaint being made by environmentalists. The coast from the state of Maranhão to the state of Amapá is the largest mangrove coast in the country and there is an important Marine National Park off the coast of Maranhão, the Parcel Manoel Luis National Park, which is a veritable ship cemetery with over 100 sinkings. It is made up of 18 square kilometers of coral heads that nearly reach the surface of the sea and are home to many marine species of fish and crustaceans, currents there are very strong and the tide variations are large.

To the north at the tip of Amapá is the beautiful Cape Orange national park also home to a wide variety of marine and land species. The government sustains that the primary data will be developed by the operator that acquire the blocks, even though this primary data should have been acquired before the decision to negotiate these block was ever made. This long coast on the equatorial margin is also very remote, with little if any infrastructure in place for emergency oil spill cleanup equipment. All this points to the fact that operators acquiring the block will need to make large investments in primary research and emergency response infrastructure in order to attain an environmental license for exploring the blocks. It is a notable fact that there are expectations of around 7,5 billion barrels boe of reserves in the equatorial margin that has seen very little exploration and development and this is attracting many operators, big and small to the area. We will see more on the risks of drilling in the Brazilian equatorial margin in future posts. 

 

 

 

 

Based on project experience, research, and joint industry development work, DNV issues a number of pipeline codes. These comprise service specifications, standards and recommended practices, and are highly regarded within the international pipeline community. The DNV OS-F101 ‘Offshore Standard for Submarine Pipeline Systems’ provides acceptance criteria and design procedures for pipelines. The standard applies modern limit-state-design principles with ‘safety classes’ linked to consequences of failure. The DNV standard is complemented by several recommended practices (RPs), which give detailed advice on how to analyze specific technical aspects according to stated criteria.

DNV Pipeline Codes / Offshore Standard DNV-OS-F101

• 1976 - DNV Rules for Submarine Pipeline Systems - The 1st complete pipeline code for offshore pipelines, based on allowable stress format.

• 1981 - DNV Rules for Submarine Pipeline Systems - Update of 1976 version and became a wide spread code

• 1996 - DNV Rules for Submarine Pipeline Systems - A completely new version, incorporating the limit state format with calibrated safety factors based on the SUPERB JIP work

• 2000 - DNV-OS-F101:2000 - Converted to pure technical standard

• 2007 - DNV-OS-F101:2007 - General Improvement - Aligned with ISO3183 Linepipe standard

• 2009 – ASME Global Pipeline Award

• 2012 - DNV-OS-F101:2012 - General Improvement, Aligned with ISO

65% of the world’s offshore pipelines are designed and installed to DNV’s pipeline standard. As the easy recoverable fields in shallow water have been developed, the trend within the O&G industry is to go for the more challenging prospects, reaching water depth of 3000m+. There is a lack of available technical information addressing the collapse of thick walled pipelines, therefore DNV is launching the JIP to assess the behaviour of pipelines with low D/t and re-visit the design equations and safety factors currently in use. One of the targets of the JIP is to optimize and reduce wall thickness for a deep- and ultra-deepwater pipelines while still complying with the strictest safety and integrity regime.

This JIP is targeting deepwater pipelines in Brazil. There is an major deepwater drilling effort going on off the Brazilian coast and while much of this effort is related to uncorking new pre-salt reservoirs, some are actually seeking deepwater post-salt reservoirs as has been recently found by Petrobras. The new well, informally known as Arjuna, is covered by the 1-BRSA-882-ESS (Indra) Evaluation Plan, and is around 130 km off the coast of Espírito Santo state, and 0.9 km northwest of the discovery well. The oil reservoirs, approximately 200 meters deep, are located 3,679 meters down, at a water depth of 2,143 meters.

With the amount of new deepwater discoveries going on and the fact that deepwater pre-salt and post-salt production is increasing, it is becoming critical to develop new deepwater pipeline designs that allow for pipes of lesser thickness which are lighter and much easier to handle, while still maintaining high safety standards. The O&G industry and especially the operators involved in deepwater E&P are investing significant sums to this end. To this end DNV is performing the JIP Collapse Assessment of Offshore Pipelines with D/t < 15 along with industry partners. We will take an in-depth look at DNV’s Collapse Assesment of Offshore Pipelines in future posts.

Brazilian national operator Petrobras had a scare with one of its drilling rigs off the coast of the state of Amapé, the northernmost state in Brazil, where the mouth of the Amazon River is located. Although the drilling rig did not completely loose from its mooring anchors, it did tip to one side in such a way that Petrobras was forced to abandon the well. This accident occurred in December 2012 but as yet the well continues plugged. With this development Petrobras was forced to ask the national O&G regulator ANP (National Petroleum Agency) for a longer deadline to be approved for its exploratory plan in the block located at the Amapá coast, in order to better study the very strong currents that occur in this region. Sources pegged the losses at around US$ 150 million, this has not been confirmed by the national operator. The problem with the drill rig in Amapá also worries the ANP as the region, officially known as part of the equatorial margin, will have block negotiated during the long awaited 11th round of tendering. The studies of the currents may take over a year to complete, directly affecting future production plans. Although the mooring anchors on the drill rig did not actually come loose, they did however drag on the bottom causing the rig to tilt dangerously and also caused the wellhead to tilt during the drilling of the Oiapoque exploratory well, which actually lies right on the border of the northern states of Amapá and Pará. Specialists explained that the force of the current was such that the risers were torn loose and the BOP was also affected, but with no oil spill happening. The rig was dragged around 250 meters by the force of the currents. These same specialists informed that the higher up the equatorial margin the stronger the currents and that these may vary according to depth and also that some of the currents are affected by the Amazon River, making them very strong indeed. Petrobras has confirmed that it will only resume drilling once it has a better grasp on these currents and feel safe about the mooring system. The Oiapoque exploratory well is located 138 km from the coast of Amapá at a depth of 150 meters.

The recente Discovery of a shallow water pre-salt reservoir by Brazilian private operator OGX has definitely raised a few eye brows. This novelty is a first in Brazil as up to now all other pre-salt reservoirs have been found in ultradeep waters off the Brazilian coast and usually very far from the coast. This new discovery which is located in BM-S-57 Block, in the Santos Basin and is less than half the distance from the mainland as other pre-salt finds in the Santos Basin, exactly 102 km from the coast of Rio de Janeiro. The wellhead is only 155 meters deep and the well was drilled down to 6,135 meters, which is the normal depth where pre-salt reservoirs are expected to be found. Also of consequence is the fact that preliminary appraisals of the reservoir show estimates of 1,8 billion barrels boe, although the company was quick to point out that further tests may uncork even larger reserves. Some industry analysis claim there is potential for up to 4 billion barrels. The OGX-63 well identified a hydrocarbon column of approximately 1,000 meters with a net pay of approximately 110 meters in the Albian section. The drilling of the well reached the Aptian section, where it identified hydrocarbons through a high gas presence. It is well known that the pre-salt reservoirs began to be formed during the breakup between South America and Africa over 120 million years ago and as the continents drifted apart the reservoirs were covered up by a thick salt crust which has been found to be between 200 and 2,000 meters deep. The major pre-salt finds in the Santos Basin all have been found under the 2,000 meter salt crusts. The analysis of rock fragments led to the confirmation of a microbiolite reservoir of Aptian age, in other words, the same type of reservoir rock found in the deep and ultra-deep waters pre-salt of the Santos and Campos Basins. According to an OGX release, due to the high pressures encountered, the drilling was temporarily suspended so that OGX can replace the current Ocean Quest rig with the Ocean Star rig, also part of OGX’s fleet. The Ocean Star has the requisite specifications to continue the operation, which is expected to include logging and possibly conducting at least one drill-stem test. This new shallow water pre-salt discovery is an important milestone as it increases industry expectations that other large shallow water pre-salt reservoirs may be located close by and possibly also in other shallow water locations up and down the coast. One of the positives aspects of this possibility is the fact that drilling for pre-salt oil in a shallow water set-up is much cheaper and less complicated that drilling over 300km offshore, beyond the range of most helicopters and especially, much, much simpler than drilling in water depths in excess of 2,000 meters. Basically the shallow water pre-salt decreases safety hazards and logistics problems at the same time it increases the company´s profit margins. This is also good news for suppliers of equipment used in pre-salt drilling as it is probable that other operators with stakes in areas in the Santos Basin will be looking more closely at their survey data and drilling even more wildcat well in order to try to find more of these shallow water pre-salt reservoirs. Claudio Paschoa

VAM Drilling is a company belonging to the French drilling pipe manufacturer Valourec. The new VAM Drilling mill will be located in Belo Horizonte, Brazil, adjacent to already existing Valourec & Mannesmann (V&M do Brasil) steel production and pipe rolling plant. With this the company expects to be able to respond more rapidly and efficiently to its customers in South America, lowering logistics costs and reducing the production time. Accortding to Hector Arevalo VP of South American sales for V&M do Brasil “Because of the local steel production and pipe rolling capabilities of V&M do Brasil, the new mill will be able to provide full capabilities. We are the only fully integrated drill pipe manufacturer in the world that is able to guarantee its production process from steel making to final product assembly”.

This new VAM Drilling mill is expected to create up to 70 jobs and first production is scheduled to begin in April for a major international offshore drilling contractor. The company will supply operators, offshore and onshore drilling contractors and its target is to secure contracts for pre-salt drilling pipes in Brazil along with other standard drilling pipes for drillers in Brazil and all over South America. The VAM Drilling mill opening ceremony is slated to take place during the third quarter of 2011.

Premium tubular accessories for well completion with V&M Tube Alloy technology are another differential that may set the company apart from competition in Brazil, along with their deepwater drill pipe technology, specially designed for the harsh condition found in drilling through 2,000 meters or more of salt crust under the ocean floor in order to reach the pre-salt reservoirs. Another product that should interest players is their Serimax welding solutions.

 

Claudio Paschoa

Brasil Supply was launched in 2002 to provide logistics services to offshore operations, technical services of oil, water and gas treatment fluids, and environmental services for the oil and gas industry. Their headquarters is located in the State of Espirito Santo, based in the cities of Anchieta and Cariacica, and they also have offices in the State of Rio de Janeiro, in cities of Rio das Ostras, Rio de Janeiro, and Duque de Caxias. Further south, they also operate in the city of Itajaí, in the State of Santa Catarina, and are developing a significant operation in the Northeast of the country, in association with other major service providers.

The main shareholders that control Brasil Supply S.A are Cotia Trading (A major Brazilian trading company), Petrobras Distribuidora and Cepemar (Specialized in environmental engineering).

Brasil Supply offers integrated solutions in drilling fluids, including the acquisition, formulation, development, storage and transportation of their products as well as supplying qualified labor.

The company owns and operates one of the largest drilling fluid manufacturing plants in Brazil located in the city of Anchieta in the state of Espirito Santo.

Recently Brasil Supply has entered the offshore market and in March 17 will launch their first crew boat, the BSCO 1 in Rio. It will be the first of a total of 11 vessels it will receive in the next four years in a $250 million investment, 80% of which will come from the FMM (Merchant Marine Fund, a special BNDES fund supporting ship construction investments).  All of these vessels are already contracted to Petrobras for service in Northeast Brazil.

The fleet will be composed of 7 crew boats being built at the Arpoador shipyard in Angra dos Reis in southern Rio de Janeiro. Another 4 PSVs were ordered from the EISA shipyard, also in Rio with a delivery date set for 2014. The company has ambitious plans to expand their fleet of crew and support vessels to 60 ships in the next 15 years.

Today Brasil Supply´s main businesses are residue treatment 70% and the rest from drilling fluids, with a total income of around $30 million.

 

Claudio Paschoa