Consultants, News, Oil & Gas, Production Technology

Brazil: the most promising international market

Norway’s oil and gas supplier industry generated NOK 95 billion in export revenues in 2008. Brazil’s growth potential represents the market with the largest growth potential for the Norwegian oil industry, according to Rune Norseng, INTSOK Brazilian Director.

Brazil currently produces 80% of its oil from the major deepwater and ultra-deepwater fields in the Campos Basin. But large discoveries are being made in the neighbouring Santos and Espírto Santo basins. Further large discoveries such as Carioca will add to the growth.

“Within the next five years state-owned, Petrobras is expected to double its annual oil production of 2 million barrels per day and spend USD 104 billion in offshore exploration, development and production,” said Norseng.

INTSOK, the government-supported initiative to help the Norwegian oil industry expand internationally, established an office in Rio de Janeiro in 2005 to help target this promising market. It currently counts about 30-40 different Norwegian oil industry companies present in Rio.

These companies mostly provide products and services for green field developments, such as seismic, drilling, subsea installations, marine operations, floating and fixed platforms, but also for maintenance, modifications and operations (MMO) on existing fields. FMC, Aker Subsea, Norskan, and DOF Subsea are among the largest Norwegian oil service companies working in Brazil.

The Norwegian Marine Technology Research Institute (MARINTEK) has also been active in the Brazilian market, first by helping the shipping industry in the 1970s and later the growing offshore oil industry. In 2007, Marintek established a subsidiary in Rio in 2007 to further develop its relationship to its existing clients, such as Petrobras, and to build up research and development activities.

Maintenance, modification and operations (MMO) is currently Brazil’s largest area for offshore expenditures and represents an upside potential for the Norwegian oil industry, according to INTSOK.

Increasing Oil Recovery

One area where the Norwegians have a potential to apply their expertise is increased oil recovery (IOR). Brazil currently pumps up about 30% out of its existing fields. The average on the Norwegian Continental Shelf was 40% when projects were sanctioned and is now targeted to reach about 70%. Norwegian based technology has a business potential in helping the Brazilian oil company Petrobras bring up recovery rates through several IOR tools.

IOR measures are anything that can increase or accelerate the oil recovery from a field. This could be reservoirmodelling and planning, data acquisition and processing, chemical flooding, drilling, well technology, subsea solutions, topside modification, water management, and integrated operations.

FMC Technololgies, for example, recently won a USD 90 million contract to supply a subsea separation system for Petrobras’ Marlim field in the Campos Basin. This technology has been developed in the North Sea in collaboration with Statoil. The subsea separation module will separate heavy oil, gas, sand and water at a water depth of approximately 2,950 feet.

It will be the first separation system to include subsea reinjection of water into a reservoir to boost production. It will also be the first deepwater deployment of subsea separation technologies in a mature field, and the first separation of heavy oil and water in a subsea environment in the world.

“Marlim is the fifth field in the world that will utilize FMC’s subsea separation technologies,” said Tore Halvorsen, FMC’s Senior Vice President of global subsea production systems. “The project will enable a broader application of our separation technologies for future subsea processing opportunities.”

Another example is Framo Engineering, which signed a technological cooperation agreement in September with Petrobras to install an unprecedented submarine multiphase pumping system in the Barracuda field at a water depth of 1,040 metres in the Campos Basin.

The prototype, which pumps multiphase fluids (oil, water and gas) from the well to the platform, will be the first helicon-axial-type pump to be installed in the world to exert differential pressure above 60 kgf/cm3. The system will increase oil production and improve the reservoir recovery factor.

Field Development

Petrobras is the dominant operator on Brazilian offshore fields and operate approximately 95% of the offshore production. When it ended its state monopoly on the oil and gas sector in 1997, it incited international oil companies to come to Brazil.

Shell’s Bijupira-Salema project in the Campos Basin was the first field in Brazil not operated by Petrobras. The project came on-stream in 2003. Devon brought its Polvo project online in August 2007, representing the only upstream oil project in Brazil without Petrobras participation. Chevron commenced operations at the Frade project in July 2009. Finally, Statoil is developing the Peregrino field in Brazil.

Norwegian oil company Statoil will start production in 2011 at Peregrino, its first operatorship offshore Brazil. The field is located 85 kilometres off the coast of Rio de Janeiro in the Campos Basin and is expected to hold between 300-600 million barrels of heavy oil. Statoil’s portfolio in Brazil also includes seven other exploration licenses in the basins of Santos, Campos, Jequitinhonha, Espírito Santo and Camamu-Almada.

Subsea separation system developed by FMC Technologies for Petrobras’ Marlim field. The system will be the first to separate heavy oil in a mature, deepwater field.

Brazil is a very attractive country for Statoil. Since the opening of the exploration and production market to private and foreign players in 1997, the country has shown a large resource potential and an attractive and stable investment environment, the company said. Brazil is also a country where Statoil can fully apply its offshore technology expertise developed on the Norwegian Continental Shelf.

Much of the future excitement surrounds the challenging pre-salt field developments located in deep waters stretching from the Santos Basin in the south to Espírito Santo in the north. According to Petrobras, the pre-salt fields are expected to be producing more than 1.3 million barrels of oil per day in 2017, nearly 70% of what the company currently produces in Brazil. The first sub-salt field development – Tupi in the Santos Basin – came on-stream this year and is expected to hold 5-8 billion barrels of oil equivalents in recoverable reserves.

Petrobras announced in August that the President of Brazil submitted to Congress a new proposed legislation for the oil and gas industry that would introduce production-sharing contracts for oil and gas exploration in pre-salt layers and in other potentially strategic areas. Petrobras would operate all blocks under this regime and have a minimum interest of 30% in all areas subject to public bids. This may reduce the interest from foreign oil and gas operators in Brazil offshore activities.