Kinks in the pre-salt supply chain

While operating in Brazil’s pre-salt region does require an array of technologies, Petrobras CEO Jose Gabrielli told a Houston lunch that a bigger challenge lies in meeting logistical demands for operating in deep waters offshore. During the Brazil-Texas Chamber of Commerce event in March, Gabrielli stressed the importance of focusing on ‘the hubs that we must develop for our people and goods 300km from our coastline’. For the pre-salt, he elaborated, ‘the main challenge that we have is much more on logistics, on the optimization of the knowledge we have’. The opportunities in pre-salt are big, but they also require a new hub for suppliers. ‘We believe the most important constraint that we may have is in the supply chain.’

To that end, the Brazilian operator has set up a web site aimed at smoothing the logistical hurdles and ensuring supplies are available as needed. For instance, Petrobras expects to require 49 VLCCs, 135 supply and service vessels, 45 production platforms, seven jackups or tension leg wellhead platforms, 140 manifolds, 629 compressors, 229 subsea wellheads and 417 subsea trees between 2009 and 2020.

By 2018, the company is looking for 58 new drilling rigs, with 23 being delivered 2009-11, nine being chartered in 2012 and the remaining 28 being built in Brazil 2013-18. ‘We have a very big scale,’ Gabrielli said, noting that Petrobras today operates 22% of global deepwater production.

Local content requirements will come into play with much of those items, he added. ‘It’s not only that it’s mandatory to have local content. Sometimes it’s better to have local content.’ Local content requirements are a ‘policy to attract investment in Brazil’.

The pre-salt opportunity offshore Brazil spans 149,000km2 and has already yielded discoveries such as Tupi, which holds an estimated recoverable base of 5-8 billion boe. ‘We’ve had several wells tested with very good results, very high flow rates,’ Gabrielli said. Petrobras has, he added, drilled 37 pre-salt wells with an 87% success rate. To develop the pre-salt, Petrobras believes it needs improvements to existing technology rather than ‘breakthrough’ technologies. ‘I can see where we need to improve existing technologies,’ he added, citing as examples flow assurance, reservoir characterization, deepwater CALM buoys, dry completion systems and FLNG designs. ‘The first thing we need to do is identify the technological bottlenecks and then work together to solve them,’ he said. The operator is involved in partnerships with over 120 universities and research centers in Brazil and 20 institutions abroad.

Under its 2009-13 business plan, Petrobras expects to invest some $4 billion in technology, with about half of that earmarked for E&P.

Additionally, Petrobras has budgeted $174.4 billion in capex over that period. ‘It’s a challenge to do more than $31.1 billion per year for the next five years,’ Gabrielli said. And he fully expects the next business plan to feature increased capex as the company pursues its goal of producing almost 4 million b/d by 2020. ‘We plan to double our production in 12 years.’

From a hydrocarbon standpoint, the new barrels will be harder to find and develop and harder to get onstream,’ Gabrielli told the Cambridge Energy Research Associates annual meeting, or CeraWeek, in Houston last month. Unknowns will factor in, he said, and Petrobras is working to learn everything it can about its vast presalt reserves, for example through extended well tests on its Tupi find (OE June 2008). ‘What we don’t know is the behavior of the reservoir,’ Gabrielli said. ‘This is going to be a key variable. Given the current technology, we think pre-salt is feasible below $45.’ OE

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