Home / 2015 / In Brazil’s deepwater, ‘there is no turning back’ on MPD
The biggest challenge is to enhance productivity in the complex environment of offshore well construction. This can be achieved by improving well designs to better manage...

In Brazil’s deepwater, ‘there is no turning back’ on MPD

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Driven by pre-salt targets and the need to enhance productivity, Petrobras charges ahead with MPD projects on floaters

By Linda Hsieh, Managing Editor

_MG_1490Rudimar Lorenzatto serves in the role of Executive Manager E&P – Offshore Well Construction for Petrobras.

What do you see as the most critical challenges facing Petrobras’ drilling and completions operations?

The biggest challenge is to enhance productivity in the complex environment of offshore well construction. This can be achieved by improving well designs to better manage existing resources and by introducing technologies like managed pressure drilling (MPD) on floating rigs. These efforts must be done with a high level of safety for people and the environment.

The integration between operator, drilling contractors and service companies is another important area to deliver better results. Maximum capacity utilization of sixth-generation rigs is another major challenge in the pursuit of continuous improvement.

With Petrobras’ current focus on increasing production, what effects can drilling contractors expect to see on the drilling side? What type of rig count will Petrobras keep in the coming year?

The biggest part of the oil and gas production increase may come from pre-salt projects in the ultra-deepwater Santos Basin. Our rig fleet profile will change considering this approach. By the beginning of 2015, Petrobras will have more than 40 ultra-deepwater rigs, capable of drilling and completing wells in more than 2,000-m water depth. It is also important to mention that we are focusing on improving productivity per well and improving operational efficiency in order to reduce drilling and completion durations.

In recent years, the deepwater industry has trended toward bigger and higher-specification drilling rigs. Going forward, will Petrobras continue to invest in these bigger rigs versus older rigs? What gaps in capability or capacity would you like to see drilling contractors address in next-generation rigs?

As the industry gets closer to the 12,000-ft water depth threshold, operations have gone further than 100 miles from the coastline, and well designs are requiring heavier risers, casings and strings. Higher-specification drilling rigs seem to be the industry’s natural response to offshore operational challenges. I believe the industry must address the capability gap in BOP reliability in next-generation rigs. This will involve not only hardware but also people and processes.

The Petrobras 10000 drillship is drilling exploratory wells in the Sergipe Basin for Petrobras. In January, Petrobras announced it found light oil in ultra-deep waters in Sergipe off Brazil’s northeast coast.

The Petrobras 10000 drillship is drilling exploratory wells in the Sergipe Basin for Petrobras. In January, Petrobras announced it found light oil in ultra-deep waters in Sergipe off Brazil’s northeast coast.

Petrobras has increasingly embraced MPD as a valuable method of drilling narrow-margin prospects, although contractual challenges have arisen between drilling contractors and service providers in preparing MPD-ready rigs. What do you see for the future of MPD in Brazil? What will the main challenges be?

I believe we are entering an era that points toward a widespread use of one or more managed pressure methods to drill wells. It was recently argued in the industry that, in a decade or so, 30% to 50% of all offshore wells, both shallow and deepwater, will make use of some form of MPD.

In recent years, Petrobras has identified increasingly complex geological
environments for which MPD and mud cap drilling (MCD) technologies would be of great benefit. This is not only to improve drilling efficiency but also to allow operators to reach their planned geological targets to TD, which may not be accomplished otherwise.

The use of MPD/MCD can increase the drilling success rate and provide conditions to properly evaluate the reservoir. This translates into more attractive well costs, mainly due to reduced well duration and rig time, as well as improved safety in offshore drilling operations.

Having said that, we grant MPD as a key technology to enable us to overcome issues encountered when drilling troublesome reservoirs with conventional drilling systems. These include narrow drilling margins, well control events and lost circulation. Both geological environments – narrow drilling margins in HPHT wells and lost circulation – require the use of MPD/MCD for safe drilling of these intervals.

Petrobras currently has two drilling rigs working offshore Brazil equipped to do MPD, and we plan to expand this total to a considerable extent within the next couple of years. Our expectations are to start drilling multiple-well campaigns with MPD/MCD as early as this year.

The main challenges are first, negotiations with drilling and well service contractors to establish standards covering operational procedures for MPD/MCD operations on floating rigs.

Second is training crews to safely operate the system and properly respond to any potential situations on the rig. We must train the crews to drill differently. This transition is not like switching on a light bulb, but as the project develops further, we are getting more confident with our methodology and our people.

Third is the implementation of MPD/MCD in our rig fleet according to the scheduled timetable.

We firmly believe in the success of this MPD initiative in Brazil, and there is no turning back at this point in time. Some people have described MPD as a drilling method of the future for challenging offshore wells. In this respect, for Petrobras, the future is now.

Brazil has implemented very strict local content regulations. What are Petrobras’ main challenges in complying with these rules?

There are two main actions to comply with local content regulations set by ANP, the Brazilian National Agency of Petroleum, Natural Gas and Biofuels. Firstly, we must ensure that newbuild rigs in Brazilian shipyards are delivered in compliance with local content requirements. These rigs will be assigned to more restrictive projects – projects requiring a higher local content percentage. Secondly, for less restrictive projects, we must make the necessary contracts “split” adjustments – basically to increase the contract payment in the local currency, Brazilian Real – mainly on services, in order to comply with regulations and minimum local content certification level.

Drilling operations continue through the moonpool of Seadrill’s West Eminence. The semisubmersible is drilling for Petrobras on the Lula Field in the Santos Basin.

Drilling operations continue through the moonpool of Seadrill’s West Eminence. The semisubmersible is drilling for Petrobras on the Lula Field in the Santos Basin.

At the IADC Deepwater Drilling Conference, held in Rio de Janeiro in March 2014, you highlighted the importance of reducing high-potential incidents. Have you seen any progress? What more would you like to see the industry do?

One of the main drivers in our safety programs is reducing high-potential incidents. The progress in this area is taking place, and we are improving our metrics, but we want to make it happen faster. Recently, we developed an additional Rig Operational Safety Plan with several actions that we believe will contribute to an additional decrease in the number of high-potential incidents.

The Rig Operational Safety Plan’s main objective is to promote a different approach from drilling contractors and Petrobras leadership regarding safety. The main points are:

  • The plan must arrive effectively on the drill floor and promote a real change in culture;
  • Faster and more efficient actions by drilling contractors;
  • Offshore monitoring of the plan implementation, by companymen and third-party company audits; and
  • Low level of safety non-conformities.

Coming back to your question, we’d like to see the industry take this Rig Operational Safety Plan as a challenge for all of us in order to prove that the drilling industry can develop higher standards and deliver better safety results.

I understand that you view BOP integrity as a critical issue for the drilling industry, with 60% of Petrobras’ rig-related NPT in 2013 being due to subsea BOPs. What should drilling contractors be doing to improve BOP integrity, and how can operators like Petrobras help?

Petrobras is working very closely with drilling contractors, OEMs and vendors in order to maximize BOP reliability and mean time between failures. It is more than BOP integrity. We are also involving the Petrobras R&D center to support us in this important initiative. We strongly believe that, as a whole, the drilling industry should move toward operations and maintenance practices, procedures and standards as close as possible to the aeronautic industry, and the sooner the better.

You serve on the Board of Directors of the Well Control Institute (WCI), which IADC launched in 2013. How do you think the WCI can benefit the global drilling industry as a whole? What do you personally hope to achieve through your participation in the WCI?

After Macondo, it became clear that the industry must work to prevent this type of incident from ever happening again. The WCI is an excellent initiative to help the industry to improve its well
safety practices. Personnel training in well
control and BOP reliability are key factors to achieving this improvement.

Petrobras’ well control training is accredited under the IADC WellCAP program. We are also working with IADC on the improvement of WellCAP through the WCI.

Regarding BOP reliability, Petrobras recently signed an agreement with Embraer, a Brazilian aeronautic company, with the goal of applying the rigorous standards practiced in the aerospace industry to assess the requirements and architecture of critical systems used in exploration and production of oil and gas from the perspective of safety, reliability and maintainability. The first project will focus on the BOP. We understand and expect that the WCI and IADC can provide great contributions to this by engaging BOP manufacturers and drilling contractors in this effort.

An MPD system is deployed on Brasdril’s Ocean Valor semi for Petrobras’ first managed pressure drilling/mud cap drilling operation from a dynamically positioned rig. The operation took place in the Santos Basin.

An MPD system is deployed on Brasdril’s Ocean Valor semi for Petrobras’ first managed pressure drilling/mud cap drilling operation from a dynamically positioned rig. The operation took place in the Santos Basin.

One major international operator recently had to delay its drilling program in Brazil by two years due to its inability to secure environmental licenses. What challenges do you see in this area for Petrobras?

Petrobras already has secured licenses to drill our wells in the Campos, Santos and Espirito Santo basins. Therefore, our drilling campaign is not affected by the timeline to acquire licenses in those areas. For the more sensitive and frontiers areas, the licenses are being approved, but the normal processing time is much longer, requiring the operator to plan way in advance of the Environmental Agency process.

What key challenges has Petrobras encountered in onshore operations? What do you see for the future of unconventionals in Brazil?

Petrobras currently operates 22 land drilling rigs, most of them developing conventional resources. The exploratory efforts on unconventional resources have just begun, with exploratory wells related to tight sands. We are aware that enhancing this knowledge is part of the
business, and it will help to meet the demand for natural gas in Brazil.

In the last offshore licensing round, Petrobras was the only oil company allowed to serve as operator, while other companies were allowed to invest but not operate. What effects from this restriction have you seen on the overall Brazilian E&P market? How do you think this restriction will affect the future of Brazilian E&P?

This decision applies only to the areas auctioned under the Production Sharing Agreement, in which Libra was the first. This regime, established in 2009 by the Pre-salt Regulatory Model, will regulate the future bid rounds of pre-salt areas. It ensures us a minimum working interest of 30% in these areas and the right to be the only operator.

For our partners, having Petrobras as an operator is highly strategic. We have already passed through the learning curve in dealing with the pre-salt
reservoirs and have mastered the
technology required to develop the new fields. We also have a deep knowledge of the reservoirs. When we started the development of the first giant field, we had drilled only six wells in the pre-salt area. Now, after six years, we have drilled 116 wells, of which 30 are producing.

The pre-salt frontier is highly attractive. The systems we have put on stream are presenting exceptional results, with high productivity that reflects lower costs. The Lula Pilot, originally planned to operate with six wells, has reached its maximum capacity with only four wells and has one of the company’s lowest
lifting cost, around $9/boe.

By 2020, our production will reach more than 4 million barrels of oil, which we consider a high level in terms of efficiency. This will provide us with sufficient operational scale in order to
accommodate in our portfolio the areas to be auctioned in future bids, repeating the success reached by both Petrobras and our partners.

How do you think proposed changes to the tax law in Brazil regarding the charter party will affect the drilling market in Brazil?

The proposed changes to the law regarding the charter contracts of drilling units are being analyzed by the National Congress. They are considering keeping the zero rate income tax for cases where the charter party is not greater than 80%. This is in compliance with the present reality of our drilling market. Therefore, we believe that there won’t be great impact due to these changes.

The rapid growth of Brazil’s E&P industry in recent years has transformed Macaé into a major oil and gas hub but also a bottleneck in terms of logistics. Do you see Petrobras spreading the logistics to other cities along the coast, or will you focus on increasing the capacity of Macaé?

Although we need to increase our logistics resources to keep up with the demand of the drilling units operating in both Campos and Espirito Santo basins, Petrobras is not going to invest its own money in new infrastructure projects. We have started bidding processes to hire logistic services in the region, and the best commercial proposal will define the location of the new facilities.

IADC has been working through its Brazil Chapter to bring operators, contractors and service companies together to collaborate on important issues. Do you believe the Brazilian drilling industry has benefitted from IADC’s increasing presence there?

Petrobras’ decision to join IADC as an operator is part of our efforts to foster best practices and improve the drilling industry’s overall performance in Brazil. The IADC Brazilian Chapter is
working closely with drilling contractors and operators. The focus is on occupational safety, process safety and critical equipment reliability. Petrobras’ expectations are for even greater efforts focusing on high-potential incidents, including fallen objects, and specifically BOP reliability improvement.

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