November 2023

First oil

Brazil’s Petrobras quietly sets more records
Kurt Abraham / World Oil

While the global oil and gas community has been preoccupied with OPEC+ quota levels, Russia-Ukraine war effects on natural gas supplies, or the Israeli-Hamas conflict affecting Eastern Mediterranean activity, Brazilian state firm Petrobras has been setting records without lots of fanfare. Indeed, the magnitude of the records is quite impressive. 

In mid-October, Petrobras reported that it broke a quarterly record for operated oil and gas production during third-quarter 2023, averaging 3.98 MMboed, or 7.8% above the second-quarter level. Furthermore, the company reached a monthly record of operated production in September, with a volume of 4.1 MMboed, or 6.8% above the August volume.

Fig. 1. The Petrobras-operated P-71 FPSO, offshore Brazil. Image: Petrobras.

Petrobras attributes these results mainly to a production increase (ramp-up of output) at the FPSO Almirante Barroso MV 32, which operates at Búzios field, and the P-71 FPSO (Fig.1) at Itapu field—both in the Santos basin pre-salt. Additional credit goes to the FPSO Anna Nery and FPSO Anita Garibaldi MV33 units, in Marlim and Voador fields, which operate in the Campos basin.

In addition, Petrobras said a relevant factor was the lower number of maintenance stops conducted at the vessels during this period. The new record in monthly operated production also was accompanied by a monthly record in operated production in the pre-salt during September, when Petrobras reached output of 3.43 MMboed in that layer. 

Meanwhile, during third-quarter 2023, Petrobras also achieved cumulative, lifetime production of more than 27 Bboe. Of this total, two-thirds were produced in the last 20 years, thanks to significant progress in development of the company’s ultra-deepwater fields. 
“In the year that Petrobras turns 70, we have many reasons to celebrate,” said Petrobras CEO Jean Paul Prates. “We broke our quarterly and monthly records in operated production, and our results show the high productivity of the pre-salt, this giant that amasses exceptional results. In addition, since December last year, we have already put four new production platforms (FPSOs) in operation.”  

With FPSO Sepetiba (see the vessel on the cover of this issue) now moored at Mero field, and ready to start production in December, the company will have deployed five FPSOs within a period of 12 months—as the company says, “a true milestone.” The five projects will add 630,000 bpd to the company’s oil production capacity. Thus, “Petrobras will deploy half of all the FPSOs in the world in the next few years, always focusing on our commitment to safety, diversity and sustainability,” noted Prates. 
About three weeks later (early November), subsequent to these figures being released, Petrobras announced that the guidance for its CAPEX had been revised. The new guidance is for total CAPEX of $13 billion in 2023, an increase of more than 30% compared to 2022. However, it is also a reduction, as relates to the original plan for $16 billion. This is due to lower spending on E&P CAPEX than planned, decreasing from $13.3 billion to $11.2 billion.  

The company blamed the lower figure on “the challenging scenario faced by the supply market in the post-pandemic inflationary context, which influenced the capacity to supply the growing demand for critical resources for the oil and gas industry.” Nonetheless, the company pointed out that “it is important to note that even with this reduction in relation to plan, there was no compromise to the production target planned for 2023.” 

IPAA re-cap. For those of you who did not attend IPAA’s annual meeting in San Antonio and/or missed seeing our stories from that gathering, we now provide a few highlights from what was an excellent event. On the first full day of proceedings, Nov. 7, the keynote speaker, Ken Hersh, former CEO of NGP Energy Capital Management (Dallas, Texas), talked with IPAA Chairman Steven Pruett about his knowledge and experiences that have built up over years of turning NGP into one of the nation’s largest, most successful private investment firms. Hersh also offered wisdom from his current position as President and CEO of the George W. Bush Presidential Center on the Southern Methodist University campus (also in Dallas). 

Hersh said that “people who plan out their trajectory too much might close off some of their options.” And, he added, “a lot of people (in oil and gas) are too risk-averse. What’s the worst thing that can happen?” He did say that the problems facing the upstream industry cannot be solved by any one company. Rather, they require a broad coalition of industry companies working together. Hersh also expressed a good deal of irritation with those officials in the U.S. government, who think the answer to climate problems is to tax oil and gas producers. “Taxing oil and gas producers (punitively) for the climate is like taxing sugar cane producers for causing diabetes.” 

Hersh has written a book, The Fastest Tortoise: Winning in Industries I Knew Nothing About—A Life Spent Figuring It Out. It is an entertaining look at Hersh’s career, going from knowing nothing about the energy industry to building up NGP, and then transferring those skills to running the Bush Presidential Center.  

On the afternoon of Nov. 7, three senior IPAA staffers gave attendees a candid assessment of the threat posed to the E&P industry by the Biden administration. Executive V.P. Dan Naatz talked about the “very aggressive” anti-oil-and-gas agenda of the Biden people, which includes climate, low-hanging fruit on federal lands, and imposing an onslaught of federal regulations. IPAA’s V.P. of Government Relations, Mallori Miller, focused in great detail on the situation involving federal lands and waters, noting that “dozens of rules have been released, or will be released, by the Department of the Interior that will have great impacts for the industry.” And V.P. Of Government Relations and Political Affairs Ryan Ullman gave further details on the intertwining of environmental and tax policy. He noted with the COP 28 conference coming shortly, “we expect this administration to get aggressive and roll out a number of activist proclamations.” 

On the second day, Nov. 8, IPAA rolled out the first installment of a new recognition award. The Wirt Franklin Lifetime Advocacy Award is named after and in the spirit of IPAA’s founder and first chairman/president. The award was made to IPAA’s Officer for Environment and General Strategy, Lee Fuller. Fuller has been with IPAA since 1998 and has 35 years of experience in federal policy issues. 

Also, at mid-day on Nov. 8, IPAA Chairman Steven Pruett had an interesting “fireside chat” with Continental Resources Chairman Harold Hamm, where they discussed Hamm's philosophy of operating, his observations on the “fracing revolution,” and Hamm’s new book. See farther down in this column for more on Hamm’s book. 

IADC second look. Again, for those of you who missed attending IADC’s annual general meeting and/or did not see our stories on it, you missed a well-attended event with excellent speakers. On the first full day, Nov. 9, the meeting began with a breakfast presentation of the IADC Exemplary Service Award to Noble Drilling V.P. Ron Lee and Unit Drilling President Chris Menefee. They were cited for their multi-year work in helping to establish IADC student chapters at a number of universities. 

The breakfast session also included an excellent talk by ExxonMobil’s Operations Manager for Unconventional Wells, Jason Gahr. He said that there are three basic things that define an “industry champion”: improve people by investing time and effort in their success; inspire and support innovation and technology to make the industry better; and explain how energy makes people’s lives better. 

Later that afternoon, a panel of three industry veterans offered their thoughts in the Drillers Outlook session. Citadel Drilling (Calgary) CEO Dan Hoffarth said that the upstream/drilling sector faces four key issues: regional conflicts; high costs; finicky and unpredictable global demand, and difficulty in attracting capital. For his part, Transocean Executive V.P. Roddy Mackenzie noted that the duration of floater fixtures is going up, with utilization hitting 95% this year and heading toward 100% in 2024. Summing up the situation for offshore contractors, Mackenzie declared, “After eight years of winter [financially], cash flow is coming.” Not to be outdone, Latshaw Drilling Company Founder and President Trent Latshaw (a World Oil editorial advisor) reflected on hitting 50 years of working in the industry last year while proclaiming that the industry “has a great future.” He then went on to discuss how oil and gas were a major factor in the U.S. and Allies winning World War II and whether these same countries are prepared, on the energy angle, for a World War III, given recent conflicts. 

On IADC’s final morning, Nov. 10, the 70th Annual Rig Census was unveiled by NOV’s President for Rig Technologies, Joe Rovig. He noted that while the available U.S. rig fleet shrank noticeably this year, the utilization actually increased from 54% to 58%. The Canadian fleet is seeing its second-highest utilization of rigs since 2011 at 48%. And internationally, there is considerable good news, with high utilization in the Middle East. Offshore utilization also remains “tight.” 

The 2023 IADC Contractor of the Year award was given to Diamond Offshore President and CEO Bernie G. Wolford, Jr. This award recognizes an individual contractor’s outstanding lifetime achievement in technical innovation, safety, and economic efficiency within the drilling industry. 

Harold Hamm’s new book. As alluded to earlier in this column, Continental Resources Executive Chairman Harold Hamm has written a book of observations, recollections and analysis of his 50-plus years in the upstream oil and gas industry. The book is entitled, Game Changer: Our 50-Year Mission to Secure America’s Energy Independence. In particular, he examines the role that horizontal drilling has played in resurrecting activity in the U.S. and its contributions to the exploitation of shale plays. 

In his book, Hamm explains why American energy independence is the most important policy to guarantee long-term U.S. economic and national security. He also explains how the conversion to natural gas for electricity production in the U.S. has led to the largest declines in emissions in the industrialized world. In addition, Hamm explains why much of the energy narrative is distorted by money, politics, activism and virtue-signaling. And he describes how the so-called “energy crisis” in America is self-inflicted.  

It's a finely written book with great anecdotes and authoritative details. Based on the first third of the book that this editor has had time to read, it would make a great addition to any energy professional’s reading list, as well as a good primer for non-industry folks. 


Special focus: Advances in Production. Among the four features in our lead theme is an article from Saipem authors on subsea storage and injection for chemicals management. Meanwhile, a Siemens author discusses the next step in offshore digitalization. In addition, authors from INNIO Group and Detechtion Technologies describe a unique collaboration that is enhancing gas production, reducing emissions, and boosting revenue generation while controlling costs. Finally, authors from Validation Associates and Michigan State University talk about the impact and mitigation of volatile organic carbon emissions in the oil and gas industry. 

Deepwater/Subsea: X80 heavy wall pipe solutions for deep/ultra-deepwater field developments in mild sour environment. This article from two Vallourec authors presents mechanical and sour corrosion test results for X80 seamless pipes and girth welds. Four-point bend tests were carried out on parent pipes and weld joints, using samples taken at the ID surface to assess the material’s sulfide stress cracking resistance. Results highlight the possibility of using X80 heavy-walled seamless pipes for risers in a mild sour environment, using cost-effective welding. 

Water management: Two unique treatments. In one feature, an author from Clean Chemistry describes how singlet oxygen-generating treatment technology achieves sustainable operations and helps operators meet production goals. In the second article, two authors discuss the possible and secure offshore production of potable water from subsea karstic aquifers. 

About the Authors
Kurt Abraham
World Oil
Kurt Abraham
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