Analysis: Petrobras Invests Heavily in Offshore Drilling
With massive deepwater finds in the pre-salt layer, as well as the Campos and Santos Basins, Brazilian state-owned Petrobras pledged an investment of $174.4 billion for 2009 to 2013. With a firm commitment to exploration and production, the company hopes to become one of the five largest energy companies in the world.
In an interview with Rigzone, a Petrobras executive explained that the company was able to achieve its recent successes because it invested when times were tough."This allowed the company to develop in deepwater oil production, in the '80s when only a few companies could do it because the prices were not lucrative," explained Decio Fabricio Oddone da Costa, CEO of Petrobras Energia.
"When the global scenario changed, at the end of the '90s, Petrobras was already prepared technologically, as well as managerially and operationally, to explore and produce oil in unconventional conditions, and so it started to experience, in a more accelerated manner, the fruits that it planted so long ago," said Oddone.
The Rig Count Adds Up
Accomplishing this rise partly through increased exploration, appraisal and development drilling, Petrobras has a massive amount of deepwater and ultra-deepwater rigs contracted and working for the company now through 2013.
Starting from April 2009 and looking forward through 2013, Petrobras has contracted no less than 34 semisubs and drillships. In fact, the yearly averages of floaters contracted by Petrobras range from 39 rigs in 2009 to 47 rigs in 2010, 48 rigs in 2011, 53 rigs in 2012, and 52 rigs in 2013. The future rig counts portray the biggest increases in number of rigs between 2009 and 2010 with a 20% rise in average rigs contracted, followed by an increase of 11% in average rigs contracted between 2011 and 2012. Petrobras has the most floaters under contract in July and August of 2012, with 58 deepwater and ultra-deepwater rigs.
This commitment to drilling in the next five years is in stark contrast to super-majors BP, Chevron, ExxonMobil and Shell. While Petrobras is beefing up its rig count over the coming years, each of these companies has contracted substantially fewer floaters.
Over the same time period, BP contracted the most deepwater and ultra-deepwater rigs in 2009, with an average of 11 floaters contracted to work for the British company for the remainder of 2009. The number of rigs contracted by BP drops dramatically through the next five years, with a low of five rigs contracted for the majority of 2013. Furthermore, Chevron has more rigs working for the remainder of 2009, but that number drops, as well. Although the remainder of 2009 averages 11 rigs, Chevron drops to a low of four rigs in 2014. ExxonMobil is similar with an average of 5 rigs contracted for the remainder of 2009 and those contracts dropping off to a low of one rig in 2013. Shell starts off the strongest of the bunch with an average of 15 floaters through the remainder of 2009, but its numbers also dwindle to a low of two rigs by the end of 2013.
Additionally, Petrobras has contracted the most newbuild rigs of any operator. Out of the 88 deepwater and ultra-deepwater floaters that are currently being built or are slated to be built, 59 have contracts executed on them -- and Petrobras holds the contracts on 29* of those newbuilds, representing nearly 50%.
Drilling Commercially Viable at Current Price
While not all of the deepwater and ultra-deepwater rigs Petrobras has under contract will be working in Brazil, the large majority of them will be. Furthermore, the company is confident that the expense incurred will be worth it.
Solidifying the company's practiced theory of rising to the top through investments during economic downturns, the CEO of Petrobras, Jose Sergio Gabrielli confirmed that the company believes drilling in its sub-salt basins is a low risk.
Speaking at a Brazilian congressional public hearing on March 25, 2009, Gabrielli claimed that sub-salt exploration and production was commercially viable for Petrobras even with crude prices ranging between $40 and $50 a barrel. "We've found oil in 16 of the 16 wells we've drilled," Gabrielli simply stated.
With reserves estimated in 2008 at 14 Bboe, Petrobras needs to drill a host of development wells in the sub-salt layers of the hydrocarbon-rich Espirito Santo, Campos and Santos Basins to make good on the promise of its discoveries in the area. That need for development and continuing exploration coupled with the long-term vision of its executives makes it clear why Petrobras has contracted more deepwater rigs than any other major operator.
*Note: These numbers include one ultra-deepwater drillship, yet unnamed, that is currently under construction and owned by a Petrobras JV.
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