Peregrino Success Escalates Statoil Status Offshore Brazil

Peregrino Success Escalates Statoil Status off Brazil
The Peregrino field is 85 mi off Rio de Janeiro

Statoil started production from its Peregrino field offshore Brazil in early April. The Peregrino field is 85 km offshore Brazil from Rio de Janeiro in the Campos basin in about 100 m of water.

Back in 1994 when the field was discovered, Statoil wasn't even a shareholder in the BMC-7 and BMC-47 licenses, which were known as the Chinook field. Original shareholders were Anadarko Petroleum Corp. with a 50% stake and EnCana Corp. with the remaining 50% stake. Statoil (formerly Hydro) purchased its 50% operating stake in the field from EnCana for $350 million in August 2006.

"The acquisition of Peregrino makes (Statoil) Hydro a major player on the Brazilian continental shelf. We have now established an excellent platform for further growth in an area with large oil and gas resources," Tore Torvund, Norsk Hydro executive vice president, said in November 2006.

StatoilHydro took control of the entire Peregrino field in December 2008 when it bought out Anadarko's stake. The agreement included Anadarko's 25% stake in the Kaskida discovery in the US Gulf of Mexico. The combined purchase price was $1.8 billion, plus a maximum pre-tax value of $300 million related to the Peregrino field to be earned by 2020, conditional on future oil prices above pre-defined threshold levels.

Statoil then agreed sell a 40% share in the Peregrino field to Sinochem Group, China's biggest chemicals trader, for $3 billion. The partners also entered into a Memorandum of Understanding (MoU) that underlined the wish of the two companies to jointly investigate further opportunities in Brazil and elsewhere.

At the time of the announcement, Statoils's CEO Helge Lund said, "The MoU is the beginning of a long term relationship between our two companies having similar international growth ambitions. I believe that we have supplementary skills and areas of expertise, strengthening both our opportunities globally by cooperation."

Lund continued, "In addition, we look forward to partner with Sinochem Group in the further development and operations of the large Peregrino field. Both companies see many opportunities for value creation through increased recovery and exploration for additional resources in the decades to come.

Field Development

Phase One of Statoil's field development plan included two drilling and wellhead platforms and a large floating production, storage and offload unit (FPSO). "The plan call(ed) for a total of 30 horizontal production wells to be drilled, together with seven water injection wells," said Statoil's Peregrino production director Johan Kr. Mikkelsen.

Peregrino Success Escalates Statoil Status off Brazil

In drawing up the field development plan, Statoil relied on its competence and experience gained while developing similar fields on the Norwegian continental shelf and drilling horizontal wells to increase recoverable reserves.

Hydro chartered AP Moeller – Maersk A/S (Maersk) to build the FPSO in February 2007. The FPSO was scheduled for installation in early 2010 in anticipation of start up later that year; however first production was delayed several months. The partners also entered into an agreement to rent two drilling platforms, which Kiewit Offshore Services Ltd. of Ingleside, TX, built for the Peregrino field.

In March 2007, Hydro submitted the Declaration of Commerciality for the Peregrino oil field to the Agencia Nacional do Petroleo (ANP) in Rio de Janeiro. The ANP approved the Plan of Development (POD) in mid-May that year.

More contracts quickly followed. The partners awarded Subsea 7 a $115 million contract for engineering, procurement, fabrication, and installation of six steel pipelines, 12 flexible risers, four power cables and two mid-water arches to support the cables. Subsea 7 installed the pipelines in Q1 2009. And Wellstream was tapped to supply twelve 11.5 in. ID flexible risers to connect subsea pipelines to two wellhead platforms and an FPSO in 125 m of water. Prysmian Cables & Systems supplied 20 km of Dynamic subsea power and communication umbilicals.

In November 2007, StatoilHydro along with Anadarko won two blocks in the National Agency of Petroleum's ninth bidding round. Blocks CM529 and CM 530 are in 100 m of water adjacent to the Peregrino field. The partners hoped to expand the Peregrino field into these blocks in the future.

Shortly thereafter, StatoilHydro announced that the Peregrino reserves estimates increased to 300 to 600 MMbbl, double that of the original estimates. Statoil planned to use produced water injection and rock compaction, which would yield a recovery factor of 20% compared to the original estimate of 9%. The operator planned for 23 extra well slots for the potential use of multilateral wells that would further increase the recovery factor from the reservoir.

In the first half of 2008, Statoil awarded several more key contracts. J Ray McDermott engineered, procured, and constructed 6,500 metric tons of topside modules for the Peregrino FPSO. Fabrication and construction started in Q3 2008 and was completed in Q4 2009.

Deepwater Specialists Inc. (DSI) provided commissioning activities in the US for the two drilling and wellhead platforms. DSI coordinated and managed the commissioning activities for the interfaces with the drilling modules installed on the platforms.

Each platform comprises an eight-legged jacket structure; foundation piles; well slot conductors; deck structure, equipment and systems; and wellhead decks, including cranes. Commissioning of the platform decks, which were designed by Mustang Engineering, and the living quarters were performed at fabrication yards in South Texas.

The Heerema Hermod heavy lift vessel installed the two wellhead platforms in March 2010. The two jacket substructures for platform A and B were installed in 2009.

Peregrino Success Escalates Statoil Status off Brazil
Hermod installed the two wellhead platforms.

In addition, ClampOn equipped the subsea production manifolds in 8,200 ft of water with their subsea sand and pig detectors. And BW Offshore delivered and installed the completed submerged turret production (STP) buoy, including swivel stack, and mooring system. First Subsea provided 10 Ballgrab ball and taper connectors, which were attached around the side of the buoy ahead of tow out in December 2009, thus simplifying buoy lifting and tow out operations. Once in buoy was in position, the male Ballgrabs and mooring lines were connected subsea with assistance by ROV, with no need for divers.

The offshore construction vessel Boa Deep C installed the FPSO's mooring systems in early 2010.

Keppel then delivered the converted Maersk Peregrino in Q3 2010. Keppel converted the Maersk FPSO according to stringent requirements to handle heavy crude and operate in the challenging environment off Brazil.

Nils S. Andersen, Group CEO of Maersk, said, "Tailoring the FPSO to meet the requirements of the Peregrino field (was) a complex undertaking. We (chose) Keppel Shipyard for this massive project due to the skills and competencies of the Keppel yards."

Work on Maersk Peregrino involved the marine conversion of a newbuild VLCC (Very Large Crude Carrier); the installation and integration of the topside modules; the assembly, installation and integration of the APL internal turret; the fabrication and installation of the flare tower, process piperack and helideck; and the upgrading of the accommodation quarters.

The Maersk Peregrino has a storage capacity of 1.6 MMbbl, and processes 100,000 b/d.

Peregrino Success Escalates Statoil Status off Brazil
Maersk Peregrino

Statoil started production at the Peregrino field in early April 2011. Production is expected to ramp up to 100,000 boe/d. The discovery made Statoil an important long-term operator and partner in Brazil's growing oil and gas industry.

"With the Peregrino field in full operation Statoil will be the second-largest operator in Brazil, and it offers us an excellent opportunity for future growth in the country. The Peregrino field is a legacy asset and will contribute significantly to both Statoil and Brazil's oil production for many years to come," said Helge Lund, president and CEO of Statoil.

Less than two weeks later, Statoil announced that it had found a new oil find adjacent to the Peregrino field. An exploration well drilled by the Blackford Dolphin in 120 m of water in the Peregrino South structure a few kilometers south of Peregrino encountered oil in sandstones of the Carapebus geological formation. A significant gross oil column of 130 m was proven in the well and further work was performed to confirm the volumes.

"The results confirm the significant potential in the Peregrino area and underline the beliefs we have had in the upside," said Tim Dodson, executive vice president for Exploration in Statoil.

"The results will indeed be implemented into our plans for further development of the field," said Kjetil Hove, head of Statoil's Brazil activities and vice president in the company's Development and Production International business area.


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