Embed Size (px)
Citation preview
woodmac.com Trusted Intelligence
Horacio Cuenca, Research Director, Upstream Latin America
Quantifying the Decommissioning Opportunity
A redevelopment story
2
woodmac.com
2
woodmac.com
5 bnbbl of additional oil
could be recovered from
the Campos basin
if recovery factors were
raised to US GoM or North
Sea levels
3
woodmac.com
2717 964
469
7372 1395
991
0%
20%
40%
60%
80%
100%
Campos Gulf of Mexico North Sea
WM Reserves (mmbbl) Remaining Oil in Place (mmbbl) Target
Analogues in the US Gulf of Mexico and North Sea have recovery factors of at least 30%
The average recovery factors is 15% in Campos shelf carbonates, 26% in shelf turbidites and 23% in deepwater turbidites
542 50 1533
3158 116 2656
0%
20%
40%
60%
80%
100%
Campos US Gulfof Mexico
NorthSea
Recovery
facto
r (%
)
2717 964 469
7372 1395 991
0%
20%
40%
60%
80%
100%
Campos US Gulf ofMexico
North Sea
15360 6559 398
50843 15608 886
0%
20%
40%
60%
80%
100%
Campos US Gulf ofMexico
North Sea
30% 30%
32%
8 3 3 19 98 3 21 127 1
Porosity
°API
Permeability
(mD)
Source: Wood Mackenzie Petroview, ANP, BOEM, Norwegian Petroleum Directorate
# Fields analyzed
20%-35%
20°- 35°
400
20%-35%
20°-35°
5,000
20%-35%
15°-35°
5,000
Shelf-carbonate plays (Water
depth <400m)
Shelf-turbidite plays (Water
depth <400m)
Deepwater-turbidite plays
(Water depth >400m)
Includes fields in the three regions with available information that fit the criteria. Fields were classified by their primary reservoir.
The target recovery factors are set at the lowest between US Gulf of Mexico and the North Sea.
How much higher can Campos basin recovery factors go?
4
woodmac.com
The largest Campos fields have seen lower drilling density
Infill drilling opportunities exist to increase recovery factors
Source: Wood Mackenzie Petroview, ANP
Field recovery factor vs development wells/km² of licensed area and
0%
10%
20%
30%
40%
50%
60%
70%
80%
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Re
co
ve
ry f
ac
tor
(%)
Drilling density (# dev wells per km²)
Other Campos basin fields Case studies before redevelopment Case studies after redevelopment
Marlim
Roncador
Polvo
Lack of drilling driving lower recovery factors
Bubble sizes represent original oil-in-place volumes
Redevelopment plans in Marlim,
Polvo and Roncador:
43 new wells will add 1.5 billion
barrels of reserves
5
woodmac.com
0 3 6 9 12 15
0
5
10
15
20
25
0 3 6 9 12 15
0
2
4
6
8
Well
Co
un
t
0.00
0.05
0.10
0.15
0.20
0.25
1976 1986 1996 2006 2016
Dri
llin
g d
en
sit
y (
de
v w
ells
pe
r k
m²)
<400m 400-1500m >1500m
New acreage
awarded in Campos
basin shallow
waters (Round 9)
2011-13: First
oil from Santos
basin pre-salt
Chasing the next frontier
Unparalleled productivity of pre-salt wells has attracted most of Petrobras investment capacity. Drilling activity in the Campos basin has fallen to historical lows
Source: Wood Mackenzie Petroview, ANP
1987/88: Albacora’s
first oil, the first in
deep waters
0 10 20 30 40
0
40
80
120
160
Well
Co
un
t
0 10 20 30 40
0
5
10
15
20
25
30Pre-salt (Campos and
Santos) Campos deepwater
turbidites
Campos shelf
turbidites
Campos shelf
carbonates
Campos basin drilling density by depth Distribution of well peak rates per play
Campos basin historical development
* Only wells with first oil in Jan/2006 or later
Well peak rate (‘000 b/d) Well peak rate (‘000 b/d)
6
woodmac.com
An US$8 billion decommissioning bill
Without further investment, 32 platforms would cease production by 2025.
First
oil
Primary
recovery Extend
field life
+20 years of operation
End of
production
Size of the decommissioning effort
US$8
billion*
Floating units:
• US$50 million/unit
Fixed units:
• Topsides = US$54,000/ton
• Jacket = US$41,000/ton
• Topsides flushing and depressurization
• Line disconnection
• Floating units unmoored and sail away;
for fixed units, deck and topsides
removed and steel jackets sheered off
80 metres below sea level
US$3.2 billions • 32 platforms
• 18 floating units
• 14 fixed units
Platform wells: US$2
million/well
Subsea wells: US$15
million/well
US$2-5 million/unit
US$0.2 billion • 160+ km risers & flowlines
• 160+ km control lines
• 1,500 km pipelines
US$3.6 billion • P&A of 380 wells
• 170 platform wells
• 210 subsea wells
• Flushing
• Disconnection
• Placed in the seabed or removed if in
below 80 meters water depth
• Plugged and abandoned
• Flushing
• Disconnection
• Placed in the seabed
US$1.2 billion • 200+ xmas tree
• 40+ manifolds
• 10 PLEMs
• 2 separators
Removed:
• US$0.7 million/km
Left in place:
• US$0.1 million/km
Pro
du
cti
on
un
its
L
ine
s
We
lls
S
ub
se
a
Cost of
decommissioning
all production
facilities with 25+
years of operation
or fields reaching
the end of their
economic life by
2025
Decommissioning activities Average cost per unit Estimated total cost
7
woodmac.com
Or you can redevelop.
Petrobras and Equinor will extend the field life of Roncador by eight years, recover an incremental 500 mmboe and generate US$1.6 billion of value.
Source: Wood Mackenzie GEM, Asset Phase functionality
0
200
400
600
800
1000
1200
1400
1600
1800
2000
0
50
100
150
200
250
300
350
400
1994 1999 2004 2009 2014 2019 2024 2029 2034
Ca
pit
al c
os
ts, U
S$
millio
n
Oil p
rod
uc
tio
n, '0
00
b/d
Base production Incremental production Base capex Incremental capex
Roncador production and capex
• 20 new production
wells over 5 years
• US$2.1 billion total
investment
FID: 2019
Start-up: 2020
Case study #1 – there are plenty of infill drilling opportunities in the basin
Capital receipt of US$1
billion in 2016 related
to the sale and lease
back agreement of the
FPSO P-52
+5 points of recovery factor
• 4D seismic
• infill drilling
8
woodmac.com
Campos basin platforms by years of operation Most production units in shallow water have
operated for more than 30 years.
» Investment needed to revamp ageing fixed
platforms. Upgrades would require an assessment
of structural integrity and associated costs to extend
its service life.
Majority of units operating in deep water are
less than 10 - 20 years old and could have
production extended until 2030 through the
connection of new wells.
Revamping topsides would also enhance
production and reduce opex. Debottlenecking
water treatment infrastructure would free spare
oil processing capacity and improve water
injection.
In Marlim, shrinking the number and the size of
operating platforms will also contribute to opex
reductions of US$8/boe.
Deepwater fields have newer platforms with a remaining 10 to 15 years of service life; these fields would be easier to redevelop
Most shallow-water platforms have been in service for 30+ years and structural integrity would need to be assessed before investment is committed
Source: Wood Mackenzie
0
5
10
15
20
25
30
less than5
5 to 15 15 to 25 25 to 35 35 to 45
Nu
mb
er
of
pro
du
cti
on
un
its
Number of years in operation
Floating units Fixed units
Case study #2 – ageing facilities may require substitution
9
woodmac.com
0
10
20
30
40
50
60
70
80
0
100
200
300
400
500
600
700
1991 1995 1999 2003 2007 2011 2015 2019 2023 2027 2031 2035O
pe
x/b
oe
(U
S$
/bo
e)
Pro
du
cti
on
('0
00
bo
e/d
)
Redevelopment phase production Current phase production
Production W/O Redevelopment Current Opex/boe
Redevelopment Opex/boe
Marlim: A leaner fleet and higher production to reduce opex by 30%
Redevelopment extends Marlim’s life by ten years with a secondary 140,000 boe/d production peak and an incremental NPV10 of US$1.5 billion
Source: Wood Mackenzie GEM, Asset Phase functionality
In 2023, the last FPSO
onstream (180,000 b/d)
of the current phase
produces only 5,000 b/d
440 mmboe
added
• 100+ wells shut in
• 40 wells reconnected
• 10 new wells drilled
(US$2.7 billion capex)
Marlim production and operational cost
• 100+ wells shut down
• 30 wells reconnected
• 10 new wells drilled
(US$2.7 bi capex*)
Production infrastructure
before and after redevelopment
388
150
172
2
707
730
780
9
Gasprocessing
capacity(mmcfd)
Oil processingcapacity (kb/d)
Fixed opex(US$ M/year)
# platforms
Current Redevelopment
Current production
Case study #2 – ageing facilities may require substitution
Opex from US$26/boe
in 2018 to US$18/boe
in 2023
10
woodmac.com
0
20
40
60
80
100
120
140
0
5
10
15
20
25
Op
ex/b
oe
(U
S$
/bo
e)
Pro
du
ctio
n (
'00
0 b
oe
/d)
Incremental production
Base production
Legacy production enabled by redevelopment
Opex/boe
Polvo’s opex fell 62% through operational efficiencies and contract renegotiations after a smaller operator took operatorship
Royalty reduction could incentivize incremental investment. In Polvo, the reduction would pay for 70% of the redevelopment capex
Source: Wood Mackenzie GEM, Asset Phase functionality
Renegotiation of contracts at the bottom of the market and low Brent prices
Replacement of service providers and suppliers
3 new wells
+ 6,000 b/d by 2019
with additional
US$60MM D&C
capex
Post 2018
Polvo production and operational costs
Taking over the operation during the oil price
crash helped PetroRio in the cost reduction
Since 2013...
40% reduction in FPSO lease cost
62% reduction of general costs
Royalty rate
reduction to 5% enables incremental
production and collection of US$44
million in royalty
+ 15
mmboe in
reserves
Postponement of US$51 million in
decommissioning cost to 2023
Case study #3 – what are the opportunities for smaller companies?
11
woodmac.com
Investing the same US$8 billion in the redevelopment of mature fields can add 500 mmboe of incremental reserves by 2025
The 10 fields facing the highest decommissioning cost could postpone cessation production to the 2030s
First
oil
Primary
recovery Extend
field life
+20 years of operation
End of
production
Two options: decommission or redevelop?
To develop our upside
scenario, we have used the
Upstream Data Tool to screen
Campos basin fields under the
selected criteria:
• Recovery factors under 30%
• Production facilities with
remaining service life of more
than 10 years
The fields were then ranked
by their abandonment spend
from 2018 to 2025 and we
added investment until the
US$8 billion limit was reached
Incremental
production by
2025
Additional royalty
collected through
2025
Up to 12 wells
drilled per year
and related subsea
equipment
installed
Extra positions
maintained open
from 2018 to 2025
Investment of
US$8 billion
230,000 boe/d US$3.0 billion
30,000 jobs 60 new wells
Potential fields to redevelop Incremental results versus decommissioning scenario
12
woodmac.com
0
1
1
2
2
2010 2013 2016 2019 2022 2025 2028
millio
n b
oe
/d
The extra investment in redevelopment could generate 30,000 more jobs through 2025 than the abandonment alternative, while delaying US$4.8 billion of decommissioning costs
Source: Wood Mackenzie GEM, IBP
Redevelopment could add 230,000 boe/d if getting started by 2019
Campos basin production Investment
Incremental results
Base Future projects
0
2
4
6
8
10
2010 2013 2016 2019 2022 2025 2028
US
$ b
illio
n
Redevelopment (ongoing) Redevelopment (potential)
13
woodmac.com
Horacio Cuenca
Upstream Research Director, Latin America
Biography Connect with Horacio
Horacio Cuenca is Wood Mackenzie’s Southern Cone Upstream Research Director, based in
Rio de Janeiro. Horacio works as a content leader for research efforts in Latin America,
shaping Wood Mackenzie's Southern Cone regional perspective within the global upstream
team.
Horacio is responsible for maintaining and growing Wood Mackenzie’s analytical coverage in
Argentina, Brazil and Bolivia, developing junior analysts and representing Wood Mackenzie's
views in regional industry events.
Prior to joining Wood Mackenzie in 2013, Horacio worked seven years for IHS CERA’s
Energy and Natural Resources Consulting Practice in London, focused on upstream new
ventures advisory services. Horacio has ample experience using quantitative analysis to
understand the impact of fiscal regime parameters on project and portfolio value, and key
technical decisions made under uncertainty. Prior to that Horacio worked for Petroecuador
and independent operators in Ecuador.
Horacio holds a BA in Corporate Finance and a Masters Degree in Petroleum Economy from
Scuola Superiore Enrico Mattei in Milan, Italy.
+55 21 993 006 806
+55 21 3550 7700
@WMHoracio
14
woodmac.com
Americas +1 713 470 1700
Asia Pacific +65 6518 0888
Europe +44 131 243 4477
Wood Mackenzie Client Helpdesk
Contacts
Pedro Camarota (Rio de Janeiro) T +55 21 3550 7702
Wood Mackenzie Relationship Manager
Research Director, Upstream Latin America
Horacio Cuenca (Rio de Janeiro) T +55 21 3550 7705
15
woodmac.com
Disclaimer
Strictly Private & Confidential
These materials, including any updates to them, are published by and remain subject to the copyright of the Wood Mackenzie group
("Wood Mackenzie"), and are made available to clients of Wood Mackenzie under terms agreed between Wood Mackenzie and those
clients. The use of these materials is governed by the terms and conditions of the agreement under which they were provided. The
content and conclusions contained are confidential and may not be disclosed to any other person without Wood Mackenzie's prior
written permission. Wood Mackenzie makes no warranty or representation about the accuracy or completeness of the information
and data contained in these materials, which are provided 'as is'. The opinions expressed in these materials are those of Wood
Mackenzie, and nothing contained in them constitutes an offer to buy or to sell securities, or investment advice. Wood Mackenzie's
products do not provide a comprehensive analysis of the financial position or prospects of any company or entity and nothing in any
such product should be taken as comment regarding the value of the securities of any entity. If, notwithstanding the foregoing, you or
any other person relies upon these materials in any way, Wood Mackenzie does not accept, and hereby disclaims to the extent
permitted by law, all liability for any loss and damage suffered arising in connection with such reliance.
Copyright © 2018, Wood Mackenzie Limited. All rights reserved. Wood Mackenzie is a Verisk business.
Wood Mackenzie™, a Verisk business, is a trusted intelligence provider, empowering decision-makers with unique insight on the world’s natural resources. We are a leading research and consultancy business for the global energy, power and
renewables, subsurface, chemicals, and metals and mining industries. For more information visit: woodmac.com
WOOD MACKENZIE is a trademark of Wood Mackenzie Limited and is the subject of trademark registrations and/or
applications in the European Community, the USA and other countries around the world.
Europe
Americas
Asia Pacific
Website
+44 131 243 4400
+1 713 470 1600
+65 6518 0800
www.woodmac.com
