The Vallourec Oil & Gas magazine N°06 / May 2014 · The Vallourec Oil & Gas Magazine N°06 / May 2014 / p.5 ... provide Subsea 7 with seamless ... companies have to ensure people’s

The Vallourec Oil & Gas magazine N°06 / May 2014

www.vallourec.com

Well integrity management

Vallourec’sconcreteresponse fromconceptionto completion---------

The tech filesIntegrating Hole Cleaning Solutionin the Drill String

-------------SolutionsVAM® 21:the new standard!

-------------On the marketPetrobras: new contracts for high valued-added services

-------------

Publisher: Vallourec Oil and Gas France - 27, avenue du Général Leclerc, 92660 Boulogne Billancourt Cedex - FranceEditorial Director: Thierry Wolkiewiez - Chief Editor: Hassna Belmalek ([email protected]) – Phone: +33 1 49 09 35 83Drilling section editor: Ludivine Laurent - Pipe Project section editor: Annette Karsten - Production: Zabriskie, ParisDesign: LeGrand8, Paris - Photographs: Thierry Truck, Vallourec photo library, Shutterstock, Stéphane Remael,Neuf&9, Thiago Fernandes or as mentioned otherwise All rights reserved.

VAM® is a registered trademark of Vallourec Oil and Gas France

Edito

Dearreaders,

The Vallourec Oil & Gas Magazine N°06 / May 2014 / p.3

www.connection-mag.com www.vallourec.com

Vallourec

Well integrity is a key concern for your operations and our commitment is to contribute

to address this challenge. We will demonstrate in this issue how Vallourec’s products

and solutions can help you guarantee the integrity of your wells.

After being manufactured by one of our production facility, our casings and tubings are

shipped by road, rail or sea transportation to an onshore or offshore drilling rig, located

anywhere in the world. Being run through multiple geological layers, they can be exposed

to severe constraints such as high levels of pressure (up to 20,000 psi), of temperature

(up to 250°C or 482°F), as well as corrosive environment with high content of CO2 or

H2S. Despite all these challenges, they must stay completely sealed during the whole

life cycle of the well, sometimes more than 30 years!

To meet our customers’ challenges, Vallourec has a long experience of developing

the best-in class products. VAM® connections have for example been designed and

certified to be as resistant as the body of the seamless pipe.

However, supplying high performance products is not sufficient to ensure well integrity.

This applies not only for casing and tubing but also for the drill strings and line pipe offered

by Vallourec, which may have either a direct or an indirect impact on well integrity.

Selecting the most suitable product, controlling the

way it is transported, stored, prepared, assembled,

are as important as ensuring a good level of quality

during production. That is why we have developed

a wide range of associated services in the last few

years. Designed and implemented by our Vallourec

Global Solutions team, these services are available

worldwide. From well design to field assistance

through well preparation and technical support,

Vallourec Global Solutions is making sure our cus-

tomers get the best value to equip their wells safely

and efficiently.

Happy reading!

Philippe Crouzet,Chairman of the

Management Board


Vallourec employees once again came toge-

ther all around the world for this day devoted

to customer satisfaction, a key priority for

the Group. Members of the Management

Board and the management team were pre-

sent at certain sites for the event, accom-

panied by numerous customer representa-

tives also invited to take part this year.

What better way of finding out more about

customer expectations and needs?

As Jean-Pierre Michel, Chief Operating

Officer at Vallourec, says, "helping our

customers to better define their needs

and our possibilities is in our mutual interest".

The Quality Day is a unique occasion for Vallourec to put on the front stage all the

Group teams' efforts to support its Quality commitment and promote the Quality

culture within the company.

VISIT US AT…World Petroleum CongressMoscow, Russia - 16-19 June 2014Booth #14D28

IADC World DrillingVienna, Austria - 18-19 June 2014Booth #30-32

NewsContents

Page 6

FocusWell integrity management:Vallourec’s concrete response from conception to completion

Page 12

SolutionsVAM® 21: the new standard!

Page 15

The tech filesIntegrating Hole CleaningSolution in the Drill Stringto Lower Drilling Costs

Page 20

Solutions THERMOCASE®: a SAGD Success Story

Pages 22-24-28

On the market Process Pipe: the great challenge of Wheatstone project

Petrobras: New contracts for high valued-added services

Vallourec Line Pipe for Upper Zakum (UAE)

Page 30

EventsVallourec celebrates 5 years in Nigeria

Page 31

PeopleQuality manager at VSB: the persistence in challenging

VALLOUREC CELEBRATES SECOND QUALITY DAY

Vallourec launches its new Group website

www.vallourec.com and its extended presence

on social media. After the roll-out of a single

brand for the Group, Vallourec is unifying its

digital presence to share its expertise and

promote in a single website all of the Group's

products and applications, projects and com-

mitments, and its local presence.

This new reinforced digital set-up is based on

the website which has been completely over-

hauled to progressively become the Group's

main showcase, as the websites of the

Group's subsidiaries get merged into it. It will

then be a portal with dedicated access for

each type of visitor (customers, media, share-

holders & financial community, job applicants,

and other stakeholders), making it easier for

them to find what they are looking for.

The Vallourec website can now be viewed

easily on all devices - computers, tablets and

mobile phones. Staff and partners who can

now follow and engage with Vallourec on

several digital media:

Web:

www.vallourec.com

Twitter:

www.twitter.com/VallourecGroup

Facebook:

www.facebook.com/Vallourec

Linkedin:

www.linkedin.com/company/vallourec

Youtube:

www.youtube.com/user/VallourecGroup

Google +:

https://plus.google.com/+vallourec

This new, reinforced and unified digital

set-up is a demonstration of Vallourec's

commitment to reaching out to its various

stakeholders.

A SINGLE WEBSITEFOR A SINGLEBRAND - A UNIFIED,STRONGER DIGITALPRESENCE

Vallourec proudly received the 2013 Total Satisfaction

Award among all North America oilfield product manu-

facturers from EnergyPoint Research independent

Customer Satisfaction Survey.

In addition, Vallourec received the highest ranking in

Performance and Reliability, plus 7 other categories. These first-place awards are

based on in-depth evaluations collected from qualified professionals in the energy

industry over several months. Vallourec consistently ranked at the top since 2005.

Vallourec in North America: the #1 domestic producer of premium tubular solutions.

With 2,800 people in 22 manufacturing facilities and service operations in the US,

Canada and Mexico, Vallourec in North America primarily serves the local Oil &

Gas market. Key products include Oil Country Tubular Goods (OCTG), Line Pipe,

Drill Pipe, premium threading services of VAM® premium joints, and downhole

accessories.

US: VALLOUREC RECEIVESTOP INDUSTRY AWARDS

IMPORTANT CONTRACT IN DEEPWATER GHANA

Vallourec’s Drilling Products Division renewed a large contract with Ensign Energy

Services, a Canadian industry leader in land-based drilling and well-servicing

worldwide. “This wasn’t a simple contract renewal, points out John Kent, Global

Account Manager. This was a tender with fierce competition. The fact that we

had already worked with Ensign for three years helped us a lot in winning this

tender.” Vallourec will provide Ensign with drill pipe for three years.

VALLOUREC TO PROVIDE ENSIGNWITH DRILL PIPE FOR 3 YEARS

Vallourec’s Dril l ing Products

Division recently renewed a

frame agreement with KCA

Deutag. KCA Deutag is one of

the largest international drilling

and engineering contractors with over 9,000 employees in more than 22 coun-

tries, 39 offshore platforms worldwide and a fleet of more than 60 land drilling

rigs. The frame agreement, which was secured in October 2013, was ultimately

signed thanks to Vallourec’s competitive pricing and superior technical support

services. It is a three year frame agreement covering drill pipe, BHA and acces-

sories.

NEW FRAMEAGREEMENTWITHKCA DEUTAG

@@@@@@

Vallourec has been selected for a major deepwater development in Nigeria for the

provision of both flowline and riser line pipe applications for a total tonnage reaching

25,000 tons. Deliveries will be spread over 2014.

FLOWLINES AND RISER LINE PIPESFOR DEEPWATER NIGERIA

p.4 / The Vallourec Oil & Gas Magazine N°06 / May 2014

GHANANIGERIA

Vallourec has secured an

important contract in

deepwater Ghana and will

provide Subsea 7 with seamless

offshore line pipe including anticorrosion

coating for a total of 15,000 tons.

The pipes will be dedicated to production

flowlines (pipe-in-pipe system by ITP InTerPipe)

and gas export line.

Deliveries are due to start in the second quarter

of 2014.

In addition Serimax will accomplish associated

welding services for the double jointing operations

related to the production pipe-in-pipe and the gas

export lines and Vallourec Fittings will perform

cutting operations for the preparation of the pipe-in-pipe

subassemblies.

Focus

From well conception to wellabandonment, or during thirtyyears on average, oil & gas companies have to ensure people’ssafety, respect the environmentand reduce non-productivity to a minimum. All that is contained in the concept of well integritymanagement that has flourishedin the oil and gas industry over the last few years. Well integrity is high on oil & gas companies’priorities. Connection magazineasked Vallourec’s OCTG, DrillingProducts and Pipe Project managers what concrete servicesthey implement to address thiskey concern of their customers.

WELL INTEGRITY MANAGEMENT

Vallourec’s concrete response from conception to completion

The Vallourec Oil & Gas Magazine N°06 / May 2014 / p.7p.6 / The Vallourec Oil & Gas Magazine N°06 / May 2014

/...

Well integrity management is generally defined as the“Application of technical, operational and organizationalsolutions to reduce risk of uncontrolled release of formation fluids throughout the life cycle of a well”. “This definition which meets the particularly difficultconditions in the North Sea fits perfectly,” explainsPatrice Brossard, new Director of Vallourec GlobalSolutions (VGS). “Better yet, wecan claim that VGS was createdto meet the demands of our cus-tomers for well integrity while offe-ring a new and comprehensiverange of premium services fromthe mill to the well. All this mustof course be put into perspectivewith the fact that pipes – as amechanical barrier – are at theheart of the well’s life cycle. So,it’s our duty to warn our customersabout the risks that they someti-mes take and to help them elimi-nate those risks.”Even if quality remains a constant battle, it should berecognized that VAM® premium connections are glo-bally renowned for their reliability and performance.We know that VAM® 21, for example, is as resistantas a pipe. For Vallourec, scoring points in well integritynow largely happens outside production lines.Endorsed by customers and checked many times,

premium connections are high tech products that mustbe properly handled, transported, stored, installed andpossibly repaired. No one knows VAM® like VAM®, that’s why our customers are asking us to integrate more and moreservices upstream and downstream from the manu-facturing to the running. Our common target is to

ensure well integrity and have ourcustomers completely satisfied.

Supply chain optimizationEveryone knows about the supportprovided by the 200 techniciansfrom VAM® Field Service on rigsworldwide. They provide technicalguidance, inspect products, over-see the smooth functioning of run-ning operations, and can even,when and where required, carry outstraightforward repairs on connec-

tion threads. The objective is to make sure that animproperly made-up connection does not compromisewell integrity. But that’s not all. Investigations byVallourec show that over 50% of rejected pipes comefrom damage occurred during handling, transport andespecially storage. “For one of our customers,” explains Patrice Brossard,“we recently rejected nearly 30% of the pipes on an oil

rig that were ready to be run. That represents a lot ofNPT hours (Non Productive Time). An example whichclearly illustrates why we decided to offer an onshorestock and inspection management service for our cus-tomers. Added to that is the complexity of wells with acorrespondingly large number of product references.This service, which can save a lot of time and money,is provided in the United Kingdom, Norway, Gabonand Brazil (see article p. 24). Theobjective is to deliver only high qua-lity products to the rig and, it goeswithout saying, in the required quan-tities and on time.” In addition to therig preparation service, we alsomanage the rig return that for manyyears relies on a network of 200VAM® licensees worldwide benefi-ting from in-depth training and veryclose monitoring.

Integration of accessoriesFrom the most straightforward to the most complex,accessories pose a major threat to well integrity.Indispensable interfaces between tubing, casing, com-pletion equipment and OEM parts (Original Equipment

Manufacturer), they must meet the same requirementsfor performance, quality and availability. They also needa lot of flexibility – tailor-made solutions are a significantproportion – and reactivity. Requests must often be dealturgently to avoid a deadlock. It is the accessory thatadapts to the well and not the other way round. For allthese reasons, Vallourec offers notonly a wide range ofproducts that we completely develop in-house, from

design to manufacture (pup joint,nipple, crossover, flow coupling,blast joint, lifting plug...) but alsooffers threading services to the major Oil Field Service companiesin order to ensure the highest levelof quality.

Innovative servicesThe supply chain, with a particularfocus on accessories, covers alarge part of what we call the wellintegrity chain (see the above dia-gram). Beyond this large area, some

essential steps remain where Vallourec is working hardto find more and more innovative services. That is parti-cularly the case for team skill levels, products selectionor traceability.

VGS was created to meet

the demands of our

customers


‘‘

‘‘Only

high qualityproducts

in the requiredquantities and

on time

‘‘

‘‘

Focus

Staffqualificationlevel1

Productsselection

Incidentsmitigation 28

Wellintegrity Products

qualityIncidents

prevention

Productstraceability

37

Operationson products 5

Productssupplychain46

0-158-224—# 009ee0—

50-40-20-0—144-148-172—# 9094ac—Pantone 535

0-80-90-0—232-81-39—# e85127—

15-100-0-0—205-0-123—# cd007b—

Well integrity is like a chain: one weaklink can threaten the whole system

Vallourec offers an onshore stock and inspection management servicefor the customers. This service isalready available in the United Kingdom,Norway, Gabon and Brazil.

EDUCATION“The correct use of our products depends on the skill levelof VAM ® end-users,” considers Patrice Brossard. “That’swhy we have designed and developed a comprehensiveeducation program targeted at our customer teams.Around forty modules grouped under our programmeTubular Essentials can be customized worldwide, and

delivered at our own sites or at our customers’sites. Our top experts deal in-depth withmaterial and connection selection, logisticsand installation of OCTG, from the API standard to the most sophisticated specifi-cations for extreme applications like HP/HT.We also offer general introductory modulesdealing with steel production, pipe manu-facture or connections machining.”

PRODUCTS SELECTIONStarting from the principle that Vallourec aspremium tubular supplier is probably the bestplaced to advice customers in their choices,we built a well design service offer. Piloted

by drilling engineers, this service is able to design a wellin its entirety or provide timely advice on steel grades,pipe thickness or connection types best adapted to wellconditions. Experience shows that an early collaborationwith Vallourec’s teams will bring more added value to a

project and, as a result, contribute to maintaining its inte-grity over time.

PRODUCTS TRACEABILITYWell integrity also depends on products traceability andequipment used on rigs. However, as we have seen,the growing number of product references linked to thecomplexity of strings makes this particularly challenging.From the manufacturing plant to the well – and evenbeyond – each pipe must be able to reveal immediatelyand easily all its technical information. Vallourec surveyedits customers to test the merits of a technology that caughtits eye: Radio Frequency Identification (RFID). After exten-sive studies, it was decided to opt for an electronic tagembedded in PEEK and attached in the VAM® premiumconnections. The solution is already qualified by one majoroperator in Brazil and another major in Europe is takinga keen interest to the downhole performances of the solu-tion. At the heart of the device is a database where youcan easily find at any time information on steel grade,batch number, thread, length, thickness, inner and outerdiameters as well as valuable information on inspections,storage, make-up or even repairs. Such information cancontribute significantly to well integrity. “We can also propose other services, including first andforemost, technical assistance supplied daily by ourTechnical Sales Managers or our on-line service Mr Help,”

concludes Thierry Wolkiewiez, OCTG Strategy Director.“Added to this are our low torque test plug and test capsystem or our work string rental* that we have recentlyimplemented. All these services form part of well integritymanagement as we conceive it. In fact, well integrity isin everything and everything contributes to well integrity.It is good to know it but it is even better to propose con-crete and innovative services to ensure the safety andthe smooth running of our VAM® connections on some5,600 rigs currently operating worldwide.”

* Vallourec now offers its customers rental of columns to perform well tests.


Focus

‘‘

‘‘“As the well is being drilled, explains YannickMfoulou, Business Development Manager –Vallourec Drilling Products, the drillstring that is used to ensure achievement of the drilling objectives is in constant friction with the casing in place. This metal-to-metal interaction inevitablyeats up some of the casing material, in a processknown in the industry as “casing wear”. If uncontrolled, this wear will directly impact thelifespan of the casings and liners in place, andtheir ability to later withstand bottomhole loadings (pressure, bending…). As a premium drill stem component manufacturer, we are concerned by theimpact our products will have in the overall lifetimeof the well. We have long advised our customers on the use of hardbanding on their drillstring components, as a wear out material that will consumebefore the casing is damaged, and that will at thesame time help preserve the drillstring componentsthemselves.”

Drilling Products From the cradle...

Correct use of the productsdepends

on the skill levelof VAM®

end-users

200 technicians from VAM® Field Service provide support on rigs worldwide.They provide technical guidance, inspectproducts, oversee the smooth functioning of running operations and can even, when and where required, carry out straight-forward repairs on connection threads.

“Since Vallourec Pipe Project Division offer a wide rangeof tubular products1 and related services2 downstreamfrom the wellhead and manifolds, explains ChristophePaillusseau, Global Solution Manager - Pipe ProjectDivision, we inevitably extend the scope of well integritymanagement. A leaking or blocked pipeline, or an ill-functioning umbilical can lead to a production well shut-down. In a nutshell, well integrity management goal isto maintain operability of subsea assets all over the 20+year lifecycle. Therefore it is essential to understand theapplications of our customers and their purpose. AlthoughVallourec offers “fit for specification”, our premium posi-tioning imposes us to ask the relevant questions to ourcustomers to make sure they are aware of the state ofthe art solutions for a given problematic.

A concrete example of the Pipe Project value offer is our capacity tooffer end to end integrity of the as installed pipeline. By combiningthe material expertise of Vallourec Offshore Linepipe, the weldingexpertise of Serimax, and relevant partnerships with coating companies,Vallourec can offer the best weldable pipe of the market to its cus-tomers and help them design the adequate solution which will mitigateboth the risks related to construction, installation and operations. As we also offer umbilicals that can help to monitor wells, it seemsquite logical that they also form part of Vallourec’s well integritychain.”

1 - Tubular products for Offshore Applications address flowline, risers and umbilical applications2 - Associated services include onshore and offshore welding as well as field joint coating

Pipe Project In the same boat...

In the oil & gas business, the human, environmentaland financial challenges are such that they could jeo-pardize the future of any company in the event of aserious accident. We well understand why the oilindustry – otherwise so innovative – has been so pru-dent when it comes to replacing a solution that has

stood the test of time over decades. All the same,that has not stopped VAM® 21, launched in 2008,gradually becoming the new market standard againstits illustrious predecessor – VAM® TOP.

Nothing more logicalThis rapid growth does not really surprise GabrielBriquet, VAM® 21 Product Manager. “Although youget really attached to your old car, if you decide tochange it, you will plump for the new model which,offers extra airbags, anti-skidding, steering correction,heated seats and built-in GPS, that were already offe-red in options. It is exactly the same for VAM® 21which offers our clients more security and ease-of-use than VAM® TOP. That is where the analogy with consumer goods stopsbecause the new market standard – far from just amarketing makeover – grew out of a far-reachingchange in the oil & gas activities.

A child of its timeVAM® 21 is in fact the result ofmore and more challengingexploration and developmentconditions that operators face.In response to increasing tem-peratures, pressure and mecha-nical loads in wells, VAM® 21achieved a real technologicalleap by separating the functionsof sealing and shouldering. Asa result, mechanical stresses nolonger risk compromising sealingperformance. Added to that, thethread design reduces the riskof cross threading and the grooveshelp get rid of any excess dope.“The project launch of VAM®

21,” recalls Gabriel Briquet, “wasdecided in 2002, that is to say at the time theISO standard 13679 CAL-IV was introducedwhich remains the most stringent certificationto date. We know that this standard will befurther tightened shortly but VAM® 21 alreadymeets or exceeds the new requirements. Don’tforget that this connection – across its full range– is as resistant as a pipe to the different loadsit has to cope with.”

A new statusVAM® 21 is more in line with today’s conditionsof oil production and has therefore become thenew market standard. But what are the con-sequences of this change in status for custo-mers and Vallourec? Even if VAM® TOP is stillavailable, it is expected that operators will pro-gressively renew and update their stocks. Infact, VAM® 21’s performance means that it canbe used both for regular and HP/HT wells.Apart from reference changes, the transitionto VAM® 21 technology is completely imper-ceptible.For Vallourec, this new standard status hasmeant two noticeable changes. On the onehand, further research and development hasbeen interrupted for the past two years onVAM® TOP and its various spin-offs (VAM® TOPHT, VAM® TOP HC, etc). On the other hand,VAM® 21 is now the benchmark for all offerspresented by the Group.

Accelerating trendVAM® 21 currently represents about 20% of allThreaded and Coupled (T&C) orders recordedby Vallourec, up from 7% in 2012. The increase

in its market share is growing considerably. In2013, 64 customers in 28 countries orderedmore than 250,000 tons of VAM® 21 from thefull range now available, including the CLEAN-WELL® DRY dopefree version. This continuous and progressive developmentcomplies with and even exceeds Vallourec’sexpectations when the project was launchedover 10 years ago. This year, with the release of 4 1/2" sizes fortubing applications, we are able to offer a com-plete package inclusive of most popular tubingsizes.But a question remains: how can you be bothpremium and standard at the same time? “Iffor you, ‘premium’ means exclusive and expen-sive,” replies Gabriel Briquet, “and ‘standard’means limited added value, then I understandwhere you’re coming from. As far as we’reconcerned, we think that a connection can atthe same time be ‘state of the art’ and afforda-ble. Both premium and standard, that’s theremarkable feat of VAM® 21!”


Over the past few months, VAM® 21 has emerged as the new market standard, offeringthe best to meet operators’ every needs, from

the most common to the most technical.

The newstandard!

Solutions

Milestones

2002Official projectlaunch VAM® 21. Introduction of ISO13679:2002 CAL-IV standard.

2008Introduction of 9 5/8” to 13 3/8” range on the market.

2011Addition of 5’’ to 7 5/8” sizes.Addition of 10” 73.9#, 13 5/8” 88.2# and 14” sizes.Added compliance with ISO13679 FDIS-2011 CAL-IV standard.

2013Close to 250,000 tons of VAM® 21 sold to 64 customers in 28 countries.

2014Release of 4 1/2” tubing sizes.

Secured

Competitive

Prepared


#06

/...

��


Relatively speaking, drill pipe is a small capital expenditure compared to the cost ofNon Productive Time (NPT) associated with its use. Studies have estimated the globalindustry losses related to stuck pipe and lost circulationto be in the order of 2 billionUS dollars per year. This corresponds to more than twice the total amount spent tobuy drill pipe in the first place and represents about 20% of the total NPT lossesassociated with drilling operations affected by hole cleaning or the lack thereof. Increasingly complex and extended reach drilling (ERD) wells are constantly redefiningdrill pipe performance limits. For Vallourec this means that focusing on well safetyand hole cleaning efficiency capabilities of the drill string is key to providing thebest product performance.

The tech files

Integrating Hole Cleaning Solutionin the Drill Stringto Lower Drilling Costs

The tech files

p.16 / The Vallourec Oil & Gas Magazine N°06 / May 2014 The Vallourec Oil & Gas Magazine N°06 / May 2014 / p.17

A holistic engineered approach to a universal problemWhile hole cleaning is generally considered to be well

understood, many drillers still have difficulty properly

managing the entire process. Yet managing this process

with measurements of key performance indicators (KPI)

is essential when drilling deviated and horizontal wells.

Experience reveals that less-than optimal hole cleaning

can lead to hole problems with poor hole quality, espe-

cially when the hole is downgraded, and sometimes to

the loss of the drill string or even the well. Large holes

drilled in highly deviated wells at high ROPs are usually

inefficient to clean. Whereas smaller shallow ERD holes

and long lateral section have annular pressure challen-

ges requiring different pipe solutions. Those challenges

are best met through a holistic engineered approach

to planning.

Safer and faster drilling Hydromechanical cleaning devices are part of that holis-

tic approach for safer and faster drilling. Use of fit-for-

purpose technology can improve drilling efficiencies

and reduce NPT. When properly used in the drill string

these devices have proven to have better hole cleaning

characteristics than standard drill pipe in all geometries

and hole sizes.

Hole Cleaning is time consuming and can have a

significant impact on drilling performance, especially

offshore where rig costs are high. Land operators, on

the other hand, are more inclined to accept using rig

time to address these issues which increase drilling

costs and risk. The paradox and misconception with

maintaining residual cuttings at acceptable levels is that

the build-up goes unnoticed until symptoms from the

well signal a growing problem. If left unattended, the

problem becomes more obvious when indicators

such a reduced ROP (rate of penetration), need

for higher WOB (weight on bit), erratic drilling

torque, increasing ECD (equivalent circulating

density) , string whirl, tight hole or ultimately

stuck pipe can develop into a high risk

situation or lead to the loss of the well.

Remedies, which can also be interpreted

as red flags, include additional wiper trips,

reaming, sweeps and long circulating times,

all of which end up consuming additional

rig time.

Total system approach In many respects, the first approach to hole

cleaning can look simple when only considering

cutting transportation by rotation of the drill string

and cutting displacement using drilling fluid circula-

tion. Mud rheology is also deemed to play a major role

but is only one part of the total system approach which

requires all aspects of cutting behavior to be addressed

in concert. Analyzing cutting sizes re-drilled by rotation

of the drill string and cutting volumes measured over

the shakers is a first step towards setting hole cleaning

KPI’s. Keeping the well clean does not mean removing

100% of the cuttings from the well but is generally

understood as removing sufficient cuttings to allow for

trouble-free operations and usually dictates the amount

of rig time spent on hole cleaning and, time not drilling.

Performance analysis of the drill string including

evaluation of flat time, ECD and Torque & Drag are

commonly used for setting targets and for planning.

The execution at the well site usually requires the drilling

team to manage preestablished rig practices and

well-site procedures to achieve real-time performance

through well bore monitoring . Pick up Weight (PUW),

for example, is one of the tripping indicators measured

while running pipe in and out of the hole and recipro-

cating the drill string. Measurements of Pressure while

Drilling (PWD) are routinely applied tor monitoring cutting

bed height equilibrium close to the bit and considered

as an indicator of "out of control" hole cleaning. These

practices are designed to mitigate drilling risks through

planning and execution of a hole cleaning system appro-

ach. To this end, an in-depth performance analysis

review of the drilling process with emphasis on maxi-

mizing drilling time drives the entire process. When eco-

nomically justifiable, mechanical hole cleaning devices

should be considered to increase hole cleaning effi-

ciencies and drilling performance. These devices are

too often overlooked and misunderstood.

#06

High velocity zone

of annular passage

Dynamic

recirculation

Two zones of full scooping

and lift of cuttings

Initial cutting

bed height

The Hydroclean® SolutionVallourec offers a patented solution to hole cleaning

challenges with its Hydroclean® product line.

Hydroclean® comes in range 2 and 3 and is

integrally machined over the full length. A portion

of the tool joint bearing section is machined to a

larger OD with a profile to reduce friction. The dual

OD configuration provides several advantages:

• Offset bladed sections from the borehole wall

• Improved mud flow pattern around the pipe OD

• Less friction than a standard tool joint

• Increased wellbore stand-off

Benefits:

Though the Hydroclean® tool is used globally,

few effective field studies have been conducted

showing how drilling performance can be improved

with an all-inclusive system approach and mea-

surable KPIs. The blueprint for success with

Hydroclean® includes rig practices and procedu-

res with a hole cleaning management system

approach. A flow chart process that includes

planning, execution and, a post job review

analysis with lessons learned. These quanti-

fiable lessons learned can be transformed

into objectives with recommendations for

continuous improvement. There is, for example,

a minimum quantity of Hydroclean® tools requi-

red to be spaced in the drill string and a mini-

mum RPM to achieve effective removal of cutting

beds. The RPM can be further increased to the

threshold where "viscous coupling" between

the pipe and the drilling fluid is achieved. A

common mistake is to use fewer tools than

required in order to reduce costs, thus defeating

the purpose of the entire exercise. As a rule of

thumb, it is generally recommended to place

one Hydroclean® joint every two or three stands

of drill pipe with the first Hydroclean® placed

just above the Bottom Hole Assembly (BHA).

Depending on the well profile and drilling

parameters, the Heavy Weight Drill Pipe of the

lower section of BHA is fully substituted by

Hydroclean® Heavy Weight (HHW). An alter-

native option to this placement rule is to place

one HHW in every stand of standard HWDP.

Final cutting

bed height

• Reduced total

circulating time

• Fewer wiper trips

• Less or no

back-reaming

• Elimination of sweeps

• Better and faster hole

cleaning

• Lower annular pressure

• Trouble-free BHA trips

• Smooth casing runs

• Bigger cuttings

• More time spent drilling

• Faster ROP

• Extended service life

of the drill string

Analysis ofall drilling data

STEP 1:Hydroclean® job planning

STEP 3:Performance analysis

STEP 2:Drilling optimization

Job preparation with KPIsperformance objectives

Start ofoperations

KPImeasurements

Next operationdesign proposal

Final performanceanalysis review

End ofoperations

Practices andparameter update

Hydroclean® drilling and tripping practices

Hydroclean®

section view

in well.

Hydroclean®

principles of

operation

Hydroclean® Heavy

Weight (HHW) and

Hydroclean® Drill Pipe (HDP).

#06


The tech files

NEW GENERATION HYDROCLEAN® DRILL PIPEA new drill pipe design integrating hydro-mechanical cleaning

features in the tool joint has been developed to increase hole

cleaning efficiencies and address annular pressure challenges

in horizontal and ERD wells. The new Hydroclean® Max drill

pipe incorporates specially designed Hydroclean® scallops in

each tool joint of the drill string without compromising its per-

formance. The Hydroclean® Max addresses ECD issues com-

monly encountered in smaller horizontal holes and extended

reach wells. The dual OD profile of the tool joint offers additional

advantages for increased well bore standoff, reduction of friction

force on the drill pipe tube and, consequently, extending the

service life of the drill pipe.

Time and cost savings were

achieved with the use of

Hydroclean® in all 3 wells.

Several drilling problems were

also solved or improved:

• Control of hole

cleaning issues

• Increased average ROP

• Fewer wiper trips

• Reduction of non-

productive time

• Lower surface drilling torque

• Reduction in chemical

costs.

ResultsWhile drilling the intermediate hole sections an increase

of cutting of 1.5 – 2 times in volume was measured at

surface by comparison with offset wells. No slurry was

observed in the section of the BHA configured with sta-

bilizers and virtually no residue cuttings were encountered

during tripping.

As a result, the number of wiper trips were reduced

from 3 to 1 allowing for an increase in the average ROP.

The need for clean packs sweeps was also eliminated.

Additional costs saving on chemicals were incurred due

to the larger cutting sizes recovered at surface. Wash

outs and caving were dramatically reduced leading to

smoother casing runs and better cement jobs. The rig

time saving per well ranged from 6 to 9% or 2 to 3 days

with the potential to further reduce the number of days

per well.

2580 G 52,5 3,2 6,1%

2672 G 21,0 1,9 9,0%

2491 G 25,7 1,9 7,4%

DAYS DAYS %

Planned well construction

timeWell

Achieved reduction of the construction time

Field applicationHydroclean® was used Ьу TNK-Uvat in Russia to address

drilling difficulties encountered in the Ust-Tegusskoye field.

Wells planed for drilling were characterized bу complex

trajectories with long extensions and difficulties in hole

cleaning. The accumulation of cuttings was accompanied

bу а loss of circulation, stuck pipe, hydraulic fracturing of

formation. Boreholes drilled were often constructed with

poor quality and with considerable carvings and washouts.

A field trial with Hydroclean® was planned on three

directional wells with different trajectories and designs. Wells

were drilled with a total measured depth of 4.5 km and

with a lateral displacement of up to 3 km.

Evaluation of efficiency was based on monitoring key

performance indicators (KPI) which were compared with

offset wells drilled in the field and 3 wells with Hydroclean®

drill string assemblies.

Hydroclean®

Tool Joint.


Solutions

The success of SAGD, an in-situ Enhanced Oil Recovery(EOR) process, relies on a dual well design, which includesan injector and a producer. Steam is piped down theinjector into the toe and heel of the horizontal well wherethe steam heats the bitumen. As the bitumen warms up,the viscosity of the oil is decreased. The oil then drainsinto a slotted horizontal liner located directly beneath theinjector. The slotted liner allows the oil to flow into theproducer where it is brought to the surface for refining.Engineers at ConocoPhillips Canada concluded that animportant means of enhancing oil production from SAGDwells was to improve the Steam Oil Ratio (SOR). Vallourec Tube-Alloy’s THERMOCASE® Vacuum InsulatedTubing (VIT) offered the perfect solution: VIT insured thatthe steam injected into the well would remain in its state,and not condense into a liquid. One of the primary inef-ficiencies in current SAGD technology is that once thesteam is injected into the top of the well, heat is lost tothe surrounding annulus and formation, and transformsinto condensate. Water in its liquid state does not efficiently

travel through the oil sand, causing lower oil recoveryrates. In contrast, VIT holds the heat inside the productiontubing, resulting in higher quality steam traveling into thereservoir, which in turn increases the rate of produc-tion. Before implementing VIT in their well design,ConocoPhillips Canada claimed initial production ratesof 500 to 600 barrels per day (bpd) per well pair. Afterutilizing VIT in the vertical section of both the injector andproducer wells, Conoco production rates increased to800 to 1000 bpd per well pair, which in many cases dou-bled initial production rates without VIT. In addition, HuskyOil recently claimed that the initial results from implementingVIT in several test wells indicated that the VIT paid for itselfeasily in the first year of production. Therefore, SAGDoperators using THERMOCASE® VIT should see a sig-nificant increase to their bottom line for years to come,since most SAGD wells have a life expectancy of 7-10years.Furthermore, the quest for increased production fromeach well pair is leading to additional SAGD design refi-nements that will benefit from VIT. Until recently, most

SAGD operators used either a parallel or a concentricinjector design that included two separate steam injectorstrings. In both designs, one string would inject steaminto the heel of the horizontal well while the other stringwould inject steam into the toe. However, in a concentricdesign, the toe injection string would be located insidea 7” intermediate casing string used to inject steam intothe heel. The former design would partially negate thebenefits of VIT used in the vertical section of the toe injectorstring, since at various intervals steam would be appliedto the outside of the VIT. In the past two years, more E&Pcompanies have started utilizing steam diverters, alsoknown as steam splitters, in the horizontal section of theinjection string. The advent of steam diverters allowsoperators to more accurately control the placement ofthe steam down hole, insuring uniform saturation of theHeavy Oil Sands which further increases the recoveryrate. More importantly, the advent of steam divertersallows operators to utilize only one injector string as oppo-sed to two separate injectors. In this scenario, VIT wouldadd value since the production tubing would no longerbenefit from steam and hot water condensate contactingthe outside of the VIT. We anticipate the future demandof VIT in SAGD applications will likely increase on an unpre-cedented level within the next few years.

THERMOCASE® VIT at a glanceTHERMOCASE® VIT was first pioneered by GeneralElectric (GE) in the late 1960’s for permafrost preservationapplications in Alaska. Eventually Vallourec Tube-Alloyacquired the patents and trademarks in 1994. In 1998,Vallourec Tube-Alloy was approached by Shell to manu-facture VIT for Annular Pressure Build-up (APB) mitigationapplications offshore in the Gulf of Mexico. In 2000,Vallourec Tube-Alloy sold its first string of VIT to Shell.Over the course of 14 years, THERMOCASE® has beenadopted for a wide array of applications including the fol-lowing: APB mitigation, heavy oil flow assurance, hydrateprevention, hydrate preservation, wax/paraffin mitigation,permafrost preservation, and enhanced oil recovery usingSAGD and CSS. During the latest World Heavy Oil Conference held in

March 2014 in New Orleans, several of the largest multinational E&P companies including BP and Chevroncited heavy oil, estimated at over 7 trillion barrels, ashaving the greatest potential for increasing the world’srecoverable oil reserves over the next few decades. Thisincludes continued investment in onshore SAGD andCSS developments worldwide. However, a huge empha-sis was placed on heavy oil recovery offshore, where BPclaims it will invest $50 billion through the end of thisdecade. The primary hotspots targeted by BP areCanada, Brazil, North Sea, Angola in South Africa andChina. Other multinational E&P company interests includeOman, Venezuela and Duri, Indonesia, where Chevronhas a large steam injection project currently underway.

Starting in 2009, ConocoPhillips Canada and many other E&P companies developing

the Heavy Oil Sands of Alberta, Canada, werelooking at various ways to improve the overall

oil production in Steam Assisted GravityDrainage (SAGD) applications.

a SAGDSuccess Story

THERMOCASE®:

Post weld Heat Treat (HT) of the fillet weld using induction coils.

Solutions

MODEL 970

Multi-LayerInsulation

OptionalExternalInsulator

Filet Weld

Outer Pipe

VacuumAnnulus

Inner Pipe

UltrasonicTesting (UT) of thefillet weld usingcompressionwaves.

FLOW ASSURANCE SOLUTIONS FOR LINE PIPE APPLICATIONS Vallourec offers flow assurance solutions not only for downhole appli-cations but also from the manifold to the surface facilities (ex: FPSO).The development and production of deep water oil & gas reserveswith long tie-backs and/or complex reservoirs may raise flow assu-rance challenges. One methodology to mitigate those risks is theuse of passive thermal insulation in order to maintain the productionfluid above a given temperature and avoid wax or hydrate formationwithin the pipes, which could eventually lead to a production shutdown. An efficient way to insulate the pipelines and provide “flowassurance” is through a pipe-in-pipe system, in which high perfor-mance insulating material is placed in the annulus between two con-centric steel pipes. Other possibilities include wet insulation coatings,typically thick polypropylene (5LPP) or polyurethane (GSPU) coatingsapplied to the pipe. In addition to the steel line pipe portfolio for flowlineand riser applications, Vallourec also offer a complete set of solutionsfor flow assurance together with recognized partners. Vallourec hasa long project track record including pipe-in-pipe and wet insulationcoating applications, with several references in the North Sea, OffshoreBrazil and West Coast Africa. The latest example to date is a projectaward in ultra deep offshore Ghana including 15kT of line pipe and45km of pipe-in-pipe to deliver in 2014. Vallourec can therefore offerend to end integrity of the as-installed flowlines.


THERMOCASE®

is a registered trademark of Vallourec Tube-Alloy, LLC.

p.22 / The Vallourec Oil & Gas Magazine N°06 / May 2014 The Vallourec Oil & Gas Magazine N°06 / May 2014 / p.23

Wheatstone’s offshore field was discovered by Chevronin 2004. It is considered today as one of the largestnatural gas reserves in the world. Situated north-west

of Australia, at more than 200 kilo-meters (124 miles) from the coastand at an average depth of 180meters (590 feet), it is operated aspart of a joint venture bringing toget-her, among others, Chevron, Apacheand Kuwait Foreign PetroleumExploration Company (KUFPEC).The extracted gas from the groundis brought onshore to the centralprocessing platform where it is dehy-drated and compressed. It is thensent towards the coast via a major225 km (140 miles) trunkline untilreaching the north of the Shire ofAshburton, near the town of Onslow.There, an industrial complex on the

same gigantic scale as the Wheatstone project mustensure gas liquefaction from 2016 so that the largestLNG carriers can load and transport it across oceans.

Nearly 8 000 tons of pipes and fittingsAwarded to the American group Bechtel, constructionof the first two trains for the liquefaction plant began inDecember 2011, as well as a domestic natural gasplant. With each train having an annual capacity of 4.45million tons, the Wheatstone project could eventuallyproduce around 25 million tons of LNG per year.

To guarantee a significant part of its tubular product sup-plies, Bechtel called on Van Leeuwen, Vallourec’s long-standing partner in the trading of pipes. “For this project,”explains Renaud de Lapeyrière, Onshore Line Pipe SalesManager in Vallourec’s Pipe Project Division, “all thepipes we supply are seamless carbon steel (ASTM A106GR B, API 5L GR B, A333 GR 6) for pre-treatment andliquefaction. In total, that represents 7,180 tons of pipesand 430 tons of fittings. The portion of premium tubes –mainly heavy wall thickness – represents around 45%of the total volume.”

A winning duetBesides the close relations built up with Vallourec overdecades, Van Leeuwen had significant advantagesfor winning this market, in particular its presence inAustralia for over fifty years where the authorities natu-rally pay close attention to the local content dimensionof the project. In addition, it has a number of yardsacross the world, like Vallourec, some of which areclose to the four prefabrication sites and of the actualjob site for building the two LNG trains. Bechtel have in fact shared out the workload into foursubcontractors who prefabricate modules in yards located in China, Malaysia, Indonesia, United ArabEmirates before the final assembly on the job site inAustralia, so as to guarantee the project’s tight dead-lines are met. “On our side,” underlines Renaud de Lapeyrière, “wewere able to supply the full range of requested productswhile keeping costs perfectly under control. To achievethat, we called on several of our production plants inBrazil, Germany and France. The project was relativelycomplex to manage as we had to use five Vallourecplants at a time to supply five different fabrication sites,

mainly from the ports of Antwerp and Rio de Janeiro.Added to that were a large number of product refe-rences: 380 for pipes and 400 for fittings, relating tosteel grade, diameter, thickness or marking details.”

A dedicated teamFaced with all these challenges, the Pipe ProjectDivision decided to set up a team entirely devoted tothe project. Production, logistics or even relationswith Van Leeuwen were handled by many people pla-ced under the responsibility of a project manager.Always with maximum efficiency in mind, this dedi-cated team used a methodology initiated in the lastfew years by Vallourec and called “Magellean”. It relies

on a back office lean management inspired bymethods used in plants for years. It helps to optimizeall the ‘administrative’ steps, from registering ordersuntil products are received by the customer. “All our initiatives paid off”, concludes Renaud deLapeyrière. “We signed an agreement with VanLeeuwen in November 2012 for the first deliveries inthe first quarter of 2013. We initially signed a blanketorder for the supply of 4,000 tons of pipes, and todate we already supplied over 7,200 tons of pipes.The objective we set to deliver 100% of products on time has therefore been achieved and even farexceeded. That confirms our ambitious targets for theprocess pipes market which appears buoyant this yearand even more promising for 2015. In particular, weintend to offer complete packages of pipes, fittingsand services to our customers through our specializeddistributor network.”

The Wheatstone project, with a global costestimated at around 30 billion dollars, aims toexploit one of the world’s largest natural gasreserves in Australian waters. Downstreamfrom the extraction process is an immenseonshore gas liquefaction plant whereVallourec - via its partner Van Leeuwen - supplies most of the carbon steel pipes andfittings. A challenge that a dedicated team andadapted methodology have successfully met.

Process PipeThe great challenge of Wheatstone project

Aerial view of theWheatstone Project’sworkforce accommodationvillage (December 2013).

On the market

Wheatstone project • Estimated 4.5 trillion cubic feet of gas reservesof natural gas

• Liquefaction plant construction: Bechtel • Start of operation in 2016• Total capacity of liquefaction plant: 25 million tonsper year

• Supplier of carbon steel pipes and fittings:Vallourec and Van Leeuwen

• Volume for first two LNG trains: 7,215 tons of pipesand 430 tons of fittings

• Steel grade: ASTM A106 GR B, API 5L GR B,A333 GR 6

• Diameters: 1’’ à 24’’• Thickness: up to 40 mm

KEY FIGURES

The Wheatstone and nearby Iago natural gas resourcesare located about 200 km (124 miles) north of Onslow offWestern Australia's Pilbara coast. The Julimar and Brunellofields will tie back to the central processing platform.

Perth

Karratha

Wheatstone

Brunello Iago

Julimar

Barrow Island

OnslowGas plant

ThevenardIsland

AshburtonNorth

Dampie

r to B

unbu

ry

natur

al ga

s pipe

lineCo

nnec

tion

to m

ainl

and

Share of premium pipesand fittings amountedto 45% on this project.

Final quality inspection at Vallourec Fittings.

The objectivehas beenachieved

and even farexceeded

‘‘ ‘‘The objectivehas beenachieved

and even farexceeded

When it cameto the supply of seamlesspipe and fittings for theWheatstone project,Vallourec was the natural choice for

Van Leeuwen becausethey are Premium

Leo van der Leer,Wheatstone Project Director

for Van Leeuwen.

‘‘

‘‘

also, rental of special accessories to the company ope-rations at sea. The negotiations, which started in October 2011, repre-sent a great progress in the relationship between thetwo companies, once the services scope was quiteexpanded in relation to the previous deals, when theywere limited to inspection and repair. The two new agree-ments complement the main deal between Vallourecand Petrobras, announced in January 2013, for thesupplying of premium seamless pipes named OCTG(Oil Country Tubular Goods) containing steel gradesand connections using state-of-the-art technology, fora period of five years.Services shall be executed by Vallourec Transporte eServiços (VTS) (Vallourec Transport and Services), oneof the companies of Vallourec Group in Brazil. This siteis strategically located in the city Rio das Ostras, in Riode Janeiro, and is close to Petrobras in Macaé, in frontof Campos, Santos and Espírito Santo basins. Recently, VTS acquired the assets of the companynamed Lupatech Tubular Services, specialized in pipeinspection, maintenance and drill pipe coating for theoil and gas industry, which has expanded its servicesscope. Therewith, the machines, equipments and faci-lities, which shall be largely used in the next years duringthe currency of the new agreements signed withPetrobras, were transferred to Vallourec.

Vallourec support to the pre-salt is strategic, as highlighted by Vallourec Transport and Services super-intendent, Mr. Renato Rennó. “We have taken on animportant part of the operations which was outsourcedby Petrobras. Vallourec has already consolidated its services area, so the expansion for new agreementsintensifies even more the partnership with Petrobras andenables us to show to the world market that we arequalified to offer complete solutions to the oil and gassector and not only seamless steel pipes”, he affirms. The service quality provided by Vallourec, in the previousagreements, is also a determining factor through the

From 2001, that partnership has been intensified evenmore with the signing of a master agreement for pipessupplying. Afterwards, the two companies made a newagreement, in 2006, so Vallourec would give supportto the oil company’s increasingly operations, deep offs-hore, preparing itself for the pre-salt exploration. Therenewal of the long term contract in 2012 reaffirms thepartnership success and Petrobras confidence inVallourec Group. According to the Plan of Business andManagement 2014-2018, Petrobras shall reach 2018producing 3.2 millions of barrels of oil per day, 52% ofwhich will come from pre-salt. Already under implementation, the new agreementsclosed in the end of the previous year will offer a com-plete package of high value-added services in logisticsand ultra-deep offshore applications, operations con-sidered quite complex to the oil and gas sector. Amongthose services, stand out supplying and execution ofcasing pipes inspection, repairing and accessories production, field services, pre-shipment preparation,logistics in each port from where Petrobras access itsplatforms of offshore drilling, pipes traceability manage-ment using the Radio Frequency Identification (RFID)technology, resident engineers, technical assistance tothe pipes installation processes (Field Services) and,

On the market


Petrobras: new contracts forhigh valued-added services


VTS Service and plant accessoriesoverview.

More than a supplier of products for various industry segments, Vallourec works continually to reaffirm its worldwide leadership in premium tubular solutions. A proof that this positioning progress has yielded positive results to the market is the signature of two agreements to provide services to its main client, the Brazilian company Petrobras. The announcement took place last February 26. The partnership with Vallourec accompanies the longevity of the oil company, which will turn 60 in 2014.

2001Partnership negotiations withPetrobras Servicesincluded in the negotiation: stockmanagement.

2002Installation ofVallourec logisticsbase at the Petrobrasbases located inMacaé, Pojuca,Mossoró, Japaratubaand São Mateus.

2004Establishment ofVallourec base in Riodas Ostras (RJ).

2006First agreement closed with Petrobras for inspection andmaintenance services.

2007Services Operations opening,from Rio das Ostras base.

In order to expand its partnership with Petrobras and achievespace as supplier for the oil and gas industry, Vallourec hasinvested almost R$ 60 million purchasing the Lupatech TubularServices assets, a site belonging to the company namedLupatech. The site has 692 thousands of square feet, is locatedat the city Rio das Ostras, in the State of Rio de Janeiro andis specialized in inspection, maintenance and drill pipe coating services for the oil and gas industry. The negotiation whichhas also included machines, equipments and facilities, hasbeen concluded late September 2013. Right after the acquisition, Vallourec has established its subsidiary, Vallourec Transport and Services, unified the infra-structure of its base already installed in Rio das Ostras andreceived all the assets of the recently acquired site. Lupatech Tubular Services has been established in February2004. From 2007, when the operational base was constructedat the Business Special Zone – ZEN (in Portuguese) Rio dasOstras, it has taken on together with Petrobras, by means ofpublic tender process, the agreements for pipes maintenanceand inspection of pipes, equipments and accessories coating. The following year, the ZEN Operational Base activities wereinitiated with serial production line, prepared to keep up withthe technological evolution, overcome challenges and meetthe needs and expectations of the oil and gas industry.

Vallourec incorporates Lupatech TubularServices site in Rio das Ostras

2010First meeting / workshop in order toinclude other services.

2011Beginning of newservice contractnegotiation.

2012Inaugurationof VallourecAccessories site at Rio dasOstras base.

2013Agreement withPetrobras for products supplyingvalid for five years.Vallourec acquiresLupatech TubularServices assets andestablishes VallourecTransport andServices (VTS).

2014Announcement of the signature of two agreements for services providingvalid for five years.

Chronology of negotiations betweenVallourec and Petrobras from 2001

/...

The

Established 60 years ago under the law no. 2004, sanctioned bythe Republic President, Getúlio Vargas, Petróleo Brasileiro S.A(Petrobras) is a mixed economy State Company. Its majority shareholder is the federal government, which conducts the policyof national energy integration on the following segments: explo-ration, refining, commercialization, transport, petrochemical, deri-vative distribution, natural gas, electrical energy, gas-chemicaland biofuel. Currently, the company is present in 25 countries, hiring morethan 86 thousands of people, keeping the leadership in the oilsector in Brazil. Petrobras goal is to be among the five majorcompanies in its sector up to 2030. For this purpose, it has traceda Business and Management Plan for the period of 2014-2018,foreseeing investments at the order of US$ 220.6 billion (US$ 206.8billion for projects of implantation and in public tender process). From that total, the Exploration and Production area shall receive

US$ 153.9 billion, mainly to develop the pre-salt and post-saltproduction. The Supplying area is another highlight, with invest-ments at the order of US$ 38.7 billion for the refining park expan-sion, operational improvements and others. In order to reach the goal of producing, in 2018, 3.2 millions ofbarrels of oil per day, 52% of which from the pre-salt, Petrobraskeeps plans such as the Bacia de Campos Operational EfficiencyIncrease Program (Proef in Portuguese); the Operational CostsOptimization Program (Procop in Portuguese); the LogisticsInfrastructure Optimization Program (Infralog in Portuguese); theWells Costs Reduction Program (PRC-Poço in Portuguese) andthe Subsea Facilities Costs Reduction Program (PRC-Sub inPortuguese). In 2013, Petrobras reached a profit at the order of R$ 23.6billion, an 11% raise in relation to the previous year. The oil company has already announced its strategic plan up to 2030.

On the market


Petrobras celebrates 60 years with positive performance

signature of the new agreements, as Mr. Rennó affirms.“The maintenance of the relationship with Petrobras,over six decades, has demanded a continuous loyaltywork so advantageous negotiations continue to yieldfor the parties involved”, he says.

Research and DevelopmentIn July 2013, Vallourec opened Vallourec CompetenceCenter Rio (VCC), which intensifies its collaboration inResearch and Development with Petrobras, in Rio deJaneiro. It is located in the Research Center LeopoldoAmérico Miguez de Mello (Cenpes – Petrobras), in theRio de Janeiro Technological Park, inside Rio de JaneiroFederal University (UFRJ).The new research center focuses its works on the deve-lopment of products which meet the technical needs and

demands of the pre-salt fields’ exploration. It is also ableto make researches to other economic sectors consi-dered strategic. Operating since October, VCC hires 30 professionalswith master and PhD degrees and works together withthe Vallourec research center in Brazil, in Belo Horizonteand, also, with other research unities abroad. Vallourecworld investment in research, in 2012, was 20% higherthan 2011 and reached €93 million (around R$ 260 mil-lion). Over the next five years, the Company plans tomaintain the efforts at the similar levels to achieve itstargets of research and development.

Renato Rennó, Vallourec Transport and Services superintendent. Thread inspection by VAM® Field Service technician.

Vallourec participated in this demanding flagship projectwith the production and delivery of 17,000 tons of linepipe. Being chosen as line pipe supplier turned out tobe almost as demanding as the project itself - accordingto Vallourec's project team, which gave us some back-ground information on this extraordinary order.

The Upper Zakum 750 (UZ) project is unique inits layout and dimensions. What are the advan-tages of using artificial islands?Denise Mahn: Artificial islands provide a more flexibleand robust development base for the redevelopmentof the UZ field. This is said to significantly reduce life-cycle development costs and enable long term maxi-mum recovery levels to be achieved. Furthermore theinitiators of the project claim that the ‘green fields’development on islands accelerates the oil develop-ment rate, is safer and more capital efficient.

When and how did it all start for Vallourec'sProject Line Pipe team?Denise Mahn: It started back in 2010 with lots of inquiriesto Vallourec from about ten specialized pipe-laying com-panies who then were competing for the contract. A con-sortium of companies NPCC and Technip Middle Eastlater turned out to be the winners and became our part-ners in all further technical and commercial discussionsuntil we finally received the order in December 2012.

This first of all sounds like a normal, regularprocess. What were the technical and com-mercial challenges?Denise Mahn: Apart from being a technical referenceproject, the contractors, operators and project initiatorsput a lot of stress upon health and safety, quality anddocumentation issues which influenced all our internaland external processes. Meticulous documentation,reporting and auditing according to ZADCO's highcustomer standards and using their proprietary soft-ware systems, absolute process transparency andspecial testing throughout the whole contract periodwere constant challenges for our teams. Which, bythe way, we all met to satisfy the customer.

Mentioning product quality and testing - werethere any special demands regarding grades,dimensions, technical features?Jens Röös: The 17,000 tons of Vallourec line pipe -equivalent to 146 km - are being used as flowlinesand, a small amout of them, as motherpipes for bends.They were ordered as grade X65 QOS (API 5 L). Thismay be regarded as a premium quality in the contextof current Middle East oil and gas projects. The requi-rements of the customer specification for offshore andsour service application indicates the demanding fieldenvironments, in which our products will be used. Theproduction and transportation of a sour medium dic-tates special properties for the pipe material and alsoinfluences the welding process. To qualify for this appli-cation we had to safeguard a premium quality by exten-sive test programmes incorporating reliable knowledgeand data out of - among many others - CAPCIS andHIC tests as well as extensive weldability testing.All our seamless steel pipes had to be qualified tothese sour gas tests under field conditions. As we

had successfully delivered pipes for serveral MiddleEast projects with similar quality demands, proof forsome of the sour gas related specifications could beprovided on the basis of historical data. A fact whichstreamlined the process and helped reducing costs.

Vallourec line pipe for the Upper Zakum 750came from three different Vallourec productionfacilities and had to be delivered in part-shipments over a long period of time. How did you keep up the high quality level?Oliver Paas: Continuous testing and documentationhelped us to keep up the constantly high product qua-lity throughout the production and contract period.Close cooperation between the Vallourec facilities inDéville (France), Rath and Mülheim (Germany) wasindispensable and functioned as well as our internalpool of project experience, know-how in testing andapplication specific grades. From the production pointof view it was a great advantage that the overall orderwas almost evenly spread over a period of 18 months,as we delivered in 14 part-shipments from end 2012to April 2014.Denise Mahn: To sum up, Upper Zakum 750 may beregarded as an exceptional reference project for Vallourecin the Middle East region. Comprising several highlightaspects - not only in the volume of the order but also inthe fulfillment of highest performance obligations regardingquality, health and safety, testing and documentationaccording to strict customer specifications. Therefore, tous, this is in many respects a flagship project.

On the market

The Upper Zakum 750 project, carried out by operator ZADCO*, features the constructionof artificial islands as production and proces-sing bases amidst one of the world's largestoil fields west of the Abu Dhabi Islands.


Vallourec Line Pipe for Upper Zakum (UAE)


The overall concept of artificial island bases drilling and produc-tion centers was evaluated and developed by ZADCO. To supportthis concept, ZADCO’s own drilling division was established andhigh-technology extended-reach drilling (ERD) was employed.The ERD technology enables the wells to be initially drilled ver-tically and in the next stage horizontally to target reservoirs upto several miles away. Another innovative technology being usedis the maximum reservoir contact (MRC) which reduces the num-ber of new wells and unlocks tighter areas in the reservoir.The four islands, which will be oval in shape and measure 2,000ft to 2,600 ft in diameter, are constructed of sand and rocks, thelatter being transported to the site from quarries in the UAE. Theislands are being constructed in water depths ranging between5 m and 15 m.

Development of artificial islands

ABU DHABI

Umm Al Dalkh Field

Zakum Field

Facts and FiguresUpper Zakum Oilfield is located approximately 84 km offshoreto the north-west of Abu Dhabi islands and has an estimated50 billion barrels of oil reserves. The field currently produces500,000 barrels of oil per day (bpd).Currently Upper Zakum is the second largest offshore oilfieldand fourth largest oilfield in the world. It covers an area of 1,200 km2

and comprises of around 450 wells extending approximately7,000 ft to 8,000 ft below the earth's surface. The wells are tiedto more than 90 existing platforms. Production from the oilfieldstarted in 1982. Oil from the field flows through a pipeline network to one offour main processing facilities for treatment. It is further pumpedthrough main oil lines measuring around 55 km to Zirku Islandfor further processing, storage and export.The current "UZ750 project" (the figure 750 stands for the targetof 750,000 barrels per day) involves the construction of fourartificial production islands including one central complex whichwill house the processing facilities as well as the northern, sou-thern and western satellite platforms.The first phase of the project is devoted to the development ofthe offshore facilities. It includes the laying of 240 km of subseapipelines, 128 km of subsea composite and fibre-optic cablesand the installing 30,000 tons of offshore structures such asjackets, riser platforms, flare towers and bridges, and appro-ximately 3,000 tons of islands modules and bridges. The firstphase is scheduled for completion in 2015.The second phase involves the development of the facilities on thefour artificial islands including wellhead control, manifolds, crudeoil process facilities, water injection and gas lift, booster gas com-pression facilities, oil export pumps, power generation and ancillaryutilities, and modification of the existing facilities. Up to 22 pro-duction modules comprising of a wellhead control and oil proces-sing unit will be constructed as part of the second phase.The project also involves the construction of accommodationfacilities for 2,150 people, supporting buildings and permanentutilities including recreational areas, a mosque, and operationsand drilling offices.

*ZADCO is ajoint venture of Abu DhabiNational OilCompany(ADNOC),

ExxonMobil,and Japan OilDevelopmentCompany Ltd.

The Vallourec team for the Upper Zakum project (from left): Denise Mahn(Technical Sales Manager Middle East/UAE), Jens Röös and Oliver Paas (Sales).


Events


After 14 years at the Vallourec Group, the electric engi-neer, technologist in Management and ProductionManagement and an expert on Oil and Gas, MichelleChristine Rocha Lara, 35, does not know the meaningof the word "routine" in her job. The only woman amongthe seven managers who work directly in the field ofQuality in Vallourec & Sumitomo Tubos do Brasil (VSB),the Vallourec Group, she is responsible for the IntegratedManagement System. At a meeting, when she hearsthat a given goal will not be achieved as planned withina specified period, she lays hold upon the Chinese pro-verb that states that persistence can help accomplishthe impossible.With focus and persistence, the manager has achievedthe goals. VSB, which began operations in 2011, iscertified in all management standards that have beenrequired to date and is already recommended as a sup-plier for all customers that have audited it. "Challengeis what keeps me motivated to assure compliance withthe standards established by the Company, and hence,to achieve excellence in customer service. There hasbeen not a day like the other", she emphasizes.

A promising careerReaching the manager position of the IntegratedManagement System demanded effort and more per-sistence. In 2000, Michelle Lara joined Vallourec as anintern in engineering at the Integrated ManagementSystem for VBR, where she was hired and remaineduntil 2006. Then, she was transferred to Tubos SoldadosAtlântico (TSA), a company of the Vallourec Group, inSerra, in the state of Espírito Santo. At this company,she took over the area of implementation of the QualityManagement System and the certification of theCompany in the standards API Q1, API 5L, ISO 9001,as well as on the granting of qualifications to havePetrobras as a client. "When I went to TSA, theCompany was being formed. It was quite challengingto establish an integrated management system in thatcontext", she recalls.In 2010, she returned to Minas Gerais to act as a coor-dinator of the VSB Integrated Management System,before she became, in 2013, the sector manager. It ispart of her responsibilities to carry out the procedures

for customer qualification, the obtaining and maintainingof qualifications for environmental, health and safetymanagement systems, as well as to deploy the VMS(Vallourec Management System). To Michelle Lara, hermain mission is to make the custo-mer's requirements and standardsof management be understoodthroughout the company and the-refore increase the confidence ofcustomers of VSB products andservices.Married and seven-month pregnant,Michelle Lara is expecting the arrivalof Maria Luiza. At her free time, sheenjoys being with her family andfriends. She also likes good filmsand traveling, although her mainhobby is interior design. She is asubscriber of several specializedmagazines on the subject and isalways changing her house deco-ration. "I like it so much that it's common to see friendscoming to me seeking help and hints for their own housedecoration projects. I plan to take an interior designclass when my daughter is born, to get to know moreabout it", she says.

People

Michelle Christine Rocha Lara A former intern and the current manager of Integrated Management System.

The persistencein challenging

Vallourec celebrates 5 years in Nigeria

The major role of a quality manager is to ensure that customer require-

ments and standardsare respected

and met, while notforgetting that thecompany's realitymust be taken intoconsideration.

‘‘

‘‘Key figures

74employees

98%Nigerian nationals

16,000 m3

in Onne Free Zone

15,000tons capacity per year

At the occasion of the Nigeria Oil & Gas exhi-bition which took place in Abuja in March 2014,Vallourec celebrates 5 years of local presencein Nigeria. In addition to its commercial office inLagos, Vallourec today employs over 50 peoplein its first-class premium threading plant in Onne,near Port-Harcourt. The plant is qualified for thethreading of the latest VAM® connections andalso provides services such as storage, trans-portation, inspections and preparations – rigready & rig return. The plant has been certified by some of themajor international oil companies in Nigeria.

The success of this plant illustrates Vallourec’slocal presence strategy. 98% of its employeesare Nigerian nationals and Vallourec’s local enga-gement includes the help to local communitiesin accessing drinking water for example. In2012, Vallourec’s local subsi-diary financed the drilling of twowater wells to benefit the regio-n’s two main communities,Onne and Ikpokiri. In 2013,Vallourec also financed theconstruction of two libraries tobe opened in 2014.

Download the Vallourec Nigeriabrochure

The VallourecNigeria team in Onne,Port Harcourt.

The premium threading plant

in Onne, Port Harcourt.

Documents

The Vallourec Oil & Gas magazine N°06 / May 2014 · The Vallourec Oil & Gas Magazine N°06 / May 2014 / p.5 ... provide Subsea 7 with seamless ... companies have to ensure people’s