Tight Labor Vexes Brazil's Deep-Sea Oil Drilling
Date: 18-Sep-08
Country: BRAZIL
Author: Stuart Grudgings
High oil prices, previous under-investment in training by the energy industry, and increasingly hard-to-access reserves have driven up the cost of the complex equipment and skilled engineers needed for major oil projects.
"Perhaps our single greatest hurdle lies in the hiring and training of people," said Mark Riding, the deep-water theme director for oil field services supplier Schlumberger Ltd, during a seminar at the biennial Rio Oil and Gas conference this week.
"Years of under-investment in talent have led to a limited and aging pool of skilled workers."
About 35,000 people are attending the four-day conference, which is focused heavily on the newly discovered subsalt reserves off Brazil's southern coast.
Petrobras has invested US$1 billion in drilling 20 wells into the subsalt layer since 2005. Analysts estimate the reserves could contain up to 80 billion barrels of oil, catapulting Brazil into the top 10 oil producers.
To reach the oil, though, the company and its foreign partners will have to spend big -- about US$600 billion, according to a report this year by investment bank UBS -- and surmount major technological barriers.
The oil sits up to 7 km (4.5 miles) below sea level, beneath a thick layer of salt, making it among the deepest, most technically challenging and most costly in the world to tap.
"There's no silver bullet, there's just a litany of good challenges, for which the industry has proven ability to solve and overcome. We just keep going for harder places every time," said Steve Thurston, vice president of deep-water exploration at US major Chevron.
Thurston noted that subsalt production was increasingly becoming the norm, with 40 percent of new discoveries in such areas.
DEEP TECHNOLOGY
"Frankly, there are huge technological barriers for anyone producing from the sub-sea," said Simon Everett, managing director of British specialist equipment firm Remote Marine Systems.
"Drilling at that depth just produces enormous technical challenges -- it does compare to putting somebody on the moon."
Riding said that advances in thermal imaging, deep electromagnetic imaging, high-precision drilling, and reservoir fluid analysis were bringing many subsalt areas within reach. There would likely be 433 deep-water fields operating globally by 2012 compared with 44 in 2000, he said.
Extracting oil at such depths requires highly specialized equipment -- from huge well-heads to tiny valves -- to cope with massive water pressures, extreme temperatures, and other deep-water challenges.
"If you look at the rigs that are coming in here between now and 2013 it's just phenomenal," said Graham Cheyne at British firm Expro. "It's going to be just way beyond what the market can sustain."
Petrobras plans to double its rigs in deep and ultra-deep waters to 63 by 2017. On Monday, it awarded 10 contracts to build new floating production storage and offloading units to tap the reserves, which are due to begin commercial production in 2010.
"There are so many oil companies wanting to develop and expand to take advantage of the high oil prices, I don't think the supply chain has caught up with demand," said Everett.
(Editing by Matthew Lewis)