PetroRio to tie back two Brazilian fields following FPSO acquisition

Brazilian oil and gas company PetroRio has signed binding documents for the acquisition of the OSX-3 FPSO for $140 million and the farm-in with Dommo Energia of 80% in the Tubarão Martelo field (TBMT) off Brazil, where the vessel is currently chartered. 

OSX-3 FPSO
OSX-3 FPSO; Source: PetroRio

PetroRio said on Monday that the acquisition would allow for the tieback between TBMT and Polvo field, thus simplifying the production system and creating a private oilfield cluster, while enabling significant synergies, lifting cost reductions, and the extension of the useful life of both fields.

Once the tieback takes place, the company estimates Polvo’s and TBMT’s combined opex, which is currently over $200 million per year ($100 million for Polvo + $100 million for TBMT), will be reduced to less than $80 million per year.

Additionally, lifting cost could be reduced to under $16 per barrel as result of air, sea, and land logistics synergies, and the decommissioning of the FPSO currently chartered to Polvo. It is worth reminding that BW Offshore’s Polvo FPSO, which is currently operating on the Polvo field, in January 2020 won a one-year extension from PetroRio.

The cluster’s opex reduction will allow for a longer-term operation, during which more oil can be recovered. PetroRio estimates the assets’ useful life could be extended to at least 2035 – a 10-year extension- and 40 million barrels added to Polvo’s current reserves.

 

The tieback

 

The tieback between Polvo and TBMT has been thoroughly assessed by PetroRio’s technical and executive teams in the past years. Technologies developed for similar projects have been extensively employed by the industry in the past five years, primarily in the Gulf of Mexico and in the Noth Sea. The company estimates the project’s capex will range between $50 to $60 million, to be disbursed during the first half of 2021.

Leading up to the tieback’s completion, PetroRio will own rights to 80% of TBMT’s oil and will be responsible for 100% of the FPSO’s charter, the field’s opex, capex and abandonment costs. During this phase, the company will be reimbursed by Dommo at a monthly fee of $840 thousand, equivalent to 20% of Dommo’s current Opex (ex-charter costs).

Once the tieback is completed (estimated for mid-2021), PetroRio will remain responsible for 100% of costs for the cluster, while Dommo will be relieved of the monthly fees. In this new phase, PetroRio will have the rights to 95% of the oil produced by the cluster up to the first 30 million barrels produced post-tieback, and 96% thereafter.

The captured synergies will reduce the combined emissions by approximately 35% after the tieback’s conclusion, as the result of a reduced number of operated assets in the cluster, therefore lowering the operations’ environmental impact.

Layout after the tieback of the assets

TBMT field reached its peak in 2014, producing 14,000 barrels of oil per day. Today, the asset produces approximately 5,800 bbl/d and is currently undergoing a revitalization campaign that, once concluded, could increase TBMT’s production to up to 10,000 bbl/d. The company believes Dommo will be an important partner when the unified production system is installed and operated by PetroRio.

The OSX-3 is a floating, production, storage and offloading (FPSO), built and delivered to the Tubarão Martelo field in 2012. The vessel has the capacity to process 100,000 barrels of oil per day and store 1.3 million barrels.

 

Polvo drilling campaign

 

Following Polvo field’s Phase 3 of its revitalization plan, the company has confirmed, through the drilling of a pilot well, the presence of oil in two carbonate reservoirs (Ipanema and Leblon prospects) in the Quissamã Formation, and a sandstone reservoir in the Emborê Formation of the Eocene Period.

Having observed that the permeability and area of the Ipanema carbonate reservoir satisfied initial estimates, the company chose to complete the producing well in the Quissamã Formation reservoir, which has a 76- meter vertical net pay and average porosity of 18%.

During the first days of production, the oil’s viscosity was higher than expected, and requires further laboratory analyses and tests with injection of chemical products in order to improve oilflow.

Once the tests are concluded, the company will decide on the completion of the second producing well, a sandstone in the Emborê Formation, with 45-meter vertical net pay.


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