Brazil is in the process of preparing two new floating production,
storage and offloading vessels, or FPSOs, to start oil and natural gas
production in the country’s record-setting subsalt frontier, state-led
producer and refiner Petrobras said Thursday.

The FPSO P-69 arrived at the Brasfels shipyard in Angra dos Reis, south
of Rio de Janeiro, on Tuesday, Petrobras said. The vessel will have 18
processing modules installed onboard before heading out to start production at
the Lula Extremo Sul area of the massive Lula Field in 2018, the company said.

The new floating production units are part of eight that will be
installed offshore Brazil over the next two years, according to Petrobras’
investment plan for 2017-2021. The ultra-deepwater region accounted for nearly
50% of Brazil’s total crude output in January, including a record 1.276
million b/d of oil and 49.53 million cu m/d of natural gas from 73 wells.

The FPSO P-69 is part of five new production units expected to come
onstream in 2018, with all of the new FPSOs installed at subsalt fields. In
addition to Lula Extremo Sul, FPSOs are also expected to pump first oil from
the Berbigao area in the transfer-of-rights area and the Buzios 1, Buzios 2
and Buzios 3 modules of the Buzios Field.

Petrobras owns a 65% operating stake in the Lula Field, which is
Brazil’s largest oil and gas producer. Shell retains a 25% minority stake,
while Portugal’s Galp Energia holds the remaining 10%. The P-69 will be
capable of producing up to 150,000 b/d of oil and processing up to 6 million
cu m/d of gas, according to Petrobras.

Fresh production records are also expected in 2017, when Petrobras and
its partners developing the subsalt region are scheduled to install three new
FPSOs. Petrobras expects to install new FPSOs at the Lula Norte and Lula Sul
areas of the Lula Field in 2017, as well as a single floating production unit
that will produce from the sister Tartaruga Mestica and Tartaruga Verde
fields.

The FPSO P-66, which will be installed at the Lula Sul area, left the
Brasfels shipyard in early February and has already arrived on site, where
work to anchor the vessel and connect the first production well is currently
underway.

Petrobras also expects to connect 57 new production and injection wells
in 2017 to FPSOs installed over the past 18 months, which are now undergoing
the ramp-up phase of output development, according to the company. Petrobras
connected 56 wells in 2016, down from a recent high of 73 wells in 2015.

Brazil will also see an additional boost to output in the fourth quarter
of 2017, when a long-term well test is conducted at the subsalt Libra Field
and independent producer QGEP Participacoes starts an early production system
at the Campos Basin’s Atlanta Field.

The FPSO Pioneiro de Libra, which will conduct the long-term well test at
Libra, also left the Jurong shipyard in Singapore for Brazil on Tuesday,
Petrobras said in a separate statement. The FPSO will be leased by the group
developing Libra, which was Brazil’s first subsalt field sold under the
country’s new production-sharing regime. The field is estimated to hold 8
billion-12 billion barrels of recoverable reserves.

The Navion Norvegia tanker was converted to an FPSO capable of pumping
50,000 b/d of oil and processing 4 million cu m/d of gas, according to
Petrobras. The FPSO is expected to arrive in Brazil in early June.

“The FPSO will be the first to operate in the Libra block,” Petrobras
said in the statement. “The long-term well test seeks to reduce risks and
optimize definitive production systems for the area.”

Petrobras operates the Libra production-sharing area with a 40% stake,
while Shell and Total each retain 20% shares. Chinese state oil companies CNPC
and CNOOC also each own 10% minority stakes.

The long-term well test at Libra is expected to start in the third
quarter of 2017, Petrobras Exploration and Production Director Solange Guedes
said last week.

–Jeff Fick, newsdesk@platts.com

–Edited by Derek Sands, derek.sands@spglobal.com

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