Pacific Drilling S.A. has reached an agreement with South Korea’s Samsung Heavy Industries to extend an option to construct an eighth ultra-deepwater drillship until January 18, 2013, on the same commercial terms, including delivery scheduled for the first quarter of 2015.
Pacific Drilling currently operates four recently delivered drillships under customer contract and has three drillships under construction at Samsung, two of which are under customer contract.
The Laguna Star, QGOG Constellation’s new ultra-deepwater drillship, arrived, Nov. 7, in Brazil. Samsung Heavy Industries shipyard, located in South Korea, built the Laguna Star as well as the Amaralina Star drillship, which is currently in operation by QGOG.
The unit will be operated by its subsidiary, Queiroz Galvão Óleo e Gás (QGOG), in water depths of up to 10,000 feet and well depths of up to 40,000 feet. It is equipped to operate in ultra-deepwater including the Brazilian pre-salt area.
The Laguna Star is the second drillship to be operated by QGOG, after Amaralina Star, which arrived in Brazil in August, 2012. The unit contributes to expanding and diversifying QGOG’s portfolio in ultra-deepwater drilling.
“The arrival of Laguna Star is another key milestone for the QGOG Constellation’s ultra-deepwater operations and, together with Amaralina Star, reinforces our operational track record,” said QGOG Constellation CEO Leduvy Gouvea.
These two drillships are chartered to Petrobras under six-year contracts, with options to renew for six additional years. Drilling services will be provided by QGOG.
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Nautronix’ NASeBOP Control System provides a method of backup control of critical BOP functions in the event of failure of primary communication and control. At the heart of the system is Nautronix’ ADS² (Acoustic Digital Spread Spectrum) signalling technology. The system achieves a highly reliable communications link from a surface vessel to a subsea isolation device, such as a full BOP, or a simple isolation device such as which would be used during surface BOP drilling.
The NASeBOP subsea system consists of two Subsea Control Units (SCU) connected to remote transducers. Each SCU is capable of controlling and monitoring up to eight functions. This includes control of an Emergency Disconnect Sequence (EDS). A 10 meter cable allows remote transducers to be positioned away from the SCUs, thus reducing the risk of shading or multi path effects caused by adjacent structures or subsea objects. Two SCUs provide system redundancy as each can be used independently for control and monitoring.
Mark Patterson, CEO of Nautronix comments: “We have invested more than £1M in Research and Development over the past year with a significant amount in the area of our NASCOM product family supporting acoustic switches for BOPs. We are very pleased to have been awarded these contracts only a few weeks after the NASDrill RS925 orders for these drillships. It is a great testament to the technology, products and the investment Nautronix has made and I am delighted that such a well known and respected company such as Rowan Companies, Inc. have chosen Nautronix ADS² acoustics for their new deepwater drilling rigs. Nautronix continues to build upon our strong track record in the Acoustic BOP control system market.”
The Nautronix system offered is the only system in the world that is fully compliant with API 16D and 17E standards and all test ports are testable to full operating depth (4000msw/5800psi)
The two NASeBOP systems will be delivered in 2013.
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International oil companies looking to start exploring Brazil, home to the largest discoveries in the past decade, can’t get near the crude.
Brazil has repeatedly delayed the sale of exploration areas since 2007, leaving Exxon Mobil Corp. (XOM) and Royal Dutch Shell Plc (RDSA) shut out of an offshore area that holds at least $5 trillion of oil. Meanwhile Petroleo Brasileiro SA (PETR4), the state-run company that pumps more than 90 percent of the country’s crude, is struggling to develop deposits it has already found. Petrobras’s output grew 1.5 percent in 2011, the slowest pace in four years.
Companies including Total SA (FP) have accelerated exploration off the coast of West Africa, where the geology is similar to Brazil and which holds large discoveries in deep waters. OGX Petroleo & Gas Participacoes SA, controlled by billionaire Eike Batista, began exploring in Colombia amid delays in offering new exploration tracts in Brazil.
“Brazil is someplace where we would like to be more present; at the same time we are in 130 countries, it’s not one against the other, it’s one plus,” Total Chief Executive Officer Christophe de Margerie said in a June 18 interview in Rio de Janeiro. “I hate to say it but if it doesn’t work it doesn’t work. We would like it to work.”
Petrobras this month increased its five-year spending plan 5.3 percent to $236.5 billion, the biggest in the oil industry, to develop deposits in waters as deep as 2,800 meters (9,200 feet) and trapped under a layer of salt.
Petrobras trades at 6.81 times its estimated 2013 earnings, compared with a ratio of 9.74 for Exxon, 7.12 for Shell and 6.28 for Total, according to data compiled by Bloomberg.
Revenue at the Brazilian producer totaled $150.7 billion in the trailing 12 months, less than Exxon’s $442.9 billion, Shell’s $480.2 billion and Total’s $236.2 billion.
While a legislation change in 2007 put Petrobras in charge of all new contracts in the so-called pre-salt area off Brazil, the company hasn’t been able to extract oil fast enough to meet targets. Petrobras cut its long-term production guidance by 11 percent to 5.7 million barrels a day in 2020. Output will remain within 2 percent of 2011 levels until 2014, it said on June 14.
The lack of new exploration areas in Brazil has encouraged some companies to concentrate on other regions such as offshore Africa, where Tullow Oil Plc (TLW) and Cobalt International Energy Inc. (CIE) have made discoveries in deep waters. Last year, Anadarko Petroleum Corp. (APC) announced plans to sell all its Brazil blocks, granted before the 2007 legislation change, as it boosts investment in natural-gas projects in Africa.
“The absence of bid rounds is affecting all oil companies in Brazil,” Joao Clark, the head of Ecopetrol SA (ECOPETL)’s Brazilian operations, said in an April 17 interview in Rio de Janeiro. “We need new blocks, we have to improve our portfolio.”
Exxon quit its only Brazilian block this year after drilling three dry holes in deep waters, Patrick McGinn, a company spokesman, said by e-mail from Irving, Texas. The explorer is seeking more opportunities in the country, he said.
Petrobras is failing to meet output goals after new offshore wells didn’t compensate for declines at older fields. That jeopardizes its 2020 target. Brazil is counting on the company to provide national energy self-sufficiency to meet demand from a growing economy. Petrobras pumped 93 percent of the country’s oil and 99 percent of its gas in April.
Foreign producers including Exxon and Total, with little acreage in Brazil, are seeking to eat into that share as fields dwindle in other areas such as the North Sea and Alaska’s North Slope. Brazil hasn’t auctioned any offshore permits since before announcing the potential of the pre-salt zone in 2007 and hasn’t sold any blocks at all since 2008, when it sold tracts on land.
“I understand quite well the anxiety of those companies,” Petrobras Chief Executive Officer Maria das Gracas Silva Foster told reporters in Rio on Feb. 13, the day she was promoted to the role. “For them it might be really important. For Petrobras, it makes no difference. We have a lot of work to do.”
Brazil probably won’t offer any areas in the region until 2013 because lawmakers are debating how to distribute future revenues, Marco Antonio Almeida, the Energy Ministry’s oil and gas secretary, said in a May 3 telephone interview from Brasilia. The pre-salt auctions will only occur after Congress votes on how to distribute the royalties from future output, the Energy Ministry said in an e-mailed response to questions.
The combination of political wrangling, requirements to buy locally built equipment and Petrobras’s budget constraints may even push new rounds to 2014 at the earliest, according to Christopher Garman, a Latin America analyst at Eurasia Group.
“The sentiment within the upper levels of government is they already have their hands full,” Garman said by phone from Washington. “What is really hurting the decisions of international oil companies to stay is the lack of a pipeline of new opportunities.”
Petrobras is required to have a minimum 30 percent stake in new pre-salt blocks. That means the Rio de Janeiro-based company can sign contracts before knowing who it will work with, making it hard to set up the auctions, Almeida said. “It’s a situation that doesn’t exist anywhere else in the world,” he said.
The lack of auctions has put a premium on existing permits. Companies that bought exploration areas before the discovery of Lula — the field previously known as Tupi, which was the Americas’ largest oil discovery in more than three decades — have seen the value of those areas increase as a result of oil- price gains and scarcity of acreage, Peter Gaw, head of oil, gas and chemicals at Standard Chartered Bank, said in an interview.
BG Group Plc (BG/) owns 25 percent of Lula, while Portugal’s Galp Energia SGPS SA (GALP) has a 10 percent stake. Repsol SA owns 25 percent of a neighboring block. Their properties, purchased years before anyone knew what they were worth, have since attracted global peers to the south Atlantic.
China Petrochemical Corp., Asia’s biggest refiner, has agreed to invest $12.3 billion to become a minority partner with Repsol and Galp in Brazil. BP Plc (BP/), who skipped the first pre- salt auctions, paid Devon Energy Corp. $3.2 billion last year for nine blocks in the country.
Petrobras doesn’t need to worry about the timing of new sales because oil will only gain in value in coming decades, Silvio Sinedino Pinheiro, elected to the company’s 10-member board by workers this year, said in an April 11 interview at its headquarters.
“Here at Petrobras we talk a lot about if it makes more sense to sell now at $100 a barrel, or sell in 30 years when it costs $200 a barrel,” he said.
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Pacific Drilling S.A., a fast growing company dedicated to becoming the preferred ultra-deepwater drilling contractor, has received a letter of award for the Pacific Sharav drillship, revealed the company’s CEO Chris Becket.
CEO Chris Beckett commented on the increasing demand for ultra-deepwater units: “During the early part of 2012, demand for ultra-deepwater drillships continued to strengthen, as demonstrated by the acceleration in multi-year inquiries and contract awards with increasingly higher dayrates. We expect to see market demand exceed supply well into 2014.”
He added: “In this favorable market context, the Pacific Sharav received a letter of award from a major oil company for a long term commitment. We expect to provide more details on this commitment in the coming weeks. These positive market dynamics supported our decision to order a seventh drillship, scheduled for delivery in May 2014.”
Construction of the Pacific Sharav started in March 2012 at Samsung Heavy Industries in South Korea. Delivery of the rig is expected in September 2013. The vessel, of Samsung 12000 design, will be capable of operating in 12,000 ft water depth and equipped for 40,000 ft drilling depth. The ship will be able to accommodate a crew of 200.
Pacific Drilling’s fleet of seven ultra-deepwater drillships will, once completed, represent one of the youngest and most technologically advanced fleets in the world. The company currently operates four recently delivered drillships and has two additional drillships under construction and one on order at Samsung.
During the first quarter of 2012, the company invested $102 million in the construction of the fleet, including the initial payment for its seventh drillship.
“We estimate the remaining capital expenditures for our committed drillships at $1.6 billion,” read the company’s statement.
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