I N NOVATION S I N DE E PWATE R
OTC panel: Deepwater’s low-cost,
low-emission profile to keep it
competitive in coming decades
Companies exploring carbon credits, CCS
technologies and supply chain decarbonization
to fully leverage deepwater E&P’s advantages
BY STEPHEN WHITFIELD, ASSOCIATE EDITOR
E&P companies face a difficult balancing
act. They have to address the world’s grow-
ing push for renewables and environmen-
tal sustainability, which impact invest-
ment trends and business strategies, at the
same time that factors like the COVID-19
pandemic, the Russia-Ukraine war and
global inflation push them to explore for
and produce more hydrocarbons.
According to a panel of analysts and
industry experts at the 2023 Offshore
Technology Conference, this approach of
increasing E&P activity while incorporat-
ing low-carbon solutions will define oper-
ator activity in the near- and long-term
future. Deepwater oil and gas will play a
key role in enabling that journey.
“Deepwater production is going to grow
more quickly than any other resource,”
said Julie Wilson, Research Director, Global
Exploration at Wood Mackenzie. “All of the
hype you’ve heard about tight oil and LNG,
ignore all of that. Deepwater is where we’re
going to see the most growth.”
Wood Mackenzie estimates that, by
2050, the world’s total discovered and pro-
spective oil resources will be more than
double its base-case energy transition
outlook oil demand forecast, and natu-
ral gas resources will be close to double
the expected demand. However, not all
resources will be cost effective and/or
emissions efficient, so the industry will
have to become much more selective.
“Advantaged” barrels, which Wood
Mackenzie defines as resources with
breakeven price below $30/Brent and
an emissions intensity of less than 20
kgCO 2 e/BOE, will be prioritized in the
coming years. However, only 28% of the
resources in commercial undeveloped
fields currently meet those criteria. This
means operators will have to invest in
solutions to help turn disadvantaged
resources into advantaged resources, Ms
Wilson said.
“Total resource is not the issue,” she
explained. “Many of the resources we have
in our database have never been developed
because they are too expensive, too dirty or
too far from markets – whatever the reason,
they’re disadvantaged. There’s still a great
deal of demand required, and exploration of
new resources is going to be required.”
Going forward, E&P operators will like-
ly produce some of the disadvantaged
resources in order to meet demand, but
they will be looking to offset some of the
cost and emissions by maximizing pro-
duction from more advantaged develop-
ments like deepwater.
One example is the Guyana-Suriname
Basin, which already has more than 50
wells on the Stabroek Block even though
exploration in Guyana only began in 2019.
Joint venture partners ExxonMobil and
Hess made nine discoveries on the block
last year and, just in April, announced
sanction of their fifth project there – Uaru .
Upon startup in 2026, the project is expect-
ed to produce 250,000 bbl/day of oil .
Clare Gardner, Exploration Director –
South America at Hess, pointed out that
the average breakeven prices of the first
four sanctioned projects in the area –
Liza Phase 1, Liza Phase 2, Payara and
Yellowtail – ranged between $29-$35/bbl.
“If you look back to the beginning of
2019 with Guyana, we were getting zero
production. Now we’re getting 75,000 bar-
rels a day in Q1 2023. The pace and scale
at which these projects are coming online
A panel of industry representatives at the 2023 OTC discussed the role they expect deepwater to play in the near- and long-
term future . Pictured (from left) are Maiza Goulart, Petrobras; Brandon Finley, TechnipFMC; Sarah Hill, BP; Romain Chambault,
Baker Hughes; Clare Gardner, Hess; and Julie Wilson, Wood Mackenzie.
38 J U LY/AU G U ST 2023 • D R I L L I N G C O N T R AC T O R
I N NOVATION S I N DE E PWATE R
is just phenomenal. We feel the basin is
going to play a key role in future deepwater
growth – we still have billions of barrels
yet to find there,” Ms Gardner said.
The area also holds great potential
for low-emissions energy, she added. In
December 2022, Hess announced plans to
spend $750 million on carbon credits under
the United Nations Reducing Emissions
from Deforestation and Forest Degradation
(REDD+) program. The deal, which will see
Hess purchase 37.5 million REDD+ carbon
credits from the Guyanese government, is
designed in part to help offset carbon emis-
sions from its deepwater E&P activity.
Carbon capture and storage
For Petrobras, carbon capture and stor-
age (CCS) has been a primary driver in
reducing emissions intensity from its
deepwater megaprojects in the Brazilian
pre-salt, increasing the efficiency with
which it produces hydrocarbons while
also reducing greenhouse gas emissions.
Maiza Goulart, Head of Petrobras’
Research and Development Center, said
that many of the operator’s fields in the
basin carry a high amount of CO 2 , particu-
larly in the natural gas, and this CO 2 can
challenge the topside production capac-
ity of its FPSOs. So, in 2018, the com-
pany began reinjecting CO 2 produced from
its production platforms into reservoirs
beneath the seabed.
Currently, all 21 Petrobras production
platforms operating in the pre-salt incor-
porate CCS combined with enhanced oil
recovery techniques, and this effort has
paid dividends.
Last year, the company reinjected 10.6
million tonnes of CO 2 , a 22% increase from
the 8.7 million tonnes it reinjected in 2021.
According to the Global CCS institute, the
10.6 million figure represented approxi-
mately 25% of the total CO 2 that was stored
globally last year.
Petrobras is also developing a high-pres-
sure separation (HISEP) technology, which
will separate and reinject gas with high CO 2
content produced alongside the oil while
on the seabed. A two-year pilot test period
is expected to begin at the Mero 3 presalt
field upon its startup in 2024. The operator
is also aiming to install the system in other
pre-salt fields, such as Libra Central and
Jupiter, if the pilot proves successful.
“All of the hype you’ve
heard about tight oil
and LNG, ignore all
of that. Deepwater is
where we’re going to
see the most growth.”
- Julie Wilson, Wood
Mackenzie “This is going to be a very important
solution in increasing the energy efficien-
cy and the reliability of high-CO 2 fields
we have in the pre-salt,” Ms Goulart said.
“If we can use the HISEP system to avoid
having to do the reinjection process at
the surface, it could have an impact on
the CAPEX, OPEX and lead times of our
pre-salt fields. It’s a good example of how
our technology profile can help support
our goals.”
CCS was also cited by TechnipFMC
as a key pillar of its energy transition
plans. In 2021, the company entered a
strategic alliance with Talos Energy on
front-end engineering design and storage
site characterization for Talos’ CCS hub
in the US Gulf of Mexico. That same year,
TechnipFMC acquired Magma, a manu-
facturer of a hybrid flexible pipe that could
become an enabler for efficient CCS in off-
shore environments, said Brandon Finley,
Commercial Director – New Energy at
TechnipFMC. The pipe is made of a combi-
nation of carbon fiber and polyether ether
ketone and is resistant to highly corrosive
natural gas, like the high-CO 2 gas in the
Brazilian pre-salt.
“CCS is the type of market that’s allowed
us to integrate both our surface and subsea
divisions to look at how we can make the
most optimal solutions,” Mr Finley said.
“We’ve really been able to jump into a mar-
ket that we think is maturing very quick-
ly. As we move further and further into
deepwater, we think we’ll be able to take
advantage of some of these technologies
that have been developed in oil and gas.”
Supply chain management
Beyond operators’ efforts to reduce
emissions, another theme that emerged
from the panel session was the value
in decarbonizing the deepwater supply
chain. Romain Chambault, VP – Global
Services and Offshore at Baker Hughes,
emphasized the role that service compa-
nies can play in helping the industry to
commercialize and scale deepwater and
low-carbon technologies.
“The biggest challenge for us is how
can we partner not only with our cli-
ents but throughout the supply chain,” Mr
Chambault said. “We’re not going to find
the solutions all by ourselves. We have
to leverage the supply chain to actually
scale the technologies that are going to
help us. When we’re working with small
developers, they don’t necessarily know
how to scale their technologies to bring
them to market. We can provide that
scale.” BP also says it has been focusing on
better supply chain management in order
to boost the efficiency of its deepwater
projects while lowering its carbon foot-
print. The company’s partnerships with its
vendors, for example, are key to success-
ful adoption of sustainable solutions, said
Sarah Hill, VP – Procurement, Americas
and Manufacturing at BP.
Last year, the company signed a
memorandum of understanding with
Thyssenkrupp Steel to decarbonize steel
production, primarily through the replace-
ment of coal-fired blast furnaces, used
to turn iron ore into steel, with hydro-
gen-powered plants. The operator is also
developing methods to track the carbon
footprint of its supply chain so that it
can identify opportunities for emissions
reduction. Supply chain management has become
especially critical for BP as it expands
its deepwater portfolio, Ms Hill said. The
operator has developed 14 oil and gas proj-
ects, including Mad Dog Phase 2 in the US
Gulf of Mexico, over the last three years
and plans to start up four more projects
this year – GTA Phase 1, KG D6 MJ, Seagull
and the Tangguh Expansion.
“We really need to understand how
we can support our deepwater business
with our sustainability agenda and how
we can create that partnership,” Ms Hill
said. “Our suppliers have been helping us
to achieve immediate supply chain emis-
sions reductions in an area that can be
hard to crack.” DC
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