Brazil Deepwater Oil to Rescue? I Don’t think so

Posted: April 27th, 2008 by: h2

Bloomberg is really on a roll today for some reason. Rather than regurgitate the same nonsense that the normally uninformed mass media is prone to, Bloomberg actually posted an article about how A: incredibly difficult it will be to pump any oil at all from their recent deep sea finds, and B: how the technology to do it does not yet even exist.

So don’t get too excited about the coming drops of Brazilian oil.

Brazil’s plan to become one of the world’s biggest oil exporters hinges on exploiting crude six miles below the ocean surface in deposits so hot they can melt the metal used to carry uranium to nuclear plants.

Tapping what may be the biggest oil finds in the Western Hemisphere in three decades will require equipment that can withstand 18,000 pounds per square inch of pressure, enough to crush a pickup truck, pipes that can carry oil at temperatures above 500 degrees Fahrenheit (260 Celsius) and drill bits that can penetrate layers of salt more than one mile thick.
“This is a very, very technically challenging environment where no one’s ever done this,” Cline, who tracks the Latin American oil industry, said in a telephone interview from Washington. “These discoveries are in very deep water, and once you get to the seabed they are very deep under the floor, with a layer of salt that is definitely a difficult barrier.”

Brazil’s oil will be harder to develop than the Gulf of Mexico, where the deepest wells are now in production, Cline said. Exxon Mobil Corp. and Chevron Corp., the two biggest U.S. oil companies, saw diamond-crusted drill bits disintegrate and steel pipes crumple when they attempted to tap deposits beneath the Gulf’s seafloor two years ago.
Brazil Oil Trapped in 500-Degree Heat, Metal-Crushing Pressure, Bloomberg

What’s amazing is that when you look at the technical challenges of drilling this deep, you start to realize that these fields now constitute our best hope for the future. In case you have trouble understanding this: there will be only more and more complex and expensive oil finds now. We are at the end of the road, and this level of challenge merely proves that we are in fact facing the true crisis, now.

Pumping oil from the Brazilian finds, parts of which are 32,000 feet (10,000 meters) below the ocean’s surface, will require boring almost twice as far down as the world’s deepest producing offshore well.
Engineers will have to overcome temperatures that range from near freezing above the ocean floor to temperatures that can melt bismuth, used for transporting uranium rods and for shotgun shells. Layers of salt will also increase the challenge because the crystals absorb seismic waves used to pinpoint oil deposits.
“What we do at that water depth in the ocean is similar to NASA’s space program, but they get to do it without any pressure trying to attack them,” Kevin Renfro, production engineering manager at Woodlands, Texas-based Anadarko, said in a November interview.

Petrobras hasn’t said how much it spent to sink wells at Tupi and Carioca. Similar drilling by Exxon and Chevron Corp. in the Gulf of Mexico cost $180 million to $200 million for each well.
Brazil Oil Trapped in 500-Degree Heat, Metal-Crushing Pressure, Bloomberg

While on a geek level, it’s interesting to read this type of article, the way the companies try to overcome the challenge is interesting. But the key word is ‘try’, they have in fact totally failed in the recent past. In similar deep water environments.

My guess is if or when the new Brazilian fields start to produce crude in commercial quantities, the oil will all go to feed Brazilian demand, and never even see the open market.

You can read about the current state of ultra deep water Gulf drilling. Or check out the failure of the $110 million Blackbeard West well:

Blackbeard West No. 1, perhaps the world’s most closely watched exploration well because of its extremely deep target, fell well short of its goal and cast at least some doubt over the future of “ultra-deep” drilling for natural gas on the Gulf of Mexico’s outer continental shelf.

Blackbeard partner Newfield Exploration said drilling on the ExxonMobil-operated wildcat was halted at 30,067 feet, short of its primary targets down to around 32,000 to 38,000 feet. The well was spud in February 2005 and was expected to take a year or longer to drill.

“The well failed to reach its primary targets because of higher than expected pressure,” Newfield said Aug. 16. “The operator is preparing to temporarily abandon the well.”
Blackbeard casts doubt on ultra-deep,

On a purely technical level, it’s astounding stuff, but if you stop to think about what they are now doing to try to get the last big oil finds pumping, it’s really just a stop sign for homo petroleus.

And, a bit more recently:

July 9, 2007
… Lord Browne discussed the delay of the Thunderhorse deepwater project in the Gulf of Mexico. BP and Exxon Mobil had expected it would go on line in early 2007 but metallurgical defects in subsea equipment led to delays. Start up is now projected for year-end 2008. The field contains reserves of about 1 billion barrels and BP expects to go on production at 250,000 bbl/day. On June 27, Hess Corporation announced premature suspension of drilling operations at its Pony No. 2 well in Green Canyon block 468 in deep water of the Gulf of Mexico. The well was cased at 23,500 feet with plans to drill to 32,500 when mechanical problems developed. The Diamond Offshore rig will be repaired in drydock and Hess expects to resume drilling in late September of this year. Hess is the 100% operator of this block and reserves are estimated to be in the range 100-600 million barrels. The road ahead in the deep waters of the Gulf of Mexico will be difficult. So much depends on the safety of the production system that any deficiency must be dealt with immediately. These reverses delay new production until a time when worldwide production will be in further decline than it is today. Consequently crude oil prices are going to be higher [my emphasis].
Chevron setback in the Gulf of Mexico means higher crude oil prices,

Incredible stuff. Note how internally, the oil industry has no problems admitting that global production is in fact in decline almost everywhere, and that oil prices will rise. And that was almost 1 year ago. Too bad main stream media pundits and delusional politicians are being allowed to set the tone for the public discourse on a topic that is going to be, along with global climate change, the most important thing to hit humanity, possibly ever.

More on Thunderhorse problems.

So next time someone glibly tells you it’s all going to be fine because of the basically 1 year global production that allegedly may be recoverable from Tupi deepwater oil fields, remember this information.

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