Exploration to Production in 2 Years: A Contracting Strategy Case Study

Abstract

The IEA tells us that hydrocarbon fuels will continue to dominate the global energy mix with coal, oil and natural gas supplying almost 80% of primary energy needs. The consequent higher costs of new supply and the challenges of matching supply and demand are not likely to decrease.Brazil is one of emerging areas offering a cushion to this demand-supply gap. Typically the offshore exploration efforts in Brazil were led by NOC and IOCs. This changed in July 2007 with the creation of a new Independent Brazilian O&G Company. The company acquired 21 exploration blocks in November 2007 and increased its portfolio to 29 blocks by March 2009. The challenge of exploiting the blocks was achieved by setting ambitious, time bound, exploration and production goals and delivering against those goals.A conventional contracting strategy would have required a large in house team, with relevant technical expertise and multiple service contracts. It would have led the company to recruit heavily and to develop multiple internal processes and procedures prior to being able to start operations. However, the time frame set by the company to deliver the goals required a different approach. The company clearly needed to multiply its talents through rapid access to resources, people and technology in a technology intensive industry.The company chose an outsourcing strategy pillared on project management, and worked wherever practicable and appropriate to minimize the number of contractors. The majority of the exploration work was contracted to two major contractors, one integrated oilfield service provider and one drilling contractor. This gave the company access a large pool of petro-technical experts, mature processes and a wide portfolio of technologies in a short period of time.This paper looks at how this strategy allowed the company to successfully achieve its goals and increase value to its stakeholders. It also looks at the issues encountered and how they were productively turned around.

Análise dos desafios e soluções para aprimorar o desempenho operacional de poços de exploração no pré-Sal brasileiro.

“…The knowledge acquired during previous drilling (learning curve) and completion projects helps to reduce drilling time. According to Fernandes et al (2020), the contracting strategy can also play a significant role in cost reduction and time savings, Passos et al (2012) suggest an outsourcing strategy based on integrated project management to reduce the number of contractors and to overcome many of the drilling challenges.…”