In 2007, OGX was but a dream of Brazilian entrepreneur Eike Batista. In the course of three short years, the company secured financing for leases, bid on and won shallow water blocks, secured drilling rigs, hired about 150 staff, tallied six straight operated discoveries and started on production plans for one of its finds. Jennifer Pallanich charts the independent's meteroric rise.
OGX seemingly appeared from nowhere, snapping up blocks in Brazil's 9th bidding round in 2007 and in several cases outbidding oil giant Petrobras.
‘This bidding round was a success for OGX. They bid on 23 blocks and they won 21. It was a very good index for us,' says Reinaldo Belotti, OGX's director of production development. ‘It was the starting point. We needed those blocks to exist.'
Blocks in hand, OGX's exploration team kicked into high gear, sifting through lots of data to create a drilling campaign. The company also managed to obtain access to four Diamond Offshore semi rigs and one Pride International semi. ‘It was very difficult. There were no rigs,' says Belotti, recalling the tight market in 2007.
As of early March this year, OGX had drilled six shallow water wells in the prolific Campos Basin as an operator and was lining up another five wells. ‘We intend to drill at least 27 different wells this year,' Belotti notes. ‘At the end of the campaign, we'll have more exploratory wells in Brazil than all the other companies put together, except Petrobras.'
OGX – it stands for Oil & Gas and X as the mathematical multiplier symbol – has been on fire since the Ocean Ambassador spudded the company's inaugural well on the Vesuvio prospect in block BM-C- 43. The debut discovery announced in October 2009 holds an estimated 500 million barrels to 1.5 billion barrels of recoverables. More eye-opening was the announcement about the second well, made at the end of December: the well at the Pipeline prospect holds an estimated 1-2 billion barrels of recoverables.
The 1-RJS well on the Vesuvio prospect encountered an oil column of over 200m with 57m of net pay with high permo-porosity. The well reached 2347m TD in 140m of water.
‘The well 1-OGX-1 validated the geological model developed from the 3D seismic and the exploratory strategy adopted by our technical team,' says Paulo Mendonça, general executive officer of OGX.
The 2A-RJS well on the Pipeline prospect found oil in five reservoirs: shows in the Eocene and Upper Cretaceous, a 250m oil column with 100m of net pay in the Albian, a 170m oil column with 50m of net pay in the Aptian, and a 50m oil column with 15m of net pay in the Barremian. The well was drilled to about 3550m depth in 130m of water. In the Waimea prospect, the 3-RJS well, drilled to 4084m TD in 130m of water, found three reservoirs: the Albian with 130m oil column with 80m of net pay, and the Aptian and Barremian with a 180m oil column with 50m of net pay.
The 4-RJS well in the Kilawea prospect found a 90m oil column with around 17m of net pay. It was drilled to 3467m depth in 150m of water. The 5-RJS well at the Krakatoa prospect found oil in two reservoirs: a 130m oil column with 30m of net pay in the Albian and an oil column of 46m with 20m of net pay in the Aptian.
The Ocean Quest is still drilling the 6-RJS well at the Etna prospect to about 3600m, but OGX reported finding a 70m oil column with 38m of net pay in the Albian carbonate reservoir in block BM-C-41 offshore Brazil.
OGX said it has collected over 50m of reservoir rock cores at the Etna well to analyze characteristics of the reservoirs and to aid in the appraisal and development of future projects. According to OGX, sample cores and logs from the Etna find in 137m of water indicate a strong correlation between the Albian reservoirs of the Etna well with Waimea and Pipeline, the company's biggest discovery to date.
‘Our review of this data indicates that these accumulations may be connected and that the recently discovered oil province may, in fact, extend to the north of the BM-C-41 block, confirming its very significant petrolific potential,' Mendonça says. ‘New data will be collected and new wells will be drilled in order for us to better map the prospects identified in this province.'
With such a string of finds OGX found itself in the spotlight, and other companies began to pay attention, examining how the start-up was delivering such success.
‘Doctor Oil' delivers
‘We have a very good team. We have very good assets. We have very good knowledge, and we're using the best technology that is possible' is how Belotti describes the company's strategy. Belotti says OGX is fully staffed with experienced people who have a deep familiarity with the Brazilian oil market. Indeed, a good number of OGX's 150 staffers are ex-Petrobras. Mendonça, the general executive officer who is nicknamed Doctor Oil, was responsible for discovering 50 new oil fields, including ultra-deepwater pre-salt finds like Tupi, during his six-year tenure as the head of E&P for Petrobras. He's already quickly pinned down six discoveries for OGX since becoming its first employee in 2007.
Quality seismic, combined with strong interpretation and staff with decades of experience in Brazil's sedimentary basins, makes a real difference in the search for oil. Finding oil is ‘easy for us', Belotti says, because the company has invested in all three. ‘We did a lot of discoveries. We did only one test in one well. Now we are trying to get more information.' OGX is planning another test which, he says, will help OGX decide which field to bring into production first.
OGX's preferred method of developing a field is through dry tree completion units to an FPSO, with subsea and flowlines providing ‘our alternative', says Belotti. ‘Our main is wellhead platforms and FPSOs.'
Deeper waters would call for tension leg wellhead platforms (TLWPs), similar to the FloaTEC-supplied solution Petrobras will employ on its Papa Terra field in the Campos Basin in about 4000ft of water (Papa Terra makes the most of family ties).
‘We are doing everything very quickly,' Belotti says, of the company's path from being founded to spinning the bit in about two years. ‘We intend to produce our first oil in the next year.'
OGX has already signed some deals to pave the way for bringing one of its wells into production through a long-term test. OGX lined up subsea trees from GE and is working to sign a master agreement for flexible flowlines. ‘We are not sure how much we'll need. What we need, we'll buy with these guys,' Belotti says.
Both the flowlines and the trees should be delivered by year-end to be ready for first oil in 2011.
OGX's real-time integrated operations center has employees from GeoServices, M-I Swaco and Schlumberger keeping an eye on drilling activities. ‘We have all three companies in the same place so we can build momentum,' explains OGX operations manager Gilberto Rafainer.
Because of the water depth involved in OGX's wells – usually less than 150m – the costs are lower and the technology requirements aren't as stringent as they are in deeper waters. ‘We are not creating anything new' in the way of production technology, Belotti admits. But the company has every intention of plunging into the deepwater; it almost has to, if it wants to meet its production targets over the remainder of this decade.
‘It's an extremely aggressive production curve,' Belotti says of the company's aims to produce 20,000b/d in 2011, 730,000b/d in 2015 and 1.38 million b/d in 2019. To reach that volume, OGX anticipates requiring 19 FPSOs, five TLWPs, and 24 WHPs by 2019 – for operated and non-operated blocks.
As such, the company will begin branching out beyond the low-risk Campos and Santos basins and start exploring in the Espirito Santo and Para Maranhao basins, as well as some onshore drilling in the Parnaiba Basin. OGX holds interest in 29 blocks across the five basins.
The Espirito Santo Basin, Belotti says, is promising as a deepwater frontier, and OGX holds interest in five blocks in that region. ‘It's not ultra super mega deepwater,' he clarifies. ‘It's common deepwater.'
According to Belotti, the company has strong seismic of the Para Maranhao Basin, which correlates to that of the Jubilee field, the 2007 deepwater discovery offshore Ghana that is due onstream later this year. ‘Jubilee is similar,' he says of OGX's Para Maranhao Basin prospects. OE