Oil and gas companies are expected to shell out nearly US $1.2 billion annually by 2014 for R&D projects, at least 50% of which will be spent at Brazilian universities, due to a levy imposed by the country’s government, according to OTM Consulting. The other 50% will be spent on in-house R&D and R&D service companies.

And that amount could grow to around $10 billion cumulatively by 2022, according to Shahnawaz Vahora, a senior consultant with the firm. Considering the substantial amount of money, OTM conducted a study with a goal of determining how to maximize the investment for the benefit of E&P companies, universities and research groups, the government, and the Brazilian people.

The study, titled “Understanding the full extent of R&D capability within Brazilian universities,” and its findings are set to be unveiled during OTC Brasil in October.

“The biggest challenge Brazil has is in successfully exploring the presalt resources,” Vahora said, noting that the layer of salt above the oil-bearing zone can be between 2,000 m and 3,000 m (6,562 ft and 9,843 ft) thick. “If you look at it from the molecule perspective, there are challenges to be overcome all the way from the reservoir to the production tubing to floating production units to onshore pipelines.”

There is difficulty in looking beneath the salt to determine how much oil is in place. Drilling through the thick salt layer with the currently available drillbits can be challenging, and ensuring well integrity – considering salt tends to move over time – presents another obstacle, Vahora added. Other necessities include having riser systems capable of handling HP/HT conditions and quality flow assurance so that oil flow to the production unit is seamless.

“The majority of R&D coming on will be looking to solve some of these issues,” Vahora said. “The great thing about these R&D topics is that they are analogous to the whole of the deepwater ‘Golden Triangle’ [the Gulf of Mexico, offshore West Africa, and offshore Brazil], and all of them will benefit from the outputs from this research.”

State-owned Petrobras also is looking to create several centers of excellence surrounding universities to conduct R&D projects, Vahora said. Notable among them are the Numerical Offshore tank at the University of S?o Paulo, looking at wave interaction with floating hosts; InPetro at Federal University of Santa Catarina, focused on the digital oil field, flow assurance, and condition monitoring; and LabRiser at the University of Campinas, focused on delivering world-class research on deepwater risers.

As part of its study, OTM visited universities known for specializing in E&P R&D and spoke to professors to learn about their technical abilities and offerings as well as to identify gaps to determine what is needed in Brazil. Visits were made to six world-class E&P research universities in Europe and the US – the University of Oklahoma, Rice University, Texas A&M University, and Imperial College among them.

The assessment included face-to-face visits, questionnaires, and intensive desktop research to establish a benchmark as well as a comparison of how Brazilian research groups compare to their counterparts abroad.

“Brazil really struggles in terms of finding personnel and recruiting new Ph.D. students and researchers,” Vahora said. “The biggest challenge is how to get people for upcoming projects and developing a support structure. A number of these Brazilian universities are in their infancy stage if you compare them to world-class universities that have a track record.”

OTM also found that some universities initially get large amounts of money from sponsors for research, but the money runs out. The legal obligation for companies to invest in R&D in Brazil is a positive for the country.

However, researchers’ struggles in Brazil often include a lot of bureaucracy and too much time spent on mundane project management instead of conducting research, Vahora said. OTM also noted that research centers in Brazil are clustered around the Santos and Campos basins in Rio de Janiero and Sao Paulo.

“The current perception is that the north is underdeveloped compared to the south, and a lot of money is being focused on the south of Brazil,” Vahora said. “These research centers need to be spread across Brazil.” The money needs to go to the north as well as the south to develop local supply chains and access local talent.

OTM recommended developing a larger resource pool by recruiting and retaining research professionals, maintaining competitiveness among research groups, and fostering collaboration instead of competition among oil companies.

“Research groups also can learn from these new guys that are coming to Brazil,” he said, pointing out the technology and R&D legacies of companies like Statoil and Chevron. “This helps make the universities become even more world-class.”

Contact the author, Velda Addison, at vaddison@hartenergy.com.