T H E V A L L O U R E C O I L & G A S M A G A Z I N E

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VAM® 21Simply

the best

THE TECH FILESSalt Dome: challenges andopportunities for OCTG

ON THE MARKETTwo years after Macondo

SOLUTIONSVAM® Global Solutions: fromconception to completion

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Publisher: Vallourec Mannesmann Oil & Gas France - 27, avenue du Général Leclerc, 92660 Boulogne Billancourt Cedex - France - Editorial Team: Hassna Belmalek - E-mail: hassna.belmalek@vmtubes.fr - Phone: + 33 1 49 09 35 83 - Fax: + 33 1 49 09 37 13 - Thierry Wolkiewiez - E-mail: thierry.wolkiewiez@vmtubes.fr - Production: Zabriskie.,Paris - Design: LeGrand8, Paris - Photographs: Thierry Truck, Vallourec, Hassna Belmalek, V & M USA, Petrobras, Atwood Oceanics, Paul Carter, Neuf&9, iStockphoto.com/Eyeidea or as mentioned otherwise - All rights reserved.

Dear Readers,

VAM® is a registered trademark of Vallourec Mannesmann Oil & Gas France

Win an iPod shuffle (See page 6)

w w w. c o n n e c t i o n - m a g . c o mw w w. v a m s e r v i c e s . c o m

We are very proud to introduce in detail the VAM® 21 in this second edition ofyour new Connection magazine.

After several years of intense R&D work and technical exchanges with key endusers, this connection is quickly becoming the new premium product referenceon the market, providing a solution to the most demanding applications. Availableon a wide pipe sizes range and material grades, the VAM® 21 demonstrates inthe field its superiority, providing mechanical and sealability performances equivalent to the pipe body. It allows our customers to operate safely and moreefficiently during pipe running on the rig.

These performances have been proven through very extensive testing making the VAM® 21 the first connection in the world compliant, on the full pipe bodyenvelope, with the latest ISO 13679:2011 CAL IV specification which definesperformance and reliability standards for premium connections.

Our customers often operate in very complex drilling environment pushing thelimits of High Temperature and High Pressure. Indeed, as you will discover inthe Tech Files, in challenging area like the “pre-salt” offshore Brazil, the wellshave to be drilled through unstable and unpredictable formations to reach thereservoir.

Vallourec commits to providing you with optimized solutions, and tailor-made products that make your well designs possible.In addition to new material grades and premium connections,we are proud to announce a new service offering: well-designoptimization, performed by fully trained design engineers onthe reference software of the Industry. This is the most upstreamoffer of VAM® Global Solutions, illustrating our ability to innovateand offer new solutions to your challenges. Our purpose is to makeyour life easier!

Enjoy the reading.

Laurent Dubedout,Marketing & Development Director

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T H E V A L L O U R E C O I L & G A S M A G A Z I N E # 0 2 - M A Y 2 0 1 24

VAM® USA ANNOUNCES ITS NEW FINISHING PLANT

Vallourec announced lastNovember that it would investto install 2 premium threadinglines at the V & M Star complexlocated in Ohio, USA. The announcement was madeduring the YOUNG 2011natural gas conference orga-nized by the Youngstown/Warren Regional Chamber

of Commerce. This development will ensure availability of VAM®

premium finished goods out of Youngstown. “Our products are themarket leader in the natural gas production industry” says JudsonWallace, President of VAM® USA. “Expanding in Youngstown madesense for us as it brings us very close to customers working in boththe Marcellus ad Utica shale plays, where business is booming.Our new facility will enable us to improve service to existing customersand connect with new ones”. The project highlights the company’scommitment to our customers everywhere in North America, and tothe region’s economy as this development will create 100 skilledmanufacturing jobs.

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VAM® 21:SIMPLY THE BEST

THE TECH FILESPAGE 13

SALT DOME:CHALLENGES AND OPPORTUNITIES FOR OCTG

SOLUTIONSPAGE 18VAM® GLOBAL SOLUTIONS: “FROM CONCEPTIONTO COMPLETION”PAGE 23INTERVIEW WELL DESIGN

ON THE MARKETPAGE 24TWO YEARS AFTER MACONDO

EVENTSPAGE 26A STRONG LOCAL PRESENCE IN WEST AFRICA

PEOPLEPAGE 27PAUL CARTER: UNEASY RIDER

news

NEW MILL CONSTRUCTION UPDATE:GETTING CLOSER TO THE FIRST PIERCINGThe construction of the new FQM pipe mill was completed andequipment testing is underway. The first piercing is planned for June2012, and the first pipe will be rolled this autumn. The heat treatmentlines are scheduled to come on line in the second quarter of 2013.In preparation of the mill coming on line, our teams are developingwork standards and requirements to support the FQM’s new business processes. We also implemented a comprehensive trainingprogram and we are confident our staff will be performing at the highest level, with some new hires having close to 12 months on the job experience at startup.Once in production, pipes from this new mill will complement current diameters offered by our existing plant in Youngstown andprovide a full range of sizes for our customers, positioning us as the premier domestic supplier of seamless tubes in North America.As announced in November 2011 this project will be complementedwith the construction of a new premium threading facility. Overall,these two new projects will create around 450 new direct jobs.

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T H E V A L L O U R E C O I L & G A S M A G A Z I N E # 0 2 - M A Y 2 0 1 2 5

A research center in partnership with PetrobrasVallourec is partnering with Petrobras toestablish a new research center in Brazil.Vallourec Research Rio de Janeiro will belocated near CENPES, the Petrobras researchfacility, and will provide the Group with anopportunity to work hand in hand with one of its biggest customers in Brazil, gaining a better understanding of its needs and expectations. Vallourec is already collaboratingextensively with Petrobras at its R&D centerin Belo Horizonte to develop tubular solutionsfor use in offshore oil field exploration. With a primary focus on the pre-salt layer, VallourecResearch Rio will address all of Vallourec’sactivities in that area, including drill pipe,umbilicals and accessory equipment. The fields being explored by Petrobras, located deep offshore under a salt layer that in some areas is several thousand meters thick, are notable for their extremepressure, temperature and corrosion levels.Scheduled to open in early 2013, the newcenter will enjoy synergies with the FederalUniversity of Rio de Janeiro in areas such as the environment, robotics and energy consumption.

VAM® LICENSEEIN GHANAAOS Ghana Ltd has been licensed by VAM® Services andhas already been qualified to machine the following VAM® premium connections: VAM® TOP, DINO VAM® andVAM® EIS.AOS Orwell is therefore capable to repair full length pipesand to manufacture accessories fitted with VAM® connec-tions in Ghana. Both VAM® OCTG and VAM® Drilling product lines are supported by AOS. The AOS workshopis located in Takoradi, the Oil & Gas hub in Ghana. AOS is equipped with 2 CNC lathes, a phosphating unit,a copper plating unit and a make-up unit. They have acapacity to machine connections up to 14”. The AOS local staff (15 people) has received a technicaltraining related to machining, gauging, surface treat-ment and make-up operation to ensure the quality to the customer. As a VAM® Licensee, AOS has access to the VAM® docu-mentation and VAM® gauges in order to ensure a reactiveand efficient service to the Oil and Gas companies operating in Ghana. AOS will be audited by VAM® Servicesevery year.

Contact for more information: African Oilfield Services Ghana Ltd42 GIFFARD ROAD, EAST CANTONMENTS, P.O.B. CT2946, ACCRA, GHANAemail: ghanaops@aosorwell.com

VISIT US AT…Deepwater Drilling &Completions Conference 20-21 June 2012Galveston, TX, USABooth #108

NEFTEGAZ25-29 June 2012Moscow, RussiaBooth #1D50

Rio Oil & Gas Expo 201217-20 September 2012Rio de Janeiro, BrazilBooth #X17 – Pavilion 4

Vallourec North America (V & M USA,VAM® USA, V & M Tube-Alloy and VAM®

Drilling) took part in the 2012 IADC/SPEConvention which was held from 6 to 8March in San Diego, California. The level of this annual event, organizedalternatively in the USA or Europe by the International Association of DrillingContractors and the Society of Petro-leum Engineers, is always very high. A large number of participants, amongthe 1,400 recorded, had the opportunity

to visit the stand held by Vallourec subsidiaries and have discussions withthe teams in attendance. An even moreconvivial rendezvous, held in true“Californian poolside cocktail party” style, also took place in conjunction with this event.

IADC/SPE DRILLINGCONFERENCE 2012

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focusThe VAM® 21 is just as resistant as the tube whenfaced with the various loads it has to bear. This isthe first time that a connection, in all sizes, will notbe considered as the weakest link in the pipe string.

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T H E V A L L O U R E C O I L & G A S M A G A Z I N E # 0 2 - M A Y 2 0 1 2

Win

an iPod

shuffle

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Scan to win.

CONNECTION 02 v8 variante_OCTG N°8 DEF.qxd 22/05/12 18:13 Page6

After six years’ development, the VAM® 21 has been launched, symbolizing a real technological leap in the realm of OCTG. This new premium connection is a flagship product for Vallourec, meeting the expectations - and anticipating the future requirements - of the most demanding operators in the oil and gas industry.

Let's do away with the false modesty… the VAM® 21 isa sophisticated yet easy-to-use connection. It offershigh performance while remaining attractively priced.It is just as competitive in standard applications as itis in the harshest environments. In short, it is prettymuch ideal, the outcome of years of experience and alengthy development process. If we go by the enthu-siasm that the VAM® 21 has generated within Vallourecand among the early users, we trust that it has a verypromising future. /...

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SIMPLY THE BEST

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CAL-IV validation tests

The product range performanceis validated by a series of 37 CAL-IV validation tests, including 5 customer qualifications, and 110 computerized simulations.

BACK TO THE FUTUREAt the turn of the century, the marketing and R&Dteams in the OCTG Division of Vallourec all agreedthat, since oil and gas exploration and productionconditions were becoming increasingly complex,the VAM® TOP could, in the medium term, fallbehind oil companies' new expectations. It wasthus time to prepare the foundations for the pre-mium connection of the 21st century. Drawing onthe pre-defined specifications, the project was offi-cially launched in 2002 under the code name“VAM® 21”. This name pretty well summed up theambitions of the future connection and becamethe obvious choice when it was launched on themarket in 2008. “Since the end of 'easy' oil,” explains Gabriel

Briquet, VAM® 21 Product Manager, "operators arefacing increasingly complex technical challenges,and this trend is not likely to be reversed in thecoming years. We are drilling deeper and deeper,in highly deviated wells, through every kind of geo-logical stratum. With temperature, pressure, com-pression, torsion, corrosion and so on, our connec-tions need to resist in the harshest conditions, andmust also offer sufficient safety margins to ensureour customers peace of mind. This is expressed inthe VAM® 21's motto - Connect with confidence.”

LIKE NO OTHERSince the creation of the first VAM® seal design -which inspired most of its competitors - T&C(Threaded and Coupled) connections have evolved

T H E V A L L O U R E C O I L & G A S M A G A Z I N E # 0 2 - M A Y 2 0 1 2

It's a real pleasure to promotethe VAM® 21 as it is a product whereevery innovationmeans a real customer benefit,backed up by a verysound technical data file."

“

GabrielBriquet

VAM® 21 Product Manager

/...

©iStockphoto.com/Eyeidea

®

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The four key innovationsin the VAM® 21 design areshown on this diagram:the metal-to-metal sealis associated to the newdesign “VAM® Stabilizer”,which comprises anextended lip to physicallyseparate it from theshoulder, multi-groovingon the shoulder and a double taper guide, to stabilize the connectionduring make-up anddownhole conditions.

VAM® 21 design features

“An average running speed of 12 joints per hour was achieved with a maximum recorded speed of 15 joints per hour, incurring zeroreject, damage or cross threading.StatoilHydro’s well tubular technologyadvisor was very satisfied with this trial and commented: “Thanks to all involved in this world- firstdeployment of VAM® 21, which is clearly a candidate for next generationthreaded & coupled casing connectionfor StatoilHydro”.

StatoilHydro

“The expectations placed on the VAM® 21 casing have been met.The gas tightness after full usage of the high torque capacity of the connection was established and we intend to use the VAM® 21 casingalso for future projects. Following this very successful running, GDF SUEZis now looking into standardizing usageof VAM® 21 casing for other projects inGermany as well.”

GDF SUEZ

.

Testimonials

“We were very pleased with the results from this casing run and will certainly evaluate to run this set-upagain when dealing with complex HP/HT wells. ”

Marathon

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Connect w to increase their overall performance and/or adaptto specific constraints. The design of these con-nections was gradually refined, resulting in theproducts we see in the VAM® TOP family today.While it is the successor of this line, the VAM® 21breaks away from its heritage with a completelynew design, making an evolutive leap.In fact, it is the first connection of this kind wherethe seal and shoulder functions are separated (seediagram). This is not just a style feature, but actu-ally allows the engineers in charge of developmentto optimize performance of both functions, withouthaving to make compromises. What this really

means is that compression and torque constraintsno longer affect sealing performance. The thread profile, with its cylindricalthread crests and roots, has beenimproved to enable self-align-ment of the pin and box connec-tions during the stabbing phase,meaning a much lower risk ofcross-threading. Casing crewscan directly start the make-upafter stabbing.The three grooves on the pin con-

nection shoulder have been designedto evacuate any excess make-up com-

pound. Too much dope can negativelyimpact the legibility of make-up graphs, or even

the connection’s performance. These exclusivegrooves also make it easier to identify the VAM® 21and clearly locate the sealing surface (metal-to-metal seal). It should also be noted that the newconnection is already available with the CLEAN-WELL and CLEANWELL DRY dopefree options.

FIT FOR DUTYThe VAM® 21 is just as resistant as the tube whenfaced with the various loads it has to bear. This isthe first time, in such an extensive product range,that a connection will not be considered as theweakest link in the pipe string. When you put for-ward such decisive arguments, you also have to be able to back them up. This is what the develop-ment teams at Vallourec and Sumitomo have beenworking on, to the very strictest of requirements.Every aspect of performance boasted by the VAM® 21has thus been checked during a series of extremelydemanding tests, for every dimension on offer: 9 5/8’’ to 13 3/8’’ since 2008, 5’’ to 14’’ since 2011and 2 3/8’’ to 4 1/2’’ coming soon. "We have strivedto systematically test the most critical dimensionsof every size in the product range," confirms GabrielBriquet. "In other words, we have systematicallyapplied interpolation and not extrapolation."The VAM® 21 range is not only ISO 13679 CAL-IVcertified (see the description of ISO CAL-IV), but italso fulfils the upgraded requirements of the revisedversion of this standard, coming into force soon.

MUCH TO GIVEThe VAM® 21 has been developed to offer maximumand sustainable added value to the most demandingoperators in the oil and gas industry. Since 2008,Statoil, GDF SUEZ, Total, Saudi Aramco, Cono-cophillips, Petrobras and Chevron have made nomistake in ordering over 50,000 tons of this newpremium connection, most notably for HP/HT appli-cations. And all the feedback received so far hasbeen extremely positive. Currently, some wells couldnot be designed as they are, subjected to extremepressures, axial loads and record temperaturesaround 240°C, if it wasn't for the extraordinaryperformance of the new connection. Other thanthe benefits offered by its technical specifications,the VAM® 21 is an improved replacement for themajority of the existing premium connections, at a highly competitive price. It has already been ordered by one major operator to replace API connections. Using an 'all-in-one' product meansmuch easier procurement and stock management,with fewer items to consider. The VAM® 21 is thussomething of a specialist and general-use product,all at the same time.With so many benefits and a strategy aiming tocontinually improve the product, we could be incli-ned to believe that it will be the 22nd century beforea VAM® 22 is launched.

SOLUFOCUS

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ISO 13679CAL-IV compliance

ISO 13679 CAL-IV is currently the most demanding qualification available, certifying premium connection performance. This test protocol guarantees the sealing of the connec-tions by testing complex combinations of loadsto simulate extreme downhole situations. The forthcoming revised version - supported by the major operators and which the VAM® 21 has already passed - is significantly harder to obtain, as it now requires most of the tests to be carried out at high temperature. This explains why countries such as Mexico,Argentina and Italy believed it premature to officialize it in November 2011.

Scan this QR code with your smartphone to watch the VAM® 21 video.

Contact: gabriel.briquet@vallourec.com

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with confidence

11T H E V A L L O U R E C O I L & G A S M A G A Z I N E # 0 2 - M A Y 2 0 1 2

Product line In brief...

APPLICATIONSSuitable for any kind of application, including the most critical:

• Production casing

• Tubing

• Liner

• Tie-back

• Extreme HP/HT well designs

PERFORMANCES• First connection validatedto ISO 13679 FDIS-2011 CAL-IV,the most stringent connection qualification procedure to date

• Extreme compression resistance(100% of Pipe Body Yield Strength)

• Bending validated up to 42°/100FT

• Sealability validated up to 240°C(464°F)

VAM® 21 HTProvides even more torque for dedicated applications:

• Rotating liner, Drilling with Casing,ERD, Multilateral wells, horizontalsections.

• VAM® 21 and VAM® 21 HT are interchangeable.

BENEFITS• Simple, reliable and easy running

• Seal protected from rough handling

• Suitable for automated rig handlingsystems

• Clear and repeatable make-up charts

• Performances preserved whenincreasing torque (MTS value)

• Reduced drilling wear susceptibility

in. lb/ft

18.0

23.0

62.8

54.0

21.4

26.0

65.3

60.0

23.2

29.0

66.4

65.0

17.0

32.0

66.9

71.0

20.0

35.0

68.9

67.8

23.0

38.0

10 73.9

71.8

26.0

41.0

45.5

61.0

26.8

42.7

51.0

68.0

23.2

29.7

55.5

72.0

24.0

33.7

60.7

77.0

28.0

35.8

65.7

13 1/2 81.4

32.0

39.0

13 5/8 88.2

36.7

40.043.547.053.558.4

5 1/2

11 7/8

10 3/4

13 3/8

6 5/8

7 5/8

9 5/8

5

Size (OD) Nominal weight

7

9 7/8

11 3/4

VAM

®21 HT ALS

O AVA

ILABLE

ON THESE SIZES

Connection performances

This diagram shows the range of performance of an API tube, containing - in blue - the range of validation of the VAMR 21. This clearly shows that the connection performance is equal to that of the tube.

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#02

PRE-SALT GLOBALLYGeologically speaking, “pre-salt” refers to a reservoirthat was deposited prior to a layer of salt. In theSouthern Atlantic, the salt layers were deposited morethan 100 million years ago in a space formed by thegeographical separation of the American and Africancontinents. Salt being a good sealing element, thesource rocks - i.e. the organic matter or kerogen -deposited during the opening of the South Atlanticbasin, also called the “rifting process”, ended upenclosed in sealed, temperate, and pressurized for-mations, and were then later transformed into hydro-carbons (oil and natural gas). Therefore, even though“pre-salt” operations were so far concentrated in theGulf of Mexico and offshore Brazil along the westernmargin of the South Atlantic – making Petrobras andits partners, including Vallourec, precursors in “pre-salt” operations. A similar geological structure isexpected offshore West Africa, in the conjugate easternmargin of the South Atlantic. In 2008, Brazil’s provenreserves were up to 14 billion Boe, and it is consideredto be up to 23 billion Boe thanks to pre-salt reservoirsby 2030, which is a lot at stake in spite of the tech-nological challenges involved. The potential pre-saltreserves, the experience acquired offshore Brazil, thelatest technology developments, and the rising globaldemand in Oil & Gas thus made Oil companies andVallourec already looking at salt-linked challenges tobe overcome in offshore west-African countries, amongthem Gabon & Angola. /...

At a glance, salt in itself might notbe the most challenging parameterregarding drilling & productionoperations. But combined withothers it is definitely part of thechallenges to overcome in theyears to come to access the reserveslaying under or above salt layers.

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the tech files

Salt Dome: challengesand opportunities for OCTG

Drilling through pre-salt layers offshore Brazil. © Petrobras

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Rio de Janeiro

Reconcavo Bassin

Campos Bassin

Santos Bassin

Espírito SantoBassin

BRAZIL

Sao PauloCuritiba

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NEWS FOCUS SOLUTIONS ON THE MARKET EVENTS PEOPLE THE TECH FILES

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RESERVOIR MODELIZATIONAs Professor François Roure, Expert Geologist atIFPEN (French Petroleum & New Energies Institute)stipulated, the main challenge today lays in the pos-sibility to create a reliable geological model throughseismic imaging – in other words the main challengeis to find an accurate depth geological model ableto delineate the reservoirs closures. Basin modelingis also important at early stage to simulate the hydro-carbon potential and evaluate the risk of overpressuresunder the salt. Ultimately, the operator needs to knowaccurately what formations to expect in order to decre-ase drilling risks and costs. Even though technologyevolved a lot in the last decade, geologists and geo-physicists worked on developing algorithms that wouldallow the processing of the seismic profiles in such

a manner as to make what might be nestled under-neath the 2,000 meters of salt more visible. “Wemust be optimistic about pre-salt fields development,but there are some real technological challenges”,said Professor Roure. “There must be a particularworkflow between imaging, drilling and pressure linkedrisk mitigation. We need to be sure that thermody-namics of the geological formations were studiedbefore looking either at the wells structures, at thetubes needed for building them, or at the associateddrilling techniques.”Being the precursor in pre-salt operations, Petrobrashas already solved many of these early hurdles relatedto the knowledge of geological characteristics ofBrazilian pre-salt and its consequence on drillingand well integrity.

PRE-SALT BRAZILBrazil’s first discoveries happened between 2006and 2008 in two main offshore basins: Santos Basin,where 51 wells were drilled from 2005 to presentwith a success rate for Petrobras of 100%, andEspirito Santo basin where 31 wells were drilled byPetrobras with a success rate of 87%. The main pre-salt discoveries in these basins are the Tupi field(renamed Lula upon commercial declaration), withproven reserves of 5 to 8 billion Bep, Iara, andParque de Baleias with respectively 3 to 4 billionBep, and 1.5 to 2 billion Bep proven reserves. Other

pre-salt reservoirs were discovered in these basins,such as the giants Franco and Libra prospects, ormore recently like the Pao de Açucar, in Block BM-C-33, where the formation test recently indicated aproduction of 5,000 barrels oil and 807,000 cubicmeters of gas per day – and in other areas offshoreBrazil where exploration goes; it is also currentlyestimated that only 28 % of Brazilian pre-salt fieldsare already under concession and therefore furtherdiscoveries are expected.pre-salt had tremendous geopolitical impact onBrazil. As it is forecasted that pre-salt productionshould represent about 30 % of Petrobras productionby 2020, the Brazilian national oil company plannedlarge investments in pre-salt Exploration &Production operations, going up to USD 117.7 billionbetween 2011 & 2015. These investments, aimedat meeting global oil & gas demand, include tech-nological partnerships with suppliers settled in Brazillike V & M do Brasil, contracting of specialized localservices, of new production units in Brazil such as35 new production systems, and contracting & trai-ning of qualified local personnel.

OPERATIONAL & TECHNICAL CHALLENGES

/...

François Roure, Expert in the Structural Geology Department of the Geology-Geochemistry-Geophysics Division at the IFPEN"The development of 3D digital toolsadapted to saliferous tectonics is one ofthe priorities of our Institute’s GeologyDivision.Just a few years ago, it was almost

impossible to identify and precisely localize adeposit beneath a salt layer. Our Albanian colleagues

discovered this the hard way with the Dumre saltdome. After having drilled down 7000 meters— a feat in itself — they unfortunately foundnothing. At the IFP, we recently did some newcalculations and we realized that the topographicclosure was actually located 2 kilometers northof the spot where they drilled ...”

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SALT-LAYERS CHARACTERISTICSOne key challenge is the fluidity of the salt that,despite being a rock in that state, can swell duringthe drilling phase and imposes non-uniform collapseconditions over tubulars used in well construction.Above all it should be noted that Brazilian saltfields combine in fact several additional challengesbesides the salt layer itself: • well depths up to 7,000 meters, • ultra Deepwater conditions with up to 2,000meters between surface and seabed,

• acid corrosion caused by H2S and CO2 (up to 12% in Tupi for example) contaminants,

• temperatures and pressures tending toward HPHTconditions in certain areas.

Associating these parameters all together has animportant impact on exploration models, and onthe requirements for OCTG material able to with-stand such a combination of mechanical, corrosiveand thermal constraints.

RESERVOIR CHARACTERIZATIONAND PRODUCTION STRATEGYReservoir characterization, including in depth know-ledge of the reservoir fluids properties is also a chal-lenge. Petrobras has derived a well-defined opera-tional strategy that includes, after the initialexploration wells, an Extended Well Testing phaseaimed at refining reservoir knowledge, followed bythe implementation of pilots that are small-scaleproduction units designed to evaluate the best pro-duction strategy. As an example, Lula incorporatesthe first pilot unit in the Santos basin pre-salt, whichwill amongst other task evaluate the production effi-ciency of several well designs, completion optionsand injection strategy. This includes studying re-injection of the CO2 produced gas that, besidesbeing an interesting candidate for EOR (EnhancedOil Recovery) is also conceived as a storage techniqueto avoid ecological concerns associated to ventingCO2 in the atmosphere, potentially quite significantin volume given future pre-salt productions.

LOGISTICAL CHALLENGESFinally, most of these fields are situated a long distance from the shore: between 150 and 300 kilo-meters. This constraint leads to logistical challenges,not only regarding life support & offshore operationsoptimization, but also in terms of gas transportationback to shore. Being such a long distance from shoreat sea depth going down to 2,000 meters has a signi-ficant impact on Line Pipe selection process andR&D needs. For now, a gas pipeline between Tupiarea and the Mexilhao platform was installed, capa-ble of transporting 10 million cubic meters of gas,but other alternatives are currently under study thatmight allow bigger flows, including other pipelineconstruction and LNG (Liquefied Natural Gas) thatwould be transported using FPSO (Floating Pro-duction Storage and Offloading) or FSO (FloatingStorage and Offloading) units.

WELL DESIGN CHALLENGESRegarding to tubular supplies, these extreme con-ditions must be studied thoroughly at a very earlystage by both the operator and the tubular supplierin order to get the right metallurgy and connectionchosen to meet efficient drilling & production objec-tives: enabling the well architecture to maximize

production, avoiding casing collapse, enabling thesurface or subsea equipment to withstand the weightof the whole casing column, and avoiding corrosionto set in. Most obviously, the combination of reser-voir depths, external pressure from the 2,000 msalt layer and high fluid pressure imposes usage of

TUBULAR PRODUCTS REQUIREMENTS

SALT DOME: CHALLENGES AND OPPORTUNITIES FOR OCTG

Drilling & Production of pre-salt layers. © Petrobras

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#02/... tubulars with high yield strength and high collapse

performances; OCTG casings up to 140 ksi in yieldstrength have been used in some exploratory wells,and high collapse grades are routinely incorporatedin well designs. In such critical deepwater environ-ments and with wells engineered for 20 year life-time minimum, the basic expectations of well desi-gners is for OCTG connections to be designed asrobust as the pipe and qualified to the highest ISO13679 level CAL IV. Besides mechanical loads, tubulars might also besubjected to H2S presence. Therefore High StrengthSour Service grades such as C110 or proprietary125 SS grades, or even combined collapse & H2S

resistance (HCSS) are typical choices for productioncasing. Extremely high CO2 contents from the reser-voir, with potential worsening due to CO2 reinjec-tion, also drives material selection toward specialCRA (Corrosion Resistant Alloys) materials such assuper13Cr. This applies not only to the tubings thatare already commonly selected with such metal-lurgies for other projects in corrosive situations,but also to production casings placed at the bottomend of the strings that may be exposed to both thecorrosive fluid and significant collapse pressures.Such constraints on the tubulars therefore implyproduction of heavy wall large OD CRA casings:manufacturing of the tubular in such thickness, as well as design and qualification of adapted connections, imply early collaboration with the operator.

LOCAL INDUSTRY DEVELOPMENTS AND INNOVATIONSThis pre-salt opportunity is also perceived in Brazil asan important mean to develop further the local industry,as evidenced by the increasing local content require-ments imposed for operation in the pre-salt areas.

Given the ambition of the development plan and thetechnological challenges involved, this imposes thatkey supplies should not only be developed, but alsoindustrialized locally at a very fast pace. Through itslocal production capabilities at V & M do Brasil (VMB)in Belo Horizonte and by efficient coordination of localand worldwide R&D, Vallourec naturally became thekey partner for pre-salt development. A dedicated orga-nization was set through the VPP (Vallourec pre-saltProject) with the objective to reduce time to market:in answer to the operational challenges previously men-tioned products such as: • VAM® 21, • VM 125SS, • high collapse grades and • large OD super13Cr casings were developed, industrialized locally, homologatedand commercialized in short timeframes.Interestingly enough, the same technical causes(high H2S and CO2 level, water depths) have alsodriven similar developments in line pipe products,another historical product line at VMB: • high strength sour service grades (X70, X80) andcladded pipes for corrosion resistance,• end truing, • double jointing and J-Lay collars for operationalefficiency.

And V & M do Brasil nowadays continues extendingthe local product and service portfolio, with therecent addition of Drill Pipe and accessories pro-duction units in Brazil as well as the continuingexpansion of already existing service bases andassociated offers such as rig-ready products andfield services. And the future looks even more promising: with R&Dinvestments booming and largely dedicated at deve-loping cutting edge E&P technologies with the sup-port of local universities and suppliers, there shouldbe plenty of opportunities for Petrobras key techno-logical partners. As trends such as for example HP/HTexploration, drilling with casing, underbalanced ormanaged pressure drilling are being foreseen as thepotential next operational stages, new developmentswill surely be required in the fields of corrosion resis-tant metallurgies, connection designs or thermalinsulation. Vallourec, already a long-term partner ofthe CENPES (Petrobras R&D) with five technicalcooperation agreements in place is therefore settingup a brand new R&D center in Rio de Janeiro (seepage 5).

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NEWS FOCUS SOLUTIONS ON THE MARKET EVENTS PEOPLE

SALT DOME: CHALLENGES AND OPPORTUNITIES FOR OCTG

THE TECH FILES

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PRE-SALT HYDROCARBONS

MOTHER SALT LAYER

SUB-SALT HYDROCARBONS

SEA BED

WATER SURFACEDRILLING RIG

SALT DOME

Contact:benoit.ducasse@vmtubes.frfrederic.bernard@vmtubes.com.br

Typical geologicalformations metin Salt Domeapplications.

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Imagine your tubular goods supplier taking chargeof everything, from the mill where they are producedto the well into which they are run. Imagine "every-thing" also included the development of an offerdedicated to your particular application (shale gas,pre-salt, etc.), the column design, the supply of accessories or even the education programs intended for your teams. Imagine if you could dedicate

the time you saved as a result of this integrated offerto your core activity. Lastly, imagine the advantagesthat you would have every right to expect from a pro-posal of this kind in terms of quality managementor cost control. All oil companies must have dreamtabout this and, thanks to Vallourec, the dream hasfinally come true in the form of VAM® GlobalSolutions.

VAM® GLOBAL SOLUTIONS:

“FROM CONCEPTIONTO COMPLETION”VAM® Global Solutions offers a comprehensive range of solutions in additionto Vallourec’s OCTG products. If, in the past, many services were already available to oil companies, VAM® Global Solutions has managed to simultaneouslyclassify, organize and expand them. This offer is about taking charge of all or part of the intermediate services related to a project, carried out in total transparencyfor clients.

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NEWS FOCUS THE TECH FILES SOLUTIONS ON THE MARKET EVENTS PEOPLESOLUTIONS

Well design

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A STRONG BACK OFFICEMathieu, Antoine, Sébastien, Rafael, Hartley, Anne,Caroline, Arnaud, Aaron, Olivier, Pierre… In theprevious edition of Connection, we introduced youto the 15 or so colleagues who work at the heartof VAM® Global Solutions. No matter how talentedthey are, they only represent the visible part of theoffer, as they are all able to form an ad hoc teamto implement the project that is assigned to them.In short, this is a solid "back office" consisting ofexperts that has been made available to the usualcompany representatives. If, for example, you seethe benefits of making your drilling engineers awareof the production, the characteristics or even thehandling of tubes, all you have to do is contact thesales department of Vallourec. They will then contactRafael Perez who is in a position to propose a turn-key solution: Tubular Essentials program, choiceof internal instructors, preparation of supports,session dates and place, factory visits, etc. If apipe storage and management platform is neededclose to a rig, Hartley Taylor will put in place sucha structure at the site, liaising with local companiesand authorities. If you eventually opt for more gene-ral control of your tube-related needs, MathieuRobbe, Project Director of VAM® Global Solutions will coordinate all courses of action and deploy theteams.

MAKE IT EASIER"The one and only objective that we have in mind,explains Mathieu Robbe, is to make life easier forour clients. By mixing with them and listening towhat they have to say, we have ascertained thatthey undertake, either directly or through a sub-contracted intermediary, a plethora of tasks relatedto their tube supplies which, ultimately, have verylittle to do with their core activity. The aim of VAM®

Global Solutions is to put their mind at rest interms of these issues, to save them time and, when-ever possible, to provide them with more efficientservices at a smaller or equivalent cost." The factthat they no longer have to concern themselveswith intermediate services and are therefore able to focus exclusively on issues related to thedevelopment and operation of a well is without a shadow of a doubt another step along the road to success.

MAKE IT BETTERAs far as the effectiveness of services is concerned,a perfect understanding of the tube and connec-tion-related characteristics will enable the variousexperts of the team to provide optimized solutions.That is valid for the design or a well, of course,and also for the conditions under which products aretransported, stored, inspected and prepared. Who better

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Logistics

Education Field Services

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than an expert in terms of the metallurgy of seamlesstubes to make sure that a sophisticated steel gradeis being stored under optimal conditions?

MAKE IT CHEAPERThe issue of the cost of services coordinated ormanaged by VAM® Global Solutions must be con-sidered in a number of ways. First and foremost,there are pure and simple reductions, owing to eco-nomies of scale, which the team makes based onvolumes processed. That is the case, for example,for shipping costs. The fall in costs usually gene-rated by missed deadlines or bad practice whichmay damage products or slow down operationsmust also be taken into consideration."At any rate”, as Mathieu Robbe points out, “ourservices are generally less expensive than if clientssubcontract the services themselves. Furthermore, we provide quality, risk-reduction and peace of mind. VAM® Global Solutions has been very warmly welcomed by the sales departments of Vallourecand their clients, and will gradually enrich its offerin line with the way in which the expectations ofoil companies change."

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SOLUTIONS

T H E V A L L O U R E C O I L & G A S M A G A Z I N E # 0 2 - M A Y 2 0 1 2

A la carte…

TECHNICAL EDUCATION• Tubular Essentials basics• Tubular Essentials expert module

WELL DESIGN• Conventional casing design• Advanced casing design

CUSTOMIZED DELIVERY• Fast Track make-to-order• Stock of standard products available for quick delivery

ACCESSORIES • Casing & tubing accessories• Casing running equipment• Separate order of couplings• Thermal solution package

SUPPLY CHAIN MANAGEMENT• Total Tubular Management incl. stock management, rig ready & rig return inspection,repairs coordination and logistics

• Freight forwarding• Consultancy services

ACCESSORIES SERVICES• VAM® Accessories for assembly• Threading customer material• Well coordination

FIELD SERVICES• Tubular running management• Connection integrity supervision• Remote make-up graph validation• Sub-assembly make-up supervision• Tubular running services operations audit

LOCAL REPAIR SERVICES• Premium quality licensees network• Extended geographical & productcoverage

SOLUTIONS

For more information, please contact your Vallourec representative.

Scan to listen theaudio testimonial:

Hartley Taylor, Supply Chain

Project Manager.

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NEWS FOCUS THE TECH FILES SOLUTIONS ON THE MARKET EVENTS PEOPLESOLUTIONS

WELL DESIGN:

CONNECTION: WHAT MADE VALLOUREC DECIDE TO OFFER THIS NEW SERVICE?Antoine Caillard: We realized that there was ademand for it amongst our clients who consideredthat their supplier of pipes and connections wouldbe very well placed to advise them in terms of thedesign of their wells. The same thought often crossedmy mind while working as a drilling engineer for amajor before I joined Vallourec. So this new offergrew out of this widely-shared belief and the "frommill to well" strategy at VAM® Global Solutions.

CONNECTION: WHAT EXACTLY DOESTHE SERVICE INCLUDE?Antoine Caillard: We can start from scratch anddesign a well from top to bottom or simply providea consultancy service for our clients at any momentduring the column design phase. Our recommen-dations can cover anything from the steel gradesto the thickness of the tubes and the best adaptedtypes of connections. Actually I cannot emphasizethis last point enough because experience showsthat the choice of connections is often made verylate—and no doubt too late—when designing wells. Obviously, we prefer to be involved as early in theprocess as possible because it is then that we areable to bring the most added value to a project.

CONNECTION: SO JUST WHAT IS THIS ADDED VALUE?Antoine Caillard: Our main asset is our in-depthknowledge of our products. Besides their mechanical

performance, which everyone can judge for them-selves, we know exactly how they react in every pos-sible situation thanks, for one, to the countless teststhat we put our products through. This extensivedata is especially valuable in difficult cases suchas high pressure/high temperature environments:it allows us to optimize the columns — in otherwords, to make sure that they are not too thin ortoo thick. So our objective is to bring all the indis-pensable safety guarantees while keeping costs tothe minimum and to help the customer to improveits well integrity. Each of our solutions is adapted to our clients’ specificneeds. It really is a tailor-made service whichobviously takes into account the load specificationsindicated in the operators’ manuals.

CONNECTION: WHAT RESOURCES DO YOU HAVE TO PROVIDE THIS SERVICE?Antoine Caillard: As well as its expertise and expe-rience, our team uses one of the most respectedcomputer design tools in the oil and gas industry.It can also rely on the support of the most eminentspecialists in VAM® tubular and connections withinthe Vallourec Group. It can also call upon externalpartners for extremely precise questions touchingmatters such as thermal simulations. Whatever thelevel of intervention, the method used and the spe-cialists involved, our clients can always depend on asingle contact person at VAM® Global Solutions whois in charge of optimizing the design of their well.

KNOWLEDGEOF THE PRODUCTSIS A STRONG ASSETThe most upstream service that Vallourec offersis casing design, which is an all new service thatis more closely linked to the profession of tubularmanufacturer than we might think, as AntoineCaillard, Well Design Engineer at VAM® GlobalSolutions, explains.

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Antoine Caillard, Well Design Engineer.

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SOLUTIONSON THE MARKET

Immediately following the Macondo incident, drillingactivity was suspended for almost 6 months. Studieswere conducted by the National Commission on theBP Deepwater Horizon Oil Spill, the Safety OversightBoard, and the National Academy of Engineering.After review and consideration of those reports theoil and gas industry acted swiftly to correct thedamage done by the actual blowout and began restoration. Industry moved rapidly to correct short-comings in the operational infrastructure. Joint indus-try taskforces were created to address safety, con-tainment, and area spill responses. There are twocontainment companies in place now with more capacity and services being created. The Center forOffshore Safety (COS), an industry organization created to implement best practices in the area ofsafety and learning processes, has begun trainingand certifying third party inspectors to evaluate the COS Safety Environmental Management System (SEMS) programs. VAM® USA has participated in the

implementation of SEMS through relationships witha number of end users.

CURRENT ACTIVITYThe current deep water Gulf of Mexico (GoMex) rig count stands at 46 versus 27 one year ago. 79deepwater permits were issued in 2011. Through Q1of 2012, 30 deepwater and 24 shallow water permitshave been issued. Rig count activity in the GoMex isexpected to be higher with 10 new deepwater rigs tobegin work by year end of 2012.It is worthy to note that the operator mix has drama-tically changed in the post-Macondo world. In 2008,the 6 major operators had 55% of the permits grantedwith others (independents, large independents) com-prising the 45% balance. As of February, 2012, threemajor operators have almost 70% of the total permitsissued with “others” having the balance. Vallourec isparticipating with all operators permitted thus far.

REGULATORY CHANGESThe regulatory framework is now being administeredby three different agencies within the US Departmentof the Interior. What was once run by the MineralsManagement Service now has three agencies: theBureau of Ocean Energy Management (BOEM), theBureau of Safety and Environmental Enforcement(BSEE), and the Office of Natural Resources Revenue(ONRR). BOEM is charged with resource developmentof the US Outer Continental Shelf. BOEM’s functionsinclude offshore leasing, review and implementationof new development plans, and environmental studies.BSEE is the oversight and enforcement entity and isresponsible for implementing and enforcing new regu-lations as well as issuing new permits, oil spill response,and training and environmental compliance. ONRR isresponsible for revenue collections. Industry has been challenged in trying to deal withthese agencies that are intent upon regulation but lackthe technical resources to make timely decisions forthe dynamic nature of the offshore business.

SIGNIFICANT TECHNICAL CHANGESBSEE imposed new well designs based upon a conceptcalled Worst Case Discharge (WCD). A key commentin their directive drives these designs – “wells mustbe able to contain well production.” WCD creates ite-rative cascading challenges in well design that sub-stantially increases complexity. The mechanical limits

TWO YEARSAFTER MACONDOOn April 20, 2012, the Gulf of Mexico oil and gas community quietly noted the two year mark since the Macondodisaster. Eleven lives were lost in that tragedy and it has not been forgotten by the industry. Operating techniques,safety systems, cultural attitudes, regulatoryregimes, and political rhetoric have muchevolved since that time.

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Office of NaturalResources Revenue

The regulatory framework is now being administered by three differentagencies within the US Department of the Interior.

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on everything in the well construction process are beingpushed to the limits. Drill pipe, landing strings, casing,casing hangers, and well heads are all being re-eva-luated and in many cases redesigned to facilitate WCD.

NEW SIZES AND WELL GEOMETRIES NEEDEDIn June 2010, in conjunction with member companies,the American Petroleum Institute began a new workinggroup called API RP 96 – Deepwater Well Design andConstruction. V & M USA’s Marco May participatedin that effort. API RP 96 serves as a deep well designconsideration tool to be used by drilling and com-pletion engineers during deep well planning and con-struction.As a consequence of the WCD requirement and thetechniques developed in the API RP 96, the industryhad a call for new sizes, connections, and connectionverification. Products and recommendations relatingto well construction that came out of the group includenew sizes of casing – 10.125”, 13.750”, 13.875”,16.15”, 18”, 22” (Metal-to-metal seal). Semi-flushconnections with 50–70% compression will need tobe validated in all of these sizes. New grades of materialwill be needed. A new well geometry scheme is on the

horizon, moving from the current “Big-Bore” welldesigns to the “Big-Big Bore” designs. V & M USA andVAM® continue to work with operators to optimize welldesigns and the tubulars, connections, and grade of mate-rial needed for the challenges of the deepwater GoMex.

THE FUTURENumerous headwinds still face the offshore industry.Higher costs associated with recertification of drillingprograms, a flight to quality, and attempts to shift risksin the offshore environment all create a degree ofuncertainty and new assessment of well plans. Newwell designs and the very heavy loads associated withthe thicker casings have exceeded the current hookload capacity of many rigs. Retro-fitting for 2.5 millionpound hookload capacity is impractical so new rigswill be needed in the GoMex. Higher quality rigordemands new and better equipment. That needdemands relationships with companies that have theexpertise and reputation to be able to achieve thosegoals. Vallourec has demonstrated time and time againthe ability to answer that call.

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The ATWOOD CONDOR,an ultra-deepwater dynamically positionedsemisubmersibleequipped with the world’smost capable BOP system.© Atwood Oceanics

Contact: douglas.polk@na.vallourec.com

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SOLUTIONSEVENTS

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For the second consecutive year, Vallourecwas present at the Nigeria Oil & Gas trade fairheld at Abuja from 20th to 23rd of February,one of the most important events for the oilindustry in West Africa. This was a greatopportunity for the company to reinforce itsstrong relationship with clients and localauthorities and to highlight various topicssuch as innovations, presentations of newproducts (VAM® 21), policy as regards localcontent... For the first time, other Group activitiessuch as VAM® Drilling, Line Pipe Project orSerimax were presented on the stand with a view to raising their public profile with the7,000 visitors who attended this great event.Vallourec is already very well established inNigeria, especially via its sales office in Lagos and a plant specializing in VAM® connection threading at Onne. This company, VAM® ONNE Nigeria Ltd, inaugurated in 2009,has a workforce of 50 employees and produces approximately15,000 tonnes of tubes per year. VMOG Nigeria Ltd, the commercial arm of Vallourec in Nigeria, will soon be majorityowned by Nigerian shareholders following a transfer of

interests. “This initiative is in keeping with the policy oflocal content which our federal government is looking for,explains Charles Osezua, Chairman of VMOG Nigeria Ltd, just like the education of the local team which has alreadytaken place, where 25 Nigerian colleagues were recently trained in the Vallourec plants in the United Kingdom, Franceand Germany.”

Vallourec participated in the “3rd Ghana Summit” which took place in Accra, the capitalof Ghana, from 27th to 29th of March. This was the first time that the Vallourec OCTGDivision took part in the summit and it was accompanied by three other Group entities,all equally very active in the oil and gas industry: VAM® Drilling, Line Pipe Project andSerimax. The booming Ghanaian market is driven by very dynamic players and technically deman-ding needs (Tullow oil discoveries offshore in deep waters). Discussions with participantsand local authorities proved to be very fruitful, in particular regarding the technicalaspects of exploration and local content policy - a very important subject in a brand

new oil producer country that is still to define its model inthis respect. Vallourec has been supplying tubular solutionsto several customers in Ghana for many years. The Group, verypresent in West Africa, also took this opportunity to announcethe qualification of the company Africa Oilfield Services GhanaLtd as a VAM® licensee (see page 5). This new partner, whosethreading workshop is located in Takoradi, joins the worldwidenetwork of licensees qualified to operate on the range of VAM®

premium connections.

A STRONG LOCAL PRESENCEIN WEST AFRICANIGERIA OIL & GAS 2012

3rd GHANA SUMMIT

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PEOPLE

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Three international best sellers about his twenty plusyears in the oil exploration game, he’s been shot at,high jacked, held hostage and locked in the toilet byhis own monkey. When he’s not doing that he’s outriding, and has been since he was a kid.So what would a bike obsessed veteran oil man do onapproaching middle age? Now that he’s a successfulwriter, no longer toiling on drilling rigs, that’s right, hetalks the Oil industry into sponsoring him to ride anexperimental motorcycle around Australia for charitythat runs on used cooking oil.You would think that was a hard sell, after all doesn’t thatmake him for all intents and purposes the ‘Anti Christ’ asfar as big oil is concerned? Apparently not, he managedto pull this off in the middle of the Global FinancialCrisis and get hold of the only properly compliance plated,road registered, bio diesel bike in Australia.This was the subject matter for his third book ‘Is ThatThing Diesel’ currently sitting at number 10 on the UK

Travel Writing Bestseller list. The success of that thirdbook prompted the current project, also based aroundanother bio diesel motorcycle.This time Paul is attempting to set a new land speedrecord for the fastest bio diesel bike. Vallourec is spon-soring the project and hopes to see Paul set a new record.His bike has taken two years to build from the groundup; it’s powered by a Holden 1.7 Litre turbo diesel carengine. It’s four meters long, one meter wide and weighsalmost half a ton.He will be riding down a private test track in South Australiaon May 28th, 2012; this new book will be released in July 2013. The current land speed record for a bio dieselmotorcycle is 211 KLM/HR, so we wish him well and lookforward to the book release and a new record.

PAUL CARTER

UNEASY RIDERPaul Carter is no ordinary motorcyclerider, he’s the guy who wrote ‘Don’tTell Mum I Work On The Rigs, SheThinks I’m a Pianoplayer in aWhorehouse’, ‘This Is Not A Drill’ & ‘Is That Thing Diesel’.

To follow the results

Visit the website: www.dlra.org.au

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