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Petrobras’ Major New Oil Discovery Could Add Up to 8 Billion Barrels to Brazil’s Reserves

Tupi
The Tupi field. Click to enlarge. Source: BG Group.

Petrobras last week announced the discovery of a new offshore oil province, ranging through the Espírito Santo, Campos, and Santos Basins, in ultra-deep horizons, and in pre-salt rocks. Petrobras analyzed and tested the ultra-deep Tupi area in the region, and said that Tupi alone, which represents only a small part of the new region, has a recoverable volume of between 5 to 8 billion barrels of oil and natural gas.

Petrobras is the area’s operator and holds 65% of the working interest, while British outfit BG holds 25%, and Portuguese company Petrogal-Galp Energia, 10%.

As a result of the discovery, Brazilian President, Luiz Inácio Lula da Silva said that his country might soon join OPEC, the Organization of the Petroleum Exporting Countries, according to a report in Brazzil magazine. “This discovery of an exceptional reserve, with good quality oil and plenty of gas,” he stated, “puts Brazil in a highly privileged situation. Very soon Brazil is going to join OPEC.

The announced oil province is located in a new exploratory frontier, where the pre-salt layer was reached for the first time. To date, Petrobras is the only company, with the operator status, with or without partnerships, that has drilled, tested, and evaluated pre-salt rocks.

Petrobras invested $1-billion over the past couple of years, drilled 15 wells and reached the pre-salt layers, eight of which duly tested and evaluated. These wells produce high commercial value light oil (28° API) and a large amount of associated natural gas.

Petrobras developed new drilling projects to reach the pre-salt layers, at depths of 5,000 to 7,000 meters: more than 2,000 meters of salt have already been crossed. The first well took more than a year and cost $240 million to be drilled. Nowadays, Petrobras drills an equivalent well in 60 days for $60 million.

The data obtained from these wells, integrated with a major mapping effort, allowed the company to determine that the pre-salt rock formations range from an area extending from the State of Espírito Santo to the State of Santa Catarina. It is about 800 km long and 200 km wide, and is found in water depths between 2,000 to 3,000 meters.

Brazil’ National Oil, Natural Gas and Biofuels Agency has already granted about 25% of the pre-salt rock areas to several oil companies in the form of exploratory blocks and production concessions.

Comments

Max Reid

In 2006, Brazil Oil
Consumption = 92 million tons
Production = 89 million tons

So they imported only 3 million tons. With this discovery and replacement of Gasolene by Ethanol, Brazil could become a major exporter.

But why do they want to join OPEC. If Brazil can join, then Canada can also join.

All the hopes of getting the Oil Sands crude from Canada at lower cost will evaporate.

But 1 thing is certain, there is no more onshore discoveries, only offshore and that will be very expensive as they have to drill 5,000 - 7,000 meters.

Harvey D

Good news for Brazil and South America.

A major oil & gaz discovery. Enough to feed the world with oil for about 100 days. Does this mean that peak oil will be postponed by about 3 months.

OTOH, 160 000 sq Km may produce much more (2x or 3x) than 8 billion barrels. Assuming 3x, the world will enjoy oil for 9 more months.

Would this allow GM, Ford, Chrysler, Toyota, Nissan etc to increase their gas guzzlers production?

One dozen more discoveries like that one and we could keep business as usual for about 3+ more years.

How much GHG would an extra 96 billion barrels create?

Cervus

Deep drilling projects like these certainly aren't cheap. And it will take years for the oil from this discovery to come to market, assuming Brazil decides to export. There won't be many more discoveries like these.

Max Reid

Harvey d

Its good point. Also we have to see the energy input : output ratio to get this Oil since its 5,000 - 7,000 meters below the seabed.

Recently Chinese made this type of offshore discovery. Pretty soon, we may see some more of this type. But all these are expensive energy intensive Oil.

Cervus

Max:

There's also a similar deep well in the Gulf of Mexico, with 3-15 billion barrels. "Easy oil" it isn't. Wired Magazine had an article on it not too long ago. If anything, I see this as either delaying peak oil (depending on how quickly it can be brought to market) or shallowing out the downslope.

JamesEE

Max Reid,

"All the hopes of getting the Oil Sands crude from Canada at lower cost will evaporate."

Oil is fungible, so I don't think OPEC oil costs any more than oil from other sources. OPEC tries to manage the global price by varying production levels. They weren't very effective when there was lots of oil (e.g., the price averaged only $15/barrel over the entire decade of the '90s).

Increased demand and possibly peak oil have given them more influence. But the value is determined by the (OPEC-manipulated) market, and only varies by geographic location and quality/density. The only way we can fight OPEC, IMHO, is to use less oil. Conservation is both environmentally and economically responsible.

I also ask "Why do they feel they need to join OPEC?" I believe they feel it gives them more political prestige, especially given that OPEC has become more effective in recent years. Brazil is often overshadowed by news from China and India, but is often mentioned as one of the BRIC countries (Brazil, Russia, India and China). Brazil wants recognition for its global importance. I hope they can achieve it without destroying the Amazon.

PS: I've enjoyed your many posts and your enthusiasm for HEVs.

Peak Oil is for Dupes

So much for "Peak Oil."

Lou Grinzo

Here we go again. Last year, it was the Jack2 find in the Gulf (alluded to above by someone else), and the stupid headlines about hso "peak oilers don't know Jack". How freakin' witty.

Now we have this Brazil find. Give me a break.

It's expensive oil, it will only supply the world for about 3 months (and that's assuming that there really is a full 8 billion barrels of recoverable oil there), and, most important of all, it won't be produced at a quick rate.

Remember--peak is a FLOW concept, not a STOCK concept. It's not the size of the tank, but the size of the spigot. As I've pointed out on my own site numerous times, if you found a 1 trillion barrel reserve, but you could only extract the oil at a rate of 100,000 barrels/day, it would do nothing to delay peak oil.

These finds show exactly what the peak oil guys predict: We can't find any more good fields in convenient places, so we're forced to go after oil in ultra deep water and Arctic regions, or rely on ultra heavy and sour crudes. That pushes up prices--higher costs to find and extract the oil, plus those reserves can typically be produced only at lower flow rates, resulting in supply not keeping up with demand.

Max Reid

Lou

What u r saying makes sense. But they could drill more holes to get more Oil, something in the range of 1 million bpd that way at 365 million bpd, it may last for around 20-22 years.

Still the World's demand is going to climb rapidly to 86, 87 or nearly 90 million bpd with a shortage of few million bpd.

Diesel prices have touched $3.44 / gallon and I guess this may be a record high. This may increase the price of all goods.

Cervus

I've seen diesel as much as $3.85 a gallon here. More than fifty cents per gallon more than regular unleaded.

The only thing unconventional oil sources will do is slow the downslope and buy us a little time to find true alternatives.

Max Reid

Matthew

There can be 80, 90 or 100 billion barrels, but how much is recoverable with output more than input is 1 question, 2nd is whether its cost effective.

If its easily recoverable, then companies are going to jump into exploration.

Looks like we will have lot of oil rigs in the Ocean.

Parallelly many windmills are sprouting in the ocean.
Here is a link to 6 MW windmill
http://www.enercon.de/www/en/nachrichten.nsf/41657424de23a0b8c1256ed10041a39f/6230d2639aa384d9c125736e004679c2?OpenDocument

Al Fin

Most recently discovered deep offshore oil is not economical to pump--at today's oil prices. As oil prices rise, more oil becomes economical to pump.

Recent peak oil predictions were based upon oil production, ignoring reserves as being too hard to determine. Too true. But that means that the peak oil predictions are meaningless.


There are probably over a trillion barrels of offshore oil yet to be discovered (including the Arctic), and it's anyone's guess what sits beneath the Antarctic.

Lou Grinzo

Max: The problem is the cost of each of those holes when the oil is 26,000 feet below the ocean's surface. Yes, it would likely be physically possible to drill multiple holes, but the economics gets terrible in a hurry. Plus, draining a field quicker often results in less total oil recovered in the long run, so the oil companies have a ceiling on how quickly they'd want to extract the oil, even if economics didn't restrain them.

Everyone else: Don't get too carried away with those "estimates" of offshore reserves. There's a VERY high degree of uncertainty involved, plus no end to the expensive, nasty surprises that would crop up when trying to exploit reserves under those conditions.

But don't worry--it won't be long before the price of oil and gasoline are so high that there's more than sufficient public support for opening up those coastal areas, ANWR, and your grandmother's veggie garden, if there's so much as a hint of oil or natural gas there. The peak is too close and we're too dependent on oil for anything else to happen.

gavin walsh

"Earlier this year the Economist reported that there's an estimated 80-90 billion barrels of oil in the offshore areas of the U.S. that are currently closed to exploration."

How would the economist know, if there's been no exploration? there may be 90 billion (which is less than 3 years consumption at current rates of consumption, never mind the future with a fully developed China and India), there may be 20bn, there may be sweet F.A. same goes for wild reserves estimates for the polar regions.

Andrey

Just for fun: take a look at this website about Russian-Ukrainian theory of abiotic origin of oil:

http://www.gasresources.net/index.htm

Treehugger

Al fin

Before saying that oil prediction are meanigless you should check it carefully. The ASPO prediction takes into account the deep offshore future production : the future deep offshore won't significanbtly delay the oil peak just as the Alsakan oil production didn't delay the peak of the US oil production, just added a small bump on the tail of the decline of the production. Now about the artic oil : there is not oil in artic, oil accumulate in sedimentary basin which is not the case of artic.

sulleny

Just as there are highly flawed silicon-based climate models - we can assume that similar problems bedevil the oil and gas exploration industry. Simulations can be made to do strange things when finds such as this are merely announced and not confirmed.

Good thing the serial hybrids will be coming online 2009. We'll all be happy-er with 60-80 mpg vehicles.

George

Matthew wrote: Wouldn't it be nice to find out? Exploration and exploitation is banned off of most of the U.S. coastline.

Given how long it takes to get new reserves online, we need to stop screwing around and get to exploring.

So mom can drive junior to Chuck E. Cheese in a seven thousand pound truck.

George

Matthew wrote: Peak oil will never get here...

And global warming is a hoax, right?

domenick

I hope this oil field lasts a long long time. What's the best way to make it last, you may ask? Well, I might reply, simply leave it there.

Matthew

And global warming is a hoax, right?

Global warming and peak oil are similar in that, while there are some genuine underlying trends and issues, their proponents have blown them all out of proportion into these apocalyptic scenarios designed to frighten the masses into going along with their ideological agends.

Twenty years from now when the world is cooling down again and the switch to electric and hydrogen vehicles is well underway, we'll look back on these days with wonder.

JamesEE

Mathew,

Let's assume for a minute that you are absolutely right about peak oil and about GW. What's your answer to the energy security problem?

Brazil is a democratic country with a pragmatic elected leader. That's not true for Saudi Arabia, Iran, Kazakhstan, Sudan, Venezuela, Nigeria, Russia, ... well, you get the picture. Why isn't energy security a major issue, and how can that ever be achieved without serious conservation? Offshore drilling alone can't fix the problem.

Matthew

What's your answer to the energy security problem?

Conservation, conversion to alternative (preferably clean) fuel sources, such as wind, solar, nuclear, tidal, et cetera.

It amazes me how everyone assumes that supporting increased oil exploration and exploitation somehow means that conservation and the like are off the table. Why can't we do both?

We are, finally, at the cusp of real technological revolutions in transportation as well as energy production. But in the meantime, we still have an oil-based infrastructure, so it behooves us to continue to fuel it while the transformation gets underway.

And no, increased exploration won't drive oil prices back down to where it no longer becomes cost-effective to fund the transformation - too much of the world's oil supply remains in the hands of the unpleasant nations of the world for that to happen. Right now, the biggest risk is that we allow ourselves to fall into an unnecessary energy crisis that damages our economies to the point that we're unable/unwilling to spend the money to transform our infrastructure.

Matthew

Conservation, conversion to alternative (preferably clean) fuel sources, such as wind, solar, nuclear, tidal, et cetera.

AND, lest we forget, greater domestic petroleum production - in case that wasn't obvious.

JamesEE

Mathew,

I agree that we should do both -- more conservation and more exploration. Unfortunately, in our polarized political climate each side is insisting that we do one, but OMG not the other. So we keep doing neither.

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