Judy Maksoud, International Editor
Today’s large budgets leave little of the world off of the exploration and production radar, and Latin America is a bright spot on the screen. In the case of Latin America, the cross-section of investors includes all of the major operating companies as well as two heavy hitting national oil companies.
Brazil kicked off 2007 by laying aggressive plans through 2010.
Petrobras has been enhancing its exploration portfolio to increase production in the long term and now has more than 100 local blocks in addition to its overseas acreage.
Petrobras has a portfolio that includes dozens of projects and will involve $38 billion in investments in exploration and production through 2010. The company will invest $7.4 billion in exploration alone through 2010, including investments made by partners and third parties.
Petrobras’ production goal for 2015 is 4,556,000 b/d of oil.
The operator took a step toward increasing production in January when it brought the Espadarte field online via theCidade do Rio de Janeiro FPSO.
Full production is expected this year with nine subsea completions - five for production and four for water injection. A new oil lifting system developed by Cenpes, the Petrobras research center, will use subsea pumps to help move the oil to the FPSO.
Petrobras hit gas with well 6-ESS-168 in the Espírito Santo basin in mid-May. Drilling is ongoing, Petrobras says, but the well reached sandstone reservoirs at a depth of 3,378 m (11,083 ft) encountering a 130-m (426.5-ft) gas column.
Well 6-ESS-168 is north of the Camarupim field, which was declared commercially viable at the end of 2006. The new discovery is important, Petrobras says, because it indicates an increase in expected recoverable volumes in the area.
Petrobras operates this concession with 65% interest. El Paso holds the remaining 35%.
Brazil is also aggressively pursuing international investment. In February, Petrobras and Gazprom signed a memorandum of understanding to identify cooperation opportunities for oil and gas projects. Three potential initiatives include LNG, gas storage, and gas transportation system projects. The companies expect to materialize actual partnerships, particularly in the LNG area, this year.
In mid-May, Petrobras signed an agreement with Galp Energia and Partex for exploration and production in four blocks of the Lusitaniana basin offshore Portugal north of Lisbon. With a 50% stake, Petrobras will be operator of the Camarão, Amêijoa, Mexilhão, and Ostra blocks in water depths ranging from 200 to 3,000 m (656 to 9,842 ft).
The agreement foresees an eight-year exploration period, which will involve seismic acquisitions and exploratory well drilling. Initial investments are expected to range from $20 to $30 million.
In March, Petrobras committed to invest at least $470 million to develop Caspian Sea reserves. According to the National Iranian Oil Co., the contract will make Petrobras responsible for the risk involved in the operations in return for a share in the sale proceedings.
Petrobras is to drill three wells in blocks 6 and 29 of the Caspian Sea and in Iran’s territorial waters. Petrobras plans to be a service provider in Caspian Sea’s deep offshore drilling.
In early May, Petrobras reaffirmed its projects in partnership with Venezuelan national oil company Petróleos de Venezuela.
According to Petrobras, there is no threat that the negotiations kicked off nearly two years ago will be interrupted.
Petrobras remains resolute in studying the viability of the projects that are currently under discussion with PdVSA and the Venezuelan government, Petrobras says. The projects include mature field revitalization and development of the Mariscal Sucre field, both of which are in Venezuela.
In early June, Petrobras signed a partnership agreement with ONGC and ONGC (OVL), ONGC’s international branch, that provides for shared operatorship of six deepwater exploration blocks, three in Brazil and three off Inida’s eastern coast.
The Brazil blocks are in the Sergipe-Alagoas basin in Maranhão and the Santos basin. The Indian blocks are in the deepwater Krishna-Godavari, Mahanadi, and Cauvery basins. At least one well will be drilled in each block.
Following this initial agreement, the partners foresee cooperation opportunities in several oil industry activities, especially offshore E&P in India, Brazil, and in other countries, Petrobras says.
Trinidad and Tobago draw investors
Trinidad and Tobago’s offshore continues to attract international investors, in great part because the established infrastructure is conducive to transporting produced hydrocarbons.
Brazil, Trinidad, Mexico, and Venezuela are the most active E&P regions in Latin America.
International operators British Petroleum, through subsidiary BP Trinidad and Tobago (bpTT) has a considerable presence in the country’s offshore. BP holds exploration and production licenses covering 904,000 acres (365,836 hectares) off the east coast, with bpTT holding the majority of its upstream assets.
British Gas and Chevron are continuing their investment in Trinidad and Tobago as well. In mid-July 2006, the partners delivered first gas from Dolphin Deep to the onshore processing facilities at Beachfield on the southeast coast. Dolphin Deep, which lies (52 mi) off Trinidad in the East Coast Marine Area (ECMA), is the first subsea development for the country.
The ECMA contains the Dolphin, Dolphin Deep, Starfish, and Manatee gas fields. The Manatee field, discovered by BG and Chevron in January 2005, is part of a cross-border accumulation that stretches into neighboring Venezuela.
In late May, BG and Chevron entered into a gas sales agreement with the National Gas Co. of Trinidad and Tobago Ltd. for the supply of 220 MMcf/d of gas for a term of 11 years, with an option to extend for another four years. Deliveries are expected to begin in 2009.
Chevron expects the gas to be sourced from the Dolphin field. At that time, Chevron says it plans to work closely with the government to promote additional development of Trinidad and Tobago’s natural gas reserves, its local market, and further LNG growth on the island.
Meanwhile, BHP Billiton is entering the second phase of the Angostura project. The plan is to commercialize the field’s gas resources.
BHP’s current focus is production optimization, beginning with block 3(a), where BHP found oil last November with the shallow-water Ruby-1 exploration well. Ruby-1 is 48 km (30 mi) off the northeast coast and 8 km (5 mi) east of the central processing platform for the Greater Angostura field on block 2(c). Appraisal efforts are continuing with an additional well planned for the block this year.
Other drilling this year will include an appraisal well and two development wells on block 2(c), from which gas production is expected to begin in 2010.
The company also will carry out drilling an additional appraisal well, two development wells, and two recompletions this year.
Talisman Energy Inc. has significant drilling plans as well. The company has committed $59.2 million to Trinidad and Tobago this year to drill up to seven exploration wells and four development wells.
And Calgary’s Canadian Superior Energy Inc. is just entering the exploration phase of its program in Trinidad. The company’s plans include drilling three locations in this drilling campaign and expanding its acreage.
Taking it all back again
Although there are two sizable developments offshore Venezuela - Plataforma Deltana and Corocoro - the most recent news for foreign investors is not encouraging.
In April, Venezuela signed agreements with foreign oil companies that gave PdVSA control of their projects. Exxon Mobil Corp., Chevron, Statoil, BP, and Total signed agreements that transfer operations to PdVSA. The final terms of those agreements were to be reached at the end of June.
PdVSA is gearing up to take control of a large number of fields, but there is speculation that the company does not have enough technical expertise to make a go of running the projects alone.
In taking over the projects in this manner, PdVSA also runs the risk of deterring future investment. Venezuela’s output has fallen over the last few years, and much of the country’s remaining oil is heavy and difficult to produce.
Mexico still exclusive
While Venezuela drums out the competition, Mexico continues to march to the beat of its own drum.
State oil company Petróleos Mexicanos still holds all of the cards, and that is not likely to change any time soon. Because foreign companies are not allowed to own hydrocarbon reserves within Mexico, foreign operators cannot carry out exploration activities offshore. The Mexican Constitution also prohibits Pemex from engaging in joint ventures or production-sharing agreements, which essentially closes the door to international operators.
Pemex, however, has carried out its own exploration program and has had some fairly favorable results. The most exciting discovery in the Mexican Gulf was the Noxal 1 wildcat, drilled by Pemex in the Catemaco fold belt in March 2006. Noxal 1 is Mexico’s first deepwater gas discovery. An IHS report places reserves estimates at 245 bcf, noting that this offshore area, to be known as Coatzacoalcos Profundo, could hold as much as 10 Bboe.
A major challenge for Pemex continues to be technology. Domestically, there has been little deepwater activity. It will be very difficult for Mexico to develop its deepwater reserves without this expertise.
A second challenge is funding. The Pemex budget is limited, and many potential developments will lie fallow as a result of the company’s inadequate budget. •
New areas open for exploration
Colombia is putting 13 blocks up for bid this year in areas ranging from the transition zone to deepwater. The blocks, located in the Urabá, Sinú, and Guajira basins, average 290,000 hectares (716,603 acres) in size.
Data packages were made available on May 21. Qualification documents will be available on Aug. 10, and bids are due on Sept. 18. Awards are to take place in October.
Each block has a minimum exploration program based on its size, available data, and characteristics. The first phase of the exploration period requires an assessment of the prospectivity as well as acquisition, processing, and interpretation of seismic data. The second phase of the exploration period requires the drilling of an exploration well and the relinquishment of 50% of the original contract area.
Suriname’s state oil company Staatsolie also is laying plans for a new bidding round. The company plans to offer a number of nearshore blocks in March of next year. Data packages should be available in January.
In early June, Murphy Oil Corp. subsidiary, Murphy Suriname Oil Co. Ltd. signed a production-sharing contract (PSC) for block 37 offshore Suriname.
Block 37 covers approximately 2.1 million acres and lies in water depths of 49-395 m (160-1,000 ft). The PSC covers an initial six-year exploration phase and includes commitments to drill two wells and acquire 3D seismic.
Exploration is also moving into deepwater offshore Peru. Peru’s prolific Talara basin has generated over 1.7 Bbbl of oil and associated gas from onshore fields, some of which have proven seaward extensions. Few wells have been drilled, however, in adjoining waters beyond a depth of 100 m (328 ft), and seismic data beyond this point is sparse.
Uruguay is also laying the groundwork to increase exploration. In late May, the Uruguayan Ministry of Energy and Environment contracted Wavefield Inseis to conduct a multi-client long-offset 2D survey covering 7,000 km (4,350 mi). The survey was to begin in June. The results should be available by year-end.
