Brazil continues to make largest waves in Latin America

“Deepwater is where we are to grow,” says João Figueira, senior VP for upstream at Petrobras America, citing the new pre-salt discoveries of Tupi and Jupiter. Since the 1990s, Petrobras’ production in waters of 300 m (984 ft) accounts for about 2.31 MMboe/d of its total production of 2.36 MMboe/d. Petrobras targets 3.37 MMboe/d by 2011.

The Tupi field mentioned by Figueira is estimated to contain 5-8 Bbbl of oil from 280 km (174 mi) offshore São Paulo state in water depths from 1,500 m to 3,000 m (4,921 ft to 9,842 ft). The pre-salt production is between 3,000 m and 4,000 m (9,842 ft and 13,123 ft) below the seafloor. The good news is that some light oil may have been discovered recently in a reservoir at nearly 5,000 m (16,404 ft). Work is ongoing to confirm the discovery.

One development under way off Brazil shows the difficulties overcome to reach production. Shell Brazil Ltda.’s BC-10 is six reservoirs in 1,600 m to 2,000 m (5,294 ft to 6,562 ft) of water with an oil gravity range from 16º API to 42º API. Shell is using subsea separation and boosting, with separation and ESPs in the caissons and a new enhanced vertical deepwater tree from FMC Technologies.

Devon Energy’s Polvo development is another example, this time of success in Brazil without Petrobras. Polvo reserves are estimated at 50 MMbbl of oil and peak production is targeted at 50,000 b/d. Devon installed a fixed platform and production is sent to an FPSO for processing and storage.

The pace of progress offshore Brazil is indicated by the volume and size of recent equipment and service orders. Recent contracts include the following:

• Aker Solutions to supply 45 subsea trees to Petrobras
• Noble Corp. with a $4-billion agreement to supply 29 rig years over five deepwater rigs
• $18 million in umbilicals from Prysmian Cables & Systems
• A $200-million EPIC contract to Subsea 7 for the Sul Capixaba export gas pipeline
• $1.95 billion for theP-57 facility to handle drilling in Jubarte field and to produce 180,000 b/d of oil and 2 MMcm/d (71 MMcf/d) of natural gas
• 10 subsea tree systems from Vetco Gray for 2,000 m (6,562 ft) water depth
• An FPSO from MODEC capable of handling 350 MMcf/d of gas and 35,000 b/d of oil for 1,300 m (4,265 ft) of water.

In addition, Petrobras and Galp Energia recently announced what promises to be a major new gas/condensate field. Jupiter is in 2,187 m (7,175 ft) water depth 290 km (180 mi) offshore. It is 37 km (23 mi) east of Tupi, which raises the possibility of a common production facility and tiebacks, although no plans have been established at this early stage.

Argentina

Since 2001, the Argentine oil industry has been changing. Domestic prices were re-regulated, and exports were curtailed and taxed. Since then, there has been a decline in exploration investment. The government has re-created a state-owned oil company, Energía Argentina Sociedad Anónima (Enarsa). E&P incentives are available only in partnership with Enarsa.

The Falklands are one bright spot in Argentina’s area-wide exploration.

The British Geological Survey estimates that the North Falkland basin may be the second richest source rock in the world with, perhaps as much as 100 Bbbl of oil, much of which is thought to be still trapped beneath the regional seal. In exploration terms, the Falkland Islands are remote, lying in the southwest Atlantic Ocean at the nearest point 300 mi (483 km) from Argentina. Despite the area’s reserves potential, only six wells have ever been drilled in the region.

Petroleum Geo Services has completed acquisition of 1,492 sq km (576 sq mi) of 3D seismic data south of the Falkland Islands for Borders & Southern Petroleum Plc. Data processing is under way at PGS and is expected to take five months to complete.

Desire Petroleum Plc. is assessing data acquired by Wavefield Inseis ASA in tranches C, I, and L offshore the Falklands. When the environmental assessments are complete in 2008, Desire plans to drill any defined prospects.

Rockhopper Exploration Co. UK has completed a Wavefield Inseis ASA survey of the Ernest prospect in License PL024 offshore Falkland Islands.

Offshore Hydrocarbon Mapping Plc. has begun a controlled source electromagnetic (CSEM) survey over Falkland Oil and Gas Ltd. prospects. OHM will use its survey vessel,CS Teneo, to acquire a series of CSEM lines over FOGL’s 20 top prospects and leads off the Falkland Islands.

Rockhopper Exploration Plc is the largest license holder in the North Falkland basin with 100% of four offshore production licenses covering over 5,800 sq km (2,239 sq mi).

Rockhopper and OHM scored two firsts during this campaign. This is the first time that CSEM has been applied in the Falkland Islands.

Belize

Providence Energy Belize has signed a production sharing agreement with the Ministry of Petroleum in Belize covering 531 sq mi (1,375 sq km) that includes offshore acreage.

The award consists of a mostly offshore block in the Gulf of Honduras from Punta Gorda to New Haven and another block over and southeast of Glover Reef off Dangriga.

A consultant to the Belize government believes the next discoveries in Belize will be made in the “southern offshore basin, where it is continuous with the field of Guatemala…and also the southern basin on land near Crique Sarco, Monkey River, and the Punta Gorda Belt…and more in the southern offshore basin including Glover’s Reef.”

Colombia

Foreign oil and gas investment in Colombia is expected to be more than $5 billion this year, compared with $3.5 billion in 2007. Colombia says it plans to sign 70-80 exploration and production contracts by year-end, compared with 56 last year.

Reliance Industries has converted two technical evaluation agreements for offshore Colombia into production and exploration contracts with Agencia Nacional de Hydrocarburos (ANH).

The blocks are Borojo North and Borojo South. Each 4,000-sq km (1,544-sq mi) block is in water depths up to 1,500 m (4,921 ft).

ANH also has awarded nine of 13 offshore blocks in the Caribbean Sea that had been released for tendering. State-owned Ecopetrol SA will participate in joint ventures with foreign partners in six of the concessions and has two others alone. BP won block 5. Altogether, Ecopetrol won blocks 11 and 12 outright, and will partner with Brazil’s Petroleo Brasileiro SA (Petrobras), India’s Oil & Natural Gas Corp. (ONGC), Hess Corp., and BP in six other blocks.

Blocks 1, 2, 3, and 13 received no bids.

Cuba

Brazil’s president has offered Cuba credits for food, drugs, roads and hotel repairs and has signed a deal for his country’s state oil company to drill for oil in the Gulf of Mexico.

An agreement with Cuba may lead Petrobras to conduct exploratory deepwater drilling in GoM waters off Cuba’s coast.

Spanish, Canadian, Indian, and Malaysian companies already have signed contracts to explore the area. The US trade embargo prohibits US companies from investing in the area.

Mexico

Mexico remains closed to foreign private investments for the time being. However, the declining production, mostly from the offshore Cantarell and Ku-Maloob-Zaap fields, could press the government into altering that rule.

That rule does not apply to service companies hired by state-owned Petroleos Mexicanos. It recently signed contracts totaling more than $100 million for services and maintenance.

The chief executive of Pemex is reported as saying the country’s proven hydrocarbon reserves fell 5.1% last year to 14.7 Bboe. Pemex reported an average production of 3.1 MMb/d of oil last year, and 6.058 Bcf/d of natural gas.

Peru

GX Technology (GXT) reportedly plans to spend $40 million on a 2D seismic survey offshore Peru. The project would cover 7,000 km (4,350 mi) from Tumbes to Moquegua.

BPZ Energy has first oil through the CX11 platform in Corvina field on block Z-1 off northwestern Peru. First production came from the CX11-21XD well, which reached a stabilized rate of 2,500 b/d of oil. The 14D well, which has an expected maximum design throughput of 28 MMcf/d of gas, flowed at a stabilized rate of 1,900 b/d through its oil tubing, producing 5,000 bbl into the second tanker. No formation water was detected in either well.

Trinidad & Tobago

BP Trinidad and Tobago has started gas production from the Mango field in the South East Galeota block in 235 ft (72 m) of water. The production goes to Atlantic LNG’s liquefaction plant. The single, unmanned platform can produce gas from nine wells for export through a 4-mi (6-km), 26-in. (66-cm) pipeline tied to the Cannonball pipeline and through the Cassia B gas processing hub.

Trinidad and Tobago’s Ministry of Energy and Energy Resources reported it will reach an agreement within the next six weeks with Tullow Oil PLC and Centrica Resources, enabling them to explore block 2 (ab) off the eastern coast of Trinidad and Tobago.

Venezuela

The future path of the oil business in Venezuela is not yet mapped. The country’s return to nationalization of existing foreign operators’ holdings and demands for new agreements is the reason. While some IOCs have pulled out and are arguing in courts regarding the affair, others still are operating.

A farm-in agreement on Cardon IV block in the Gulf of Venezuela was signed by Repsol YPF and Vinccler Oil and Gas. Repsol would retain 25%, Eni SpA would hold 50%, and Petroleos de Venezuela SA retains the right to acquire up to 35% if the natural gas project proves commercial.

The acquisition of 700 sq km (270 sq mi) of 3D seismic data over Cardon IV was completed in February 2007. The data is being interpreted, and a drilling decision for an exploration well is expected in mid-2008, with a likely spud date in early 2009. A jackup rig is being secured with a multi-operator group from adjoining blocks in the Gulf of Venezuela. If successful, first commercial production of natural gas is expected in 2011.

Venezuela awarded five exploration blocks in the non-producing Gulf of Venezuela west of the Paraguana Peninsula. The blocks are in shallow water east of Colombia’s Guajira Peninsula between Lake Maracaibo and the Caribbean. Successful bidders were Chevron, OAO Gazprom (two blocks), Vinccler Oil & Gas CA, a combine of Repsol YPF and Eni, and a combine of Petrobras and Teikoku Oil Co.

Suriname & Guyana

Suriname and Guyana have resolved a long-running maritime boundary dispute that will open 19,700 sq mi (51,023 sq km) of coastal waters for exploration.

Under terms of a legal ruling, Guyana was granted sovereignty over 12,800 sq mi (33,152 sq km) of coastal waters that had been in dispute. Suriname was awarded 6,900 sq mi (17,871 sq km). That agreement, if effective, will end almost eight years of arguing.

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