Posted on 12/01/2007 5:44:49 PM PST by Graybeard58
RIO DE JANEIRO, Brazil — This country, famed for its development of sugar-cane-produced ethanol, soon could become one of the world's great oil powers — if its state-controlled energy company, Petrobras, can tap a potentially massive deposit beneath the South Atlantic Ocean.
Experts believe the deposit, in the Tupi field 180 miles off the southeastern Brazilian coast, holds up to 8 billion barrels of light oil and natural gas. If confirmed, the deposit would be the largest petroleum find in seven years and would propel Brazil to the No. 12 position in oil reserves, after the United States and ahead of Canada and Mexico.
Analysts estimate that the deposit could be worth as much as $60 billion and predict that Brazil, which last year for the first time produced as much oil as it consumed, could become a major oil exporter.
Yet the find will challenge Petrobras' reputation as one of the world's best at exploiting deep-sea oil deposits.
About 70 percent of Petrobras' oil production comes from deep-water wells, making it the world's biggest oil producer at such depths. But the Tupi deposit is deeper than Petrobras has ever drilled — under 7,000 feet of ocean water and more than 16,000 feet of rock, sand and salt, including a 1.2-mile-thick layer of rock-hard salt.
How to tap into the find has set off a technological race, spurred because the potential rewards of exploiting the deposit are so great — especially as the price of oil nears $100 a barrel.
"It's among the most complicated projects in the world in terms of deep water," said Caio Carvalhal, a Brazil-based research associate with the U.S. consulting firm Cambridge Energy Research Associates. "But Petrobras has proved in the past that it is up to the task."
Company officials have said that years of planning lie ahead, and experts estimate that the Tupi field won't start operating fully until 2013. Although the company announced the find last year, it just released estimates of its size in November. The company will have to drill more wells to better calculate the size of the deposit.
"This was the first time that we arrived at this depth, and the technology is expensive," said Guilherme Estrella, Petrobras' director of exploration and production. "The costs are elevated, but the quality of the oil brings robustness and viability to this investment."
The Tupi field is the latest landmark in a technological race to the bottom of the ocean that many say is the energy industry's future.
Already, about a third of world oil production is offshore, with as much as 15 percent coming from deep waters, said energy consultant David Llewelyn, who's worked extensively in Brazil. Some of the most promising offshore oil regions lie in the so-called Golden Triangle, made up of the Gulf of Mexico and the coasts of Brazil and western Africa.
In 2005, U.S.-based Chevron and its partners drilled the deepest offshore oil and gas well in history at 34,189 feet below sea level in the Gulf of Mexico, according to Transocean, the world's largest offshore drilling contractor, which completed the well. The deepest onshore well, at 37,016 feet, was completed earlier this year on Sakhalin Island, off the Russian coast, for ExxonMobil.
Last year, Chevron announced it had found one of the biggest oil deposits in the United States, as much as 15 billion barrels of petroleum, more than 28,000 feet below sea level in the Gulf of Mexico.
"This is where the industry has to go to make the big finds like this," said Thomas Marsh, the Houston-based vice president of the consulting group ODS-Petrodata, a world leader in offshore exploration analysis. "And a lot of money is being spent on getting the industry going where it needs to go."
Oil companies reach such ultra-deep deposits by lowering drill bits into the ocean floor through a system of pipes connected to a floating platform on the water's surface. The pipes and drills get smaller the farther into the ocean floor they penetrate. At maximum depth, they're only about 8 inches wide, which increases their chances of being damaged.
The dangers come with the intense water pressure and heat, which can damage even the hardiest of metal drills. Temperatures 30,000 feet below the ocean floor can reach 400 degrees Fahrenheit, hot enough to turn oil into natural gas.
The biggest technical challenge of the Tupi deposit is penetrating the solid salt layer, which can become a kind of gel that squeezes and resists the drill bit. The salt also can interfere with sound wave-based seismic imaging that engineers use to figure out what's below it.
The deposit's location far from the Brazilian coast also complicates the task of delivering an estimated 53 million cubic feet of natural gas daily to consumers in the project's pilot phase.
Because natural gas can't be stored, Petrobras might have to build an enormous gas pipeline that would stretch 180 miles to shore or install gas liquefaction facilities above the deposit to turn the natural gas into storable liquid.
Despite all the difficulties, Petrobras will rise to the challenge, said Marcio Rocha Mello, president of the Brazilian Association of Petroleum Geologists and a former head of the company's geosciences section.
Before confirming the Tupi find, Petrobras already had drilled 15 wells into the solid salt along Brazil's southeastern coast, mapping an undersea basin of oil and gas stretching about 500 miles long.
"We've already put a lot of training and resources into this," Rocha Mello said. "The technology involved is already fully understood. It's not going to be a problem."
Drilling the first well alone cost $240 million, and tapping the Tupi deposit will require investing at least $5 billion at the outset, Llewelyn said. Petrobras controls a 65 percent stake in the deposit, with British company BG Group and Portugal's Gal Energia controlling the rest.
Petrobras has made such investments pay off in the past largely through innovation. The company pioneered the use of floating platforms to drill wells and store oil and has come up with new ways to heat and transport extracted petroleum.
The company has tried such technology in more than two dozen countries, including in the United States, and shared its know-how with countries also looking at going deep. In the process, Petrobras has lowered its costs for finding new deposits.
And unlike state energy companies in Venezuela and Mexico, Petrobras is known as one of the best-run firms in the industry.
Innovation has come with risks, however, and even tragedy. In 2001, a Petrobras rig that was then the largest in the world caught fire and sank off the Rio de Janeiro coast, killing 11 people.
Despite such setbacks and the enormous investments required, the Tupi discovery guarantees that Petrobras will be exploring the ocean floor off the Brazilian coast for years to come.
"With a find this size, the cost isn't really an issue," said energy consultant Llewellyn. "You really just have to do it."
Seriously, I hope Brazil can reach this oil, if only to pull some of the oil market away from the Middle East and Communist countries like Venezuela and Russia.
” No. 12 position in oil reserves, after the United States and ahead of Canada and Mexico.”
Wrong, wrong, wrong! Canada would still have over 10 times the oil reserves of Brazil.
That’s what I was thinking too. A quick Google search finds:
“Canada’s Oil Reserves 2nd Only To Saudi Arabia”
Takes the mystery out of what the oil companies do with all that money, doesn't it? It takes a LOT of money to find oil, and they could spend millions on a dry hole, and likely do, every day, looking for those big ones.
Private industry could get this oil up for likely a fraction of the cost. Too bad for Brazil, this payday will shrink them further into socialism...
What are the odds that the oil find pushes Brazil into totalitarianism instead?
The story of a major find of 8 billion barrels is reported all over the world. And the democrats and environmentalists still say the +10 billion barrels in ANWR is too small to go after.
That is quite an engineering problem there. Quite a challenge for a young engineer/oceanographer.
Changing their reserves from 11.7 billion barrels to 19.7 billion barrels is unlikely to cause such a change. Brazil has already become energy independent because of the last couple decades of increasing their oil production.
And unlike state energy companies in Venezuela and Mexico, Petrobras is known as one of the best-run firms in the industry.
Hmmmmn.
You mean Venezuela AND Mexico AND Indonesian AND Nigeria have corrupt third-world socialist government-run oil companies?
Gee. Who would have thought.
Good point.
After all, they claim it would “only” supply us oil for “only” five years.
Har. Har.
This cannot be possible because RightWhale assures us all that “peak oil” has been reached.
For the world, divide the 10 billion by 86 million to arrive less than four months. "Yes" we need to drill ANWR, but should not be deluded into believing that it is going to save us.
Peak oil is measured by several factors. Not just total ‘possible’ oil in the ground.
The amount being pumped, refined, sold, and the cost/profit ratio vs. the demand.
Peak oil is a situation where the amount going into production hits a limit due to those factors. You can have plenty of oil still underground, but if it is not profitable to get to it, it stays there.
Brazil has far, far to go before their newly found ‘unproven’ oil reserve enters into the factors for peak oil claims.
As the article states, it’s gonna take a lot of money, a lot of time, a lot of ‘miracles’ to get to it. Don’t count Brazilian chickens before they hatch.
What’s your take on the prospects of continuing to produce oil at the rate of 86 million barrels per day [or to actually to boost production significantly?]
The discovery curve [peaked in the late 1960s], the age of the existing giant oil fields [the things I have read about Ghawar, Burgan, Danquing don’t bode well] and the rather ugly decline curves in the North Sea and Cantarell have caused me to conclude that if the peak isn’t here, it will be soon.
I see a lot of promise in ultra heavy oil tar sands in Canada and Hugo Land, but that stuff won’t be anywhere near as much fun for the producers and the flow rates won’t be anything like what we have experienced for conventional crudes.
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