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."
bump
One more caveat. Off shore discoveries tend to decline at a much faster rate than on shore well heads. The extraction rate is much high as the cost per drum is much greater than land based rigs. The drillers milk it fast and big time plus the cheapest rig cost now is about $200,000/day for a jack up,
a floater is much higher.
8 billion barrels of light oil and natural gas... worth as much as $60 billion... 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.
the Tupi field 180 miles off the southeastern Brazilian coast... 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.Gee, how'd that get there? ;')
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less oil has been found than has been used each year for more than a decade
Reserves have grown in the last decade after supplying the increasing demand. Reserves have grown because more oil has been added to the reserves than has been used.
Your link did not work.
Sorry about that, go here:
International Petroleum (Oil) Reserves and Resources
http://www.eia.doe.gov/emeu/international/oilreserves.html
And select "January 1, 1980 - January 1, 2007 Estimates"
when analyzing EIA numbers, try to sort out unconventional reserves like tar sands from crude oil. They are only equivalent in the sense that they can be refined into similar products. Extraction rates and the costs of inputs differ enormously.
Extraction rates and cost differ greatly from West Texas to the Arctic and deep water gulf. That is no reason not to count the reserves. If you only want to talk about cheap, easy oil, sure that rate is going down. But that is selecting artificial criteria when the product still goes to refineries and runs in my truck.
But even if you ignore the 175 billion barrels that was finally added to Canada's reserves in 2003, there still is greater reserves in the world over the past decade in spite of meeting the growing demand.
How do you propose that ANWR be able to produce 20 million barrels per day?
The UN claims everything outside of territorial waters. At 180 miles off the coast, this would be in Brazil's exclusive economic zone. By the convention, states have exclusive sovereign rights to all natural resources out to 200 miles from the coast.
But I wouldn't be surprised to hear about the UN and/or the International Seabed Authority getting involved.
One more time:
Less oil has been found every year than has been produced since the 1980s. That is fact.
Reserve growth is not discovery. As per my previous posts, it appears to me that some of the reported reserve growth is pure nonsense. If reserves in Saudi Arabia remain the same and no new discoveries are occurring it is either magic or hogwash. Take your pick or suggest an alternate explanation, preferably one that does not rely on blindly believing the Saudis. I have set forth my case for Saudi reserve claims being “hogwash.”
Tar sands are not oil. Net energy production per barrel is much lower as a very significant fraction of the energy produced is used in production. Using natural gas to produce synthetic crude has been compared to turning gold into lead by Matt Simmons.
Finally, it is the extraction rate that is the problem. There is very little shut in production anywhere except in war zones. Almost no oil is being voluntarily withheld outside of OPEC and OPEC unused capacity is not that great. Saudi Arabia claims to have a couple of million barrels per day. Maybe half that amount in the rest of OPEC. If it can’t be produced are increasing rates, the existence of the reserves reported by the EIA doesn’t matter.
I don't and it couldn't be.
Read my post which reads in part: "[if it could be produced that fast which of course it can’t]". I posed a hypothetical for purposes of illustrating the impact in the long run on US and World oil consumption.
scuba-diving dinosaurs with tunneling technology and a death wish?
http://news.bbc.co.uk/2/hi/business/3777413.stm
[snip] ...Much of ASPO’s [Association for the Study of Peak Oil] predictions stem from the calculations of Dr Campbell. His work on oil reserves has long suggested that many official oil data are either flawed estimates or at worst downright lies... False reserves threaten the security of energy supply, just as do bombs under pipelines. Dr Campbell’s conclusion: oil production and consumption should be regulated by governments. “Many reserve figures are highly questionable,” says Dr Campbell. “Many great oil fields are increasingly old and inefficient. But I don’t think oil is easy to produce with a sniper behind every palm tree. The way to increase energy security is to reduce demand,” he says. [end]
You heard the man — oil production and consumption should be regulated by gov’ts.
;’)
“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.”
Makes you think. Makes my head wanna explode.
How deep would the ocean have to be to deposit 1.2miles of SALT?
P.S. (sorry, just got engine in gear)
I’ll answer my own question.
ABOUT AS DEEP AS IT IS NOW. (7000feet = about 1.2 miles).
Is that a good guess?
:’) The salts referred to may be a variety of different kinds (other than sodium chloride).
Oil Reserves have grown since the 1980. That is a fact. More oil has been added to the reserves than has been consumed. That is a fact.
Reserve growth is not discovery.
Whether oil is added to the reserves from exploring in new places, using new technology to find petroleum in places previous explored or using new technology to produce oil previously discovered and was not economically produceable all have the same results. More recoverable Petroleum added to the reserves. None of these are more valuable than the other.
Tar sands are not oil.
That is your opinion. The experts at the "Oil and Gas Journal" choose to include them in the reserves. I agree with them.
Net energy production per barrel is much lower as a very significant fraction of the energy produced is used in production. Using natural gas to produce synthetic crude has been compared to turning gold into lead by Matt Simmons.
Oil sands have produced their 1 billionth barrel back in 1998.
Oil sands now account for 39 per cent of Canada’s total oil production at approximately one million barrels per day. By 2020, production will grow to four million barrels per day.
Total Canadian production is projected to increase from the current 2.5 million barrels per day to reach 4.9 million barrels per day (b/d) by 2020.
Oil Sands Resources, Production and Projects
http://www.capp.ca/default.asp?V_DOC_ID=1162
Canadian Association of Petroleum Producers
Almost no oil is being voluntarily withheld outside of OPEC
As it has been since 1940 or earlier, long before OPEC existed. Nothing new or different about that.
If it can’t be produced are increasing rates, the existence of the reserves reported by the EIA doesn’t matter.
The amount of investment by oil companies is incredible these days. There is great expansion going on in exploration and facility expansion. This will bring continued expansion in the petroleum production.
I've provided a link that documents several sources showing this is a false claim even after disregarding oil sands. Would you please support your claim?
If that link doesn’t work for you try googling Matt Simmons go to the Simmons & Company site and click on speeches. The one I attempted to link to was “Twilights in the Desert” from September of 2005, but there are several others that make the point about the uncertainty of Saudi reserves.
Part of the problem is that the Saudis are using multi lateral horizontal wells. This is a good thing, except that when this type of well starts to water out, there aren’t a lot of options left in terms of secondary or tertiary recoveries. Either in this presentation or another of the dozens in the archive, he describes what happened to Yibal, a giant in the UAE. Basically using multi laterals, production history was flat or rising and then suddenly collapsed as the oil water contact rose to the level of the laterals.
In answer to your question about old oil fields, there are some great opportunities for independents to make some money and supply some much needed oil, but these sorts of projects will only very rarely return a field to its glory days.
I currently have a small interest in a field that was drilled in the 1930s abandoned. Drilled again in the 1980s and fell in disrepair. We are now trying to it bring back to a somewhat higher level of production. It isn’t easy. A very good well in this field might make 30 barrels of oil per day and 3,000 barrels of water. To do that picture operating a 250 horsepower submersible pump running 24/365 that is only 5 inches in diameter. To some extent we are trading electricity for oil with power bills of about $10,000 per month. And oh by the way, the wells for disposing of the water are more expensive to drill an equip than the producers.
If you had that sort of oil cut [1%] when Ghawar watered out, you would be talking about moving 500,000,000 barrels of water per day to try to maintain production. Almost impossible to imagine and it couldn't last for long. Beyond which most of the production in the field I described above comes from the very top of the formation between the existing wells. In a well engineered multi lateral, that area has already been swept.
The point is that the easy oil comes first, and the tail end of production requires a lot of effort. BTW, the well I described above would not work in a remote location and I doubt any company much larger than my operator would have shown any interest in operating it with 2004's prices. At today's price and a reasonable price for electricity it may produce for a very long time, so "yes" price matters. However, 30 barrels just doesn't compare to the 1,000 barrels per day that some of these wells produced back in the 1930s. I think it is safe to say that this field and the state of Oklahoma have peaked. The world?
I have not disputed that reported reserves have grown. See my comments in other posts about the validity of OPEC reserves and why more reserves won't necessarily result in higher production, and why new discoveries do. Tell me that I am wrong about new discoveries.
"Whether oil is added to the reserves from exploring in new places, using new technology to find petroleum in places previous explored or using new technology to produce oil previously discovered and was not economically produceable all have the same results. More recoverable Petroleum added to the reserves. None of these are more valuable than the other."
Refer to my response above. Same concepts. What happens with reserve growth is that the field produces for a longer period, but usually at ever declining rates.
In regard to tar sands you wrote "That is your opinion. The experts at the "Oil and Gas Journal" choose to include them in the reserves. I agree with them."
Counting them is fine, but recognize that producing them and upgrading them to syncrude consumes something like 30 percent of the energy obtained. Compare that with a flowing oil well or a beam pump well. Now compare the tar sand with a hypothetical 170 billion barrel oil conventional light sweet field located in central Canada. The hypothetical could be brought on stream at some level [first production] within a couple of months and would ultimately be capable of more than 10 million barrels a day. All reserves are not the same and IMO tar sands belong in their own category.
"Oil sands have produced their 1 billionth barrel back in 1998.
Oil sands now account for 39 per cent of Canada’s total oil production at approximately one million barrels per day. By 2020, production will grow to four million barrels per day.
Total Canadian production is projected to increase from the current 2.5 million barrels per day to reach 4.9 million barrels per day (b/d) by 2020.
Oil Sands Resources, Production and Projects http://www.capp.ca/default.asp?V_DOC_ID=1162 Canadian Association of Petroleum Producers
And your point is? It still takes a bunch of valuable energy in the form of natural gas to produce syncrude. BTW, good luck on the 4 million barrel number. And BTW did you see the fall in Canadian conventional crude oil in the numbers you recited?
I wrote that Non OPEC producers had no spare capacity. You wrote: "As it has been since 1940 or earlier, long before OPEC existed. Nothing new or different about that."Wrong. Ever heard of the Texas Railroad Commission. They regulated spare capacity to keep the oil market from collapsing prior to 1972. Beyond that, my comment was also that OPEC had very little spare capacity. When a few hundred thousand barrels a day goes down, the market responds. There is no margin of safety.
"The amount of investment by oil companies is incredible these days. There is great expansion going on in exploration and facility expansion. This will bring continued expansion in the petroleum production."
Your conclusion, not mine. That is the debate. Whether we can run faster than the spinning thread mill. Check out the mega projects list for what to expect in the near future.
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