Brazil’s Tupi field in the Santos basin is a potentially enormous discovery.  Will its flows of oil be large enough to change the view of analysts who have foreseen a sharp drop in global oil production starting some time after 2010?   

The report cited below from The Financial Times (8/4/08) sheds some light on the question by revealing Petrobras’ latest thinking.   From a strategic viewpoint, PBR has announced that it will re-deploy its skilled engineering personnel from various projects abroad to concentrate their efforts on Tupi.   This indicates that the tight markets for skilled labor and equipment to harvest oil have, not surprisingly, required Brazil to put off developing new projects in Angola, Nigeria, and elsewhere in order to develop its Tupi assets and other Santos basin fields. 

In total, Brazil hopes to increase its oil production from 1.95 mb/d in 2009 to 2.81 mb/d in 2015, an increase of 860 kb/d over 6 years.  About half that increase is hoped to be on stream by 2012.  The total increase from 2009 - 2015 is about half the increase that Saudi Arabia is projecting to bring on stream in 2008 and 2009.

In answer to the questions “Is Tupi a game changer?” the answer is “no”, at least through 2015.  No doubt Brazil will continue to increase its production after 2015, making it one of the very few countries in the world able to do so, but clearly the amount of production gains being forecast by PBR at this point do not change the megaprojects projections appreciably.

The Wiki-megaprojects current projection is that Brazil will add 1.72 mb/d of new production between 2009 and 2015, far more than the now indicated 860 kb/d according to the piece cited below.   This may be an apples/oranges comparison; it is not totally clear if the rising production target discussed in the last paragraph below refers to all PBR new oil or just the Santos Basin new oil or whether it may be net new oil after declines in other fields.

Petrobras to focus resources on Brazil field

By Stephen Fidler in London

Published: August 4 2008 03:00 | Last updated: August 4 2008 03:00

Petrobras is to reduce exploratory activities abroad in order to concentrate on exploiting a potentially huge Brazilian offshore oilfield, according to the company’s president and chief executive.

José Sergio Gabrielli said the move would slow the pace of its operations in some of the 26 other countries in which it operates.

However, he said there had been no decision to pull out from any of them and he did not identify in which locations activities would be slowed.

“We are going to bring back some of our teams to work in Brazil,” he said in an interview in London with the Financial Times.

The company’s foreign operations are mainly in the Americas but it also has operations in Iran, Asia and Africa, including Angola and Nigeria.

Petrobras is repatriating its engineers and other personnel to avoid a shortage of skills as it seeks to exploit the Santos basin, which holds a field where the company has discovered the biggest oil deposit to have been found in the western hemisphere in three decades.

The Tupi field is estimated to hold between 5bn and 8bn barrels of recoverable oil, which will start pilot production at 30,000 barrels per day in March 2009, with a further 100,000 bpd coming online in 2010.

Petrobras officials have been quoted as saying output could reach 1m bpd.

But it is only one of eight Petrobras fields in the basin. The Santos basin is twice as large as the Campos offshore basin that currently accounts for 1.6m bpd, more than 85 per cent of Petrobras’s production.

However, it will provide logistical challenges for a company well-known for its expertise in deep offshore drilling.

The Santos deposits, under a layer of salt, are deeper at 2,100 metres than the Campos deposits and also further offshore - 300km versus 150km for Campos.

Mr Gabrielli said Petrobras ferries 40,000 passengers a month by helicopter to its Campos installations, and there may be difficulties in transporting similar numbers over the greater distances to Santos.

This may require fewer offshore staff and different techniques.

For example, in the Campos basin, Petrobras has extracted oil using floating production storage and offloading vessels known as FSPOs. In Santos, the company may also use so-called tension leg well platform (TLWP) technology.

In a presentation to investors in London, Mr Gabrielli said the company was targeting production of 1.95m bpd next year, rising to 2.42m in 2012 and 2.81m in 2015.

Copyright The Financial Times Limited 2008

Tags: peak oil energy investments

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