BG says Tupi to be developed before Franco

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Aug. 3 -- Brazil’s Petroleo Brazileiro SA (Petrobras) is unlikely to accelerate development of the more recently discovered Franco well over the Tupi or Guara fields in the Santos Basin, according to Frank Chapman, BG Group chief executive officer.

"Both Tupi and Guara have exhibited very high flow rates as well, so there is no reason to believe Petrobras would accelerate development of Franco instead," said Chapman whose firm holds a 25% stake in each field alongside operator Petrobras, 65%, and Galp Energia, 10%.

Last month, Brazilian regulator Agencia Nacional do Petroleo (ANP) estimated flow rates in excess of 50,000 b/d from Franco, adding that the crude was 30° gravity, making it much lighter than most of Brazil's crude, which has a gravity of 18°.

Last month, ANP Director General Haroldo Lima also revised upward his organization’s estimate of the potential reserves of the Franco well, saying it could have more than the initially estimated 4.5 billion bbl of oil

"It could be more than this,” Lima said. “The latest news is that our prospects have increased," he said, adding that Franco is closer to being picked as the well to be used in an oil-for-shares swap aimed at bolstering Petrobras’s capital without increasing government debt.

Lima said the upward adjustment was based on initial studies by consulting firm Gaffney Cline Associates (GCA), which will assess the potential volume and value of presalt reserves in the Campos basin.

Franco is one of two wells being considered for the oil-for-shares swap that is part of the capital increase plan for Petrobras. Under the deal, the government will cede 5 billion bbl of oil for Petrobras in exchange for shares in the company.

The ANP’s remarks about Franco followed a June announcement by BG, confirming the success of a new well known as Tupi Alto (3-BRSA-821-RJS or 3-RJS-674) on block BM-S-11 in the Santos basin.

“This is the seventh consecutive successful well on the Tupi accumulation and confirms the extended presence of light oil,” BG said, adding that wireline testing confirmed the presence of light oil near 30° gravity and excellent reservoir properties across the key Sag reservoir.

“The information obtained from this well and other wells already drilled, reinforces the estimate of a potential 5-8 billion bbl of recoverable light oil and gas from the Tupi presalt reservoirs,” BG said.

The Tupi Alto well, drilled by partners Petrobras (65%, operator), BG Group (25%) and Galp (10%), is in the Tupi evaluation area in 2,111 m of water, 275 km from Rio de Janeiro.

The Franco discovery was announced in May, when ANP said it found an estimated 4.5 billion bbl of recoverable oil in the Franco subsalt prospect.

ANP said the Franco well, 2-ANP-1-RJS, 195 km south of Rio de Janeiro, found a 272-m column 41 km northeast of the 3-4 billion boe Guara discovery of Petrobras, BG and Galp Energia.

"Franco appears to be one of the wells with the greatest potential ever drilled in this country," said Lima. "The discovery reinforces the optimism of the Brazilian government in relation to the potential of the subsalt area located in the Campos and Santos basins."

ANP said the Franco discovery was made by the Noble Paul Wolf semisubmersible rig in 1,955 m of water and was drilled to a final depth of 5,063 m below the seabed.

In February, BG said it was on track to more than double its oil and gas production by 2020, with discoveries in Brazil eventually geared to providing a substantial boost to the firm’s bottom line.

“Brazil is one of our main focuses,” said Chapman, adding that the firm eventually expects its production to reach 400,000 boe/d. “We might hit this threshold anytime after the second half of this decade,” he said (OGJ, Feb. 11, 2010).

Contact Eric Watkins at [email protected].