BG Group said it's on track to more than double its oil and gas production by 2020, with new discoveries in Brazil eventually geared to providing a substantial boost to the firm's bottom line.
"Brazil is one of our main focuses," said BG Group Chief Executive Officer Frank 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.
Conservative outlook
However, in a conference call with investors, Chapman indicated current projections about Brazil's output potential may be conservative, especially when it comes to the Santos basin.
"Whereas the market recognizes broadly the importance of Brazil to BG Group, the value we've already created from the Santos basin is not yet fully recognized," he said.
"In particular, the rapid play 'de-risking' and our concrete plans for early production ramp-up have already substantially increased the value of this play," Chapman said.
The BG Group executive said the firm's program "really stepped up a gear" in 2009, shooting more than 3,000 sq km of 3D seismic, drilling 7 successful wells, coring 275 m of reservoir, performing 5 drill stem tests (DSTs), and producing 3.5 million bbl gross from the first extended well test (EWT).
"This program has provided a mass of new information, advancing substantially our understanding of the Santos basin, and supporting our earlier assessments and forward development plans," Chapman said.
Recent developments
BG Group summed up its recent developments in Brazil:
• The firm's 2009 appraisal and commercialization program substantially advanced its understanding of the Santos basin presalt, with technology tested and excellent reservoir characteristics observed across a number of locations.
BG said new information provided by the program supports previous assessments and forward development plans, including reserves and resources estimates of more than 3 billion boe net, anticipated net production of more than 400,000 boe/d by 2020, and BG Group's view that its Santos basin presalt developments achieve economic break-even at oil prices below $40/bbl.
• Tupi Sul. EWT on Tupi Sul has produced 3.5 million boe gross to date, with pressure support "greater than expected, indicating very good lateral reservoir continuity and quality."
• Tupi-Iracema. The pilot floating production, storage, and offloading module is more than 65% complete, with capacity of 100,000 b/d of oil and 175 MMscfd of natural gas. First production is expected by yearend. Full field development will require 200-300 wells and as many as 10 FPSOs.
• Guara. Gross reserves and resources estimate of 1.1-2 billion boe, well ahead of initial estimates. "Outstanding test results were achieved in 2009, with production potential of 50,000 b/d/well," BG said, adding that EWT will begin later this year. It said a letter of intent was signed for construction of an FPSO with capacity for 120,000 b/d of oil and 175 MMscfd of gas, with first production expected early 2013.
• Iara. Discovery well reentered in 2009. New well to be drilled in 2010; DST in 2011; 3D seismic in 2010-11; and EWT planned for 2013.
• Carioca. Further appraisal well planned this year followed by EWT commencing in fourth-quarter 2010.
• Santos basin gas. Joint venture agreement to conduct parallel front-end engineering and design (FEED) studies assessing the potential for as much as 3 tonnes/year floating LNG for domestic and export markets.
Chapman underlined BG Group's optimistic outlook, saying confidence has increased "in our ability to produce the oil and gas efficiently and economically, having now tested the technology and observed the excellent reservoir characteristics across a number of locations."
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