Brazil Briefs

Brazil considering new oil law

The government of Brazil plans to send a new regulatory regime for that nation’s oil and gas industry to its Congress by August, according to Mines and Energy Minister Edison Lobao. A government panel formed by President Luiz Inacio Lula da Silva was scheduled to complete its work on the proposed changes this summer, according to the minister. The new regulations will cover exploration and development of Brazil’s subsalt reserves, located deep off the country’s Atlantic coast. The Brazilian Congress is expected to pass the legislation in about six months, he said. “This year, we will have a new regulatory regime for the subsalt,” added Lobao.

The minister again stated his desire to create a separate state-owned company to manage the subsalt oil assets now under control of the government. A working panel is currently discussing this option and has been meeting two or three times a week to complete its work. Dubbed Petrosal, the company would manage development of the reserves and production-sharing agreements based on a model used in Norway. The intention is for the government to acquire a greater stake in the newfound deposits.

Petrobras confirms Tupi’s 5 to 8 billionbarrel potential

Petrobras has drilled an additional well in the Tupi area that the company says confirms earlier estimates of a potential of 5 to 8 billion barrels of recoverable light oil and natural gas in the pre-salt layers of that field. Drilling was still underway in June seeking for other objectives at greater depths. The third well is located 33 km to the northeast of the first Tupi well and indicated similar oil type and quality reservoirs. Informally known as Iracema and drilled by Seadrill’s West Taurus semisubmersible, this appraisal well is located about 250 km off the coast of the state of Rio de Janeiro at a water depth of 2,210 meters. The discovery was proved from light oil samples (about 30 degrees API) through cable testing in reservoirs located at a depth of 5,000 meters.

Following the conclusion of drilling, the Consortium composed of Petrobras (65% - Operator), BG Group (25%), and Galp (10%), which are jointly responsible for the exploration of the BM-S-11 block, will continue activities and investments, which will include the drilling of additional wells in the area.

Brazil still committed to biofuels

A key government official says that Brazil remains committed to developing biofuels despite last year’s discovery of giant oil reserves in the presalt area of the Santos basin. Dilma Rousseff, presidential chief-of-staff, while speaking to sugar and ethanol producers at the Ethanol Summit, said Brazil will continue being the world leader in ethanol production and technology development. Rousseff denied that sugarcane crops would take land from food’s rural farmers, saying that “Sugarcane occupies only 0.5% of Brazil’s arable land.” He added that ethanol could be used as a substitute for diesel oil to generate electricity in isolated communities in the Amazon region.

Petrobras approves first offshore heavy oil development

Petrobras has approved the development project for its Siri field in the Campos basin, according to a news report from Brazil. The field will be the first in the world to produce extra heavy oil from an offshore site. Siri field, off the coast of Southeast Brazil, has been in production tests since March and the company plans to contract production equipment in 2011. Petrobras will install two drilling platforms connecting to a floating production, storage, and offloading vessel, or FPSO. The FPSO will have 100,000 barrels per day capacity and is scheduled to start operating between 2015 and 2016.

Siri has recoverable reserves of 270 million barrels of heavy oil, at around 12.3 degrees on the API rating scale, which will need special extraction and processing technology. In tests, Siri is producing 10,000 barrels per day.

Chevron commences first oil production from Frade field

Chevron Corp. subsidiary Chevron Brasil Upstream Frade Ltda has commenced crude oil production from the Frade field, the company’s first operated deepwater development in Brazil. The $3 billion project, with continuing development drilling, is expected to achieve peak production of 90,000 barrels of crude oil and natural gas liquids per day in 2011. Chevron has a 51.74% operating interest in the Frade field, which contains an estimated 200 million to 300 million barrels of recoverable oil. The field is situated in the Campos basin in about 1128 meters of water about 370 km northeast of Rio de Janeiro. Frade is a subsea development with wells tied back to an FPSO. Crude oil production is planned to be exported to world markets, and natural gas production is expected to be provided for domestic use in Brazil. Other partners in the project are Petrobras (30%) and Frade Japao Petroleo Ltda (18.26%).