ROYAL DUTCH/SHELL UNIT TO START GAS FLOW OFF BRAZIL

July 20, 1992
Pecten do Brasil, a unit of the Royal Dutch/Shell Group, plans a September start-up of Merluza, the only natural gas field discovered off Brazil by a foreign operator. Plans call for initial production of 17.7 MMcfd from a single fixed platform in 130 m of water in the Santos basin 180 km off Sao Paulo state. Production is expected to build to 53 MMcfd 1 year later and stay at that volume for 12 years. Total investment in the project is pegged at $439 million.

Pecten do Brasil, a unit of the Royal Dutch/Shell Group, plans a September start-up of Merluza, the only natural gas field discovered off Brazil by a foreign operator.

Plans call for initial production of 17.7 MMcfd from a single fixed platform in 130 m of water in the Santos basin 180 km off Sao Paulo state.

Production is expected to build to 53 MMcfd 1 year later and stay at that volume for 12 years.

Total investment in the project is pegged at $439 million.

Although Pecten discovered and developed the field, state oil company Petroleos Brasileiro SA earlier was scheduled to assume operatorship in spring 1992.

PROJECT DETAILS

Pecten found Merluza in 1979 and has drilled six high angle development wells. The field holds an estimated 388.5 bcf of reserves, almost 1/10 of the nation's total 4.06 tcf, plus 11 million bbl of condensate.

Merluza gas will move through a 186 km, 16 in. subsea pipeline to shore at Praia Grande, Santos, where it will link with a 28 km, 16 in. pipeline to the Presidente Bernardes refinery at Cubatao, Sao Paulo State.

The refinery will take some of the gas, with the rest to be distributed in Sao Paulo state by Comgas, the state's gas distribution company.

Fabrica de Estruturas Metalicas, a unit of CSN, Brazil's state steel company, built and completed installation of the 81.2 MMcfd capacity Merluza platform in 1989. Although the field is capable of producing more than 53 MMcfd, Petrobras chose for a lower production rate to sustain the production plateau longer, said Mozart da Costa Freitas, head of Petrobras' Center for Exploration Contracts.

Production is expected to begin declining in 2005, falling to 14 MMcfd in 2011.

FINANCIAL DETAILS

Pecten will be reimbursed for its investments under a risk contract it signed for Santos basin exploration and development. During a preoperating phase, 1.76 bcf of Merluza gas will be produced without payment to Pecten.

Pecten spent $69 million on exploration and will spend $370 million for development of Merluza. As of yearend 1991, it had spent $280 million for Merluza E&D.

Copyright 1992 Oil & Gas Journal. All Rights Reserved.