Learn more about Hart Energy Conferences
Get our latest conference schedules, updates and insights straight to your inbox.
RIO DE JANEIRO—Brazil’s natural gas production potential has grown thanks to discoveries made in recent years in the Sergipe-Alagoas Basin by state-run oil major Petrobras.
According to the operator, roughly 20 million cubic meters per day of natural gas could be produced from six deepwater fields based on reserve estimates. For ANP, Brazil’s oil and gas regulator, those numbers represent the most promising fields since presalt resources were discovered.
Those gas fields also have an undisclosed amount of light oil of good quality, according to Brazil’s Ministry of Energy (MME).
Making the opportunity more promising is that the reserves are outside Brazil’s two most prolific oil- and gas-producing basins—Santos and Campos.
Despite the potential, presalt remains Petrobras’ priority. The company is working to have another seven production systems between 2010 and 2023 in its ultradeep waters activities. “Our agenda is based on exploration, focus on presalt and digital transformation,” Petrobras director Rudimar Lorenzatto said during a press conference in May.
But the company’s intent to invest US$2 billion by year-end 2019 includes plans for an FPSO, with an oil production capacity of 100,000 barrels per day, in the Sergipe-Alagoas Basin’s Farfan Field. In a statement, the company reported that studies on this project are in the initial phase.
A long-term test in the Farfan area is scheduled to begin by the end of 2019. Petrobras hopes to gain information to better characterize the reservoir and fluids.
“The first important point is that the findings in Sergipe-Alagoas are outside Rio de Janeiro-São Paulo axis, which is still the focus of investments in Brazil,” said Clara Frade, an oil and gas expert for Prysma, a consulting group in Rio de Janeiro. “On bringing a new perspective to the region, the abundant supply of potentially cheaper gas can encourage new industries to settle in the region and state governments are already planning to attract these new players.”
Frade said challenges of the gas industry in Brazil are marked by low competitiveness and little participation from supply chain companies. However, as long as those problems are being addressed by the government, through the New Gas Market plan, Brazil might experience a more competitive and open gas market, she said.
The expectation is that, in a short period of time, the cheapest gas in Brazil will be found in the state of Sergipe where the basin is located. Due to the great amount of natural gas, the Brazilian federal government believes this will help to reduce costs and attract more oil majors.
In 2018, U.S.-based Exxon Mobil Corp. acquired six blocks in the Sergipe-Alagoas Basin. In February 2019, the company began licensing 11 exploratory wells in the region. The nearest coastline is 67 km from the town of Brejo Grande in Sergipe.
The presence of gas companies, which will also compete for infrastructure, should also contribute to the reduction of the transportation taxes and ultimately, the final price of the product.
A new 128-km gas pipeline and an onshore treatment unit will be needed, according to MME.
With almost all of its resources committed to presalt exploration in the southeast, Petrobras seeks partners for natural gas development. But the company has decided to divest all of its interests in six areas in the Sergipe-Alagoas Basin: Cumbe, Barra, Farfan, Muriú, Moita Bonita and Poço Verde.
Recommended Reading
CEO: Magnolia Hunting Giddings Bolt-ons that ‘Pack a Punch’ in ‘24
2024-02-16 - Magnolia Oil & Gas plans to boost production volumes in the single digits this year, with the majority of the growth coming from the Giddings Field.
Hess Corp. Boosts Bakken Output, Drilling Ahead of Chevron Merger
2024-01-31 - Hess Corp. increased its drilling activity and output from the Bakken play of North Dakota during the fourth quarter, the E&P reported in its latest earnings.
Petrie Partners: A Small Wonder
2024-02-01 - Petrie Partners may not be the biggest or flashiest investment bank on the block, but after over two decades, its executives have been around the block more than most.
CEO: Coterra ‘Deeply Curious’ on M&A Amid E&P Consolidation Wave
2024-02-26 - Coterra Energy has yet to get in on the large-scale M&A wave sweeping across the Lower 48—but CEO Tom Jorden said Coterra is keeping an eye on acquisition opportunities.
Kimmeridge Fast Forwards on SilverBow with Takeover Bid
2024-03-13 - Investment firm Kimmeridge Energy Management, which first asked for additional SilverBow Resources board seats, has followed up with a buyout offer. A deal would make a nearly 1 Bcfe/d Eagle Ford pureplay.