Brazil’s New Oil Discovery

You may have seen in the news that Brazil has made a new oil discovery. It is always hard to judge how much is hyperbole, but they are excited about it:

Offshore oil discovery could make Brazil major petroleum exporter

RIO DE JANEIRO, Brazil: A huge offshore oil discovery could raise Brazil’s petroleum reserves by a whopping 40 percent and boost this country into the ranks of the world’s major exporters, officials said.

The government-run oil company Petroleo Brasileiro SA, or Petrobras, said the new “ultra-deep” Tupi field could hold as much as 8 billion barrels of recoverable light crude, sending Petrobras shares soaring and prompting predictions that Brazil could join the world’s “top 10” oil producers.

“Brazil’s reserves will lie somewhere between those of Nigeria and those of Venezuela,” Gabrielli said at a news conference.

Petrobras says the Tupi field, off Brazil’s southeastern Atlantic coast, has between 5 billion and 8 billion barrels — equivalent to 40 percent of all the oil ever discovered in Brazil.

Brazil is a country very well-positioned for worldwide energy shortages. They don’t use much oil, they have lots of oil, and they are efficient producers of ethanol.

6 thoughts on “Brazil’s New Oil Discovery”

  1. I note that the field is “ultra deep” and that “getting the oil out will be a challenge and take years.” So maybe all the “easy oil” really has been found.

  2. Its 7000 meters deep: “The Tupi field lies under 2,140 meters (7,060 feet) of water, more than 3,000 meters (almost 10,000 feet) of sand and rocks, and then another 2,000-meter (6,600-foot) thick layer of salt” That sounds like a major challenge!

  3. isn’t this find about the order of magnitude of CVX/DEV find in caribean?

    if all is recovered in both as sized, are we talking about large? several years of current worldwide usage?

    this find and several more like it should keep day rates for RIG/DO/etc at levels appreciated by stockholders. it’s better than none.
    brazil would be wise to keep it stored for themselves. maybe.

  4. I’m not sure this is a meaningful comparison, but (if so) how challenging would you think this find would be to develop vs. the Jack-2 Gulf find from earlier this year.

    From the comments circulating around the time that Jack was in the news, I got the impression that it was just on the bare edge of what could be commercially exploited with existing technology. If Brazil’s “ultra deep” find is similarly challenging, then I would guess that the near-term impact will be minimal. (The longer-term impact could be substantial, though, and the fact that it will take some time to become available could be advantageous, as it will hopefully arrive in such a time as to cushion the worldwide depletion rate, but not actually permit an increase in total world production.)

  5. This is a great example of how anxious the world is for some good news about oil. I spent part of the morning combing the web for reports about this, and found almost everybody reported “as much as 8 billion barrels!” and “producing within 3-4 years!” and “could produce as much as 1.2 million barrels a day!” with hardly any time given to the reality of producing this field under today’s realities. I found basically nobody who told the story straight. Here’s my surmise:

    1. It will take a minimum of six years to begin production (Skrebowski’s average from discovery to production, so in this extreme situation, I’d call six years optimistic), so call it 2013 at the earliest

    2. It will begin production at the rate of maybe 100,000 bpd, and won’t reach 1.2 mbpd for, what, 10 years after they start? 15? Dunno enough about the geology to say. But let’s call it 1.2 mbpd by 2025…which could be a few years after the global peak of all fuels.

    3. URR is likely on the order of what, 1.5 Gb? 2 Gb? (Khebab suggests it might be between 0.15 Gb and 1.34 Gb, based on the initial production figure.)

    4. Actual cost estimates will be 2x to 3x the initial cost estimates (typical for complex projects like this today)…starting at ~$100 million each (today’s prices) for new wells

    Exciting? Yeah…sorta…kinda…for Brazil.


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