Friday 14 April 2017

Brazil has unveiled an aggressive licensing calendar for 2017, 2018 and 2019, giving a tantalising glimpse of what will be up for grabs in fresh offerings in the coveted pre-salt province.

The policy-making panel of Brazil’s Energy Ministry gave details of what will be included in the next pre-salt rounds planned, including a string of giant prospects.

One oil company stated that the areas Brazil will put on offer in pre-salt rounds 3, 4 and 5 could represent a risked recoverable resource bordering on 50 billion barrels.

Brazilian authorities had already laid out plans to hold four licensing events in 2017 alone.

These start modestly, in May, with an exercise for mature fields in the onshore sector, and include the country’s 14th offering of exploration and production concessions.

Brazil’s second ever pre-salt round, scheduled for June, will offer areas bordering known discoveries on pre-existing concession contracts.

This “unitisation round” will allow companies acquire production-sharing rights on areas likely to harbour reservoirs that are contiguous with earlier discoveries.

In some cases, such as Shell’s Gato do Mato discovery, or Statoil’s Carcara asset, the existing concession operators are seen as strong candidates to emerge with aggressive bids for the unitisation areas.

These unitisation areas are Gato do Mato, Carcara North, Sapinhoa Surround and Tartaruga Verde South-West.

What the Brazilian National Council for Energy Policy (CNPE) revealed for the first time this week was the areas that will be offered for production-sharing rights in the country’s third pre-salt round, scheduled for November.

The acreage on offer encircles prospects known as Pau Brasil, Peroba, Alto do Cabo Frio-Oeste and Alto do Cabo-Frio Central, with potential to harbour billions of barrels of light oil and gas in a province already famed for its highly productive wells.

“Pau Brasil and Peroba are huge prospects, in the heart of the pre-salt fairway, and are likely to attract enormous bonuses,” an oil company source said.

“The Alto do Cabo Frio areas also contain multiple structures, though there is more risk here, due to the presence of siliclastic reservoirs. Together I think you are looking at between 30 and 40 billion barrels of risked resources, oil equivalent,” another source commented.

The nearest local analogy for the Alto do Cabo Frio areas is offered by Repsol’s discoveries on BM-C-33, now operated by Statoil.

“Pau de Azucar is mainly gas, but other discoveries in the area were essentially liquids, so there is plenty to ponder here,” one of the sources noted.

The CNPE offered investors a longer-term view of what is to come compared to what has been seen in Brazil before, deciding on the pre-salt areas to be put up for offer in 2018 and 2019.

The offers will include Santos basin prospects Saturno, Tres Marias and Uirapuru —featuring some of the biggest structures in the pre-salt — plus several ultra-deepwater exploration blocks in the Campos basin, namely C-M-537, C-M-655, C-M-657 and C-M-709.

In the second half of 2019, Brazil will hold its fifth pre-salt round, including the Santos basin prospects Aram, Lula South-East, Jupiter South, Jupiter South-West and Bumerangue.

“There are some giant structures, but there is the obvious risk factor that you might hit a dud like ExxonMobil did on BM-S-22, or find too much carbon dioxide, as with the Jupiter discovery. These risks are there, but there is always a real chance of finding something as big as Libra but with less CO2,” another source commented.

The four Campos basin areas are in an area with an unbroken salt canopy found to the east of established post-salt stalwarts such as the Roncador and Marlim Sul fields, where CO2 content is uniformly low.

“This area is a pure exploration play and could offer a lower cost entry for potential bidders,” one source noted.

In all, the CNPE set out the agenda for 10 licensing events for 2017-19 and also approved lower local content requirements at Cabinet level recently.

In addition to the 14th licensing round of E&P concessions, the CNPE also gave details of Brazil’s 15th licensing round for E&P concessions, due to take place in May 2018. This event will include offshore blocks in the Foz do Amazonas sectors SFZA-AP1, AP2, AR1 and AR2, Ceara sectors SCE-AP2 and AP3, Potiguar sectors SPOT-AP1, AP2 and AR2, Campos basin sector SC-AP4 and Santos basin sector SS-AUP1, plus onshore blocks in the Parana, Parnaiba, Sergipe-Alagoas, Reconcavo, Potiguar and Espirito Santo basins.

The 16th concessions round will include offshore areas in Camamu-Almada basin sectors SCAL-AP1 and AP2, and Jacuipe basin sector SJA-AP, plus ultra-deepwater areas in Campos basin sector SC-AP5 and Santos basin sector SS-AUP5, as well as onshore acreage in the Solimoes, Parecis, Sergipe-Alagoas, Reconcavo, Potiguar and Espirito Santo basins.

The CNPE also approved a sequence of smaller licensing events offering onshore fields in mature areas of production, the first of which is scheduled for May 2017, the second in May 2018 and a third in the second half of 2019.

The wealth of per-salt acreage on offer surprised many insiders in the oil sector.

“The smallest prospects on this list could lead to discoveries of 2 billion to 3 billion barrels of recoverable hydrocarbons, oil equivalent. The biggest could be more than 10 billion barrels,” said one.

Another source suggested that the offering of so many pre-salt areas with such potential might take some of the interest away from the unitisation round.

“There is an obvious attraction for the companies holding assets on the adjacent concessions, but taking on the unitisation issue with two different contracting systems is going to seem less attractive to any others, considering you can get a clean slate elsewhere,” another experienced oil executive said.