Large discoveries and reduced costs generate interest from many global oil companies, mainly in Brazil, Guyana and Suriname

South American offshore oil and gas development is entering a new era as a result of massive new discoveries, particularly offshore Brazil, Suriname and Guyana, including falling breakevens (When calculations indicate that companies have reached break-even point) that make large-scale developments more financially attractive. The combination of the 3 has made offshore development in South America one of the most attractive parts of the world.

According to a recent report by GlobalData, the average oil selling price for the top 10 deepwater and deepwater projects in South America is $50/bbl and $40/bbl, respectively. GlobalData reported that more than $81 billion in investment will be spent over the lifetime of the top 10 offshore projects in South America, which the analyst predicted would eventually produce 8,4 Bboe.

Guyana

At the forefront of the emergence of South America's offshore industry is Guyana, where Exxon Mobil and its partner Hess Corp. have announced 12 discoveries in the massive Stabroek Block. On February 7, the two companies announced their latest discoveries at Tilapia-1 and Haimara-1, in the southeastern portion of Stabroek.

“These two discoveries demonstrate the continued exploration potential of the prolific Stabroek block and add to the previously announced gross recoverable resource estimate of over 5 billion barrels of oil equivalent,” John Hess, CEO of Hess, said in a statement. announcing the discoveries.

According to Hess, the previous 10 discoveries in the Stabroek Block have established the potential for at least FPSOs to produce more than 750.000 bbl/d by 2025.

Liza Phase 1 opened the play and was sanctioned in 2017. Liza Phase 1 is expected to come online in early 2020 and produce up to 120.000 bbl/da from FPSO Liza Destiny. Liza Phase 2 will use a second FPSO and is expected to produce up to 220.000 bbl/d after it starts in 2022, according to Hess.

Liza Phase 1 comes with breakeven costs of $35/bbl (Brent) and Liza Phase 2 has a breakeven of $25/bbl, according to the company. In his 2018 investor presentation, Hess cited low equipment rates and an improved standardization approach to lower costs and improve schedules. He also noted that utilizing FPSOs would accelerate first oil for Liza Phase 1 by up to 12 months.

Wood Mackenzie reported in September 2018 that Guyana's Liza Complex accounts for 15% of all conventional oil found globally since 2015.

Meanwhile, Payara, located 19km (12 miles) northwest of Liza, could face a sanction later this year with production starting in 2022.

Other developments on the Stabroek Block include Snoek, Turbot, Pluma, Ranger, Hammerhead, Longtail and Pacora.

Barbara Lowery-Yilmas, senior vice president of exploration for Hess, said during the company's 2018 investor day that the company plans to continue exploration and appraisal activities this year, particularly in the southeast Turbot area. According to Hess, Turbot's areas include tilapia, turtle, longtail and plume discoveries.

Hess stated in his announcement of Tilapia-1 and Haimara-1 that the growing Turbot area is expected to progress into a major development center with baseline 4-D seismic data acquisition underway.

Located north of Stabroek is the emerging Kaieteur Block, located 250 km off the coast of Guyana. Hess and Exxon Mobil have acquired blocks there or initiated seismic surveys in some areas. In April 2018, Hess announced that it had acquired a 15% stake in the block. Its 2018 work program included processing and interpreting around 5.700 km2 of 3-D seismic data and evaluating a future drilling program. According to Hess, the Kaieteur Block is in the same geological basin as the Stabroek Block.

Suriname

Adjacent to the prolific Guyana Basin is the Suriname Basin, and the two combined hold an estimated 13,6 Bbbl of oil and 906,1 Bcm (32 Tcf) of natural gas, making it the second most promising offshore oil basin in the world. , according to US Geological. Search.

Among the companies leading the exploration work in the Suriname Basin are Exxon Mobil, Kosmos Energy, Chevron, Tullow Oil and national oil companies Repsol and Equinor.

Speaking during the company's Q2018 XNUMX investor meeting, Apache CEO John Christmann said the company has identified several high-quality prospects in the region and plans to drill at least one well there this year.

“We are going to start a drilling program [in 2019] in Block 58, where Apache currently owns 100%,” he said. “This block is untested and adjacent to Exxon Mobil's Stabroek Block in neighboring Guyana.”

Some initial results in the basin, however, were not favourable. Kosmos Energy started two wells last year, Pontoenoe-1 in Block 42 and Anapai-1A in Block 45. However, Kosmos has seen enough to continue its exploration efforts well into the future.

“We are in the early stages of exploration in the emerging Suriname-Guyana Basin, and given indications of a mature source, quality Cretaceous reservoir and

From the perspective, we believe there is significant remaining potential in Block 42,” said Andrew Inglis, President and CEO of Kosmos, in October. “Our current plan is to test the next perspective in 2020.”

Brazil

Much of Brazil's famous Campos Basin is nearing the end of its economic life – Wood Mackenzie estimated in September 2018 that 32 rigs would reach their economic cutoff by 2025 – the Santos Basin has emerged as its next big producer. The rise of the Santos Basin can be partially attributed to legislation passed by the government of Brazil in 2016, which allows for greater private and foreign investment in the country's offshore areas. The new legislation has resulted in offshore licensing activity in Brazil to peak in 2017 and 2018, according to a Wood Mackenzie report.

In a September 2018 auction, the government of Brazil awarded blocks in the pre-salt layer to Royal Dutch Shell, Exxon Mobil, Chevron and Petrobras.

According to Petrobras, pre-salt production has steadily increased in the Santos Basin since 2010, reaching over 1 million barrels/day in 2016 and accounting for over 50% of Brazilian oil and gas production. The pre-salt formation contains about 16,4 billion gross reserves in Brazilian ultra-deep waters.

“The main challenges that the development of the pre-salt fields face include adverse oceanographic conditions in the Santos and Campos basins – an ultradeep aquatic environment without pre-installed production infrastructure, which is 300 km from the coast with deeper water depths than 2 km [1 mile] and an oil reservoir nestled 5 km [3 miles] below the seabed with a 2 km thick layer of salt,” reported Stratas Advisors in a 2018 report on offshore production in Brazil.

Among the solutions to the challenges that Stratas pointed out were the development of pipeline infrastructure to take oil and gas from the seabed to the platform, new solutions for well construction and the design of CO2 separation and reinjection systems that allow the production of oil in the most extreme pre-salt reservoirs. .

Also supporting increased development, breakeven prices are falling, falling to around $35/bbl and $40/bbl for new pre-salt projects, according to BP.

More recent projects in Brazil include Búzios 1, on which Petrobras started production in April 2018. Búzios 2 started production in November from the P-75 platform. According to Petrobras, the P-75 was the fourth platform to start production in 2018, after FPSO Cidade Campos dos Goytacazes in Campo da Tartaruga Verde, P-69 in Campo de Lula and P-74 in Campo de Búzios.

While the Campos Basin could need as much as $8 billion for decommissioning and related infrastructure for the 32 aging platforms, Wood Mackenzie suggested that the same amount could be invested in re-developing these mature fields, further extending the life and production of the field. .

“We estimate that redevelopment could add 230.000 barrels/day by 2025 and defer 60% of decommissioning costs to post-2030,” the company said.