Royal Dutch Shell PLC announced Thursday it declared the Brazilian offshore BS-4 field in the Santos basin off the Rio do Janeiro coast, commercially viable.
After intense exploration work, Shell and its partners defined two areas in the block for development, the company said in a release. Shell is the lead operator of the block with a 40% stake. Brazil's state-run oil firm Petrobras holds another 40% and US Chevron 20%. The field is located at a water depth of 1,550 meters 185 kilometers off the coast of Rio de Janeiro and was first drilled in 2001. Shell didn't say when it expects the new field to start producing or how much it plans to produce from the BS-4 per day. The BS-4 block has estimated reserves of about 300 million barrels of very heavy crude, Shell had admitted earlier. While heavier crude is more difficult to extract and has a lower market price, recent high oil prices have made the production of Brazilian heavy offshore oil more promising. "We know that we have to continue to work on the evaluation of the discoveries and on the definition of the development concept," the vice president of exploration and production at Shell's Brazilian unit, John P. Haney, is quoted in the release. Shell also has a 50% operating stake in Brazil's BC-10 block, which was declared commercial in December 2005. That block is located in water depths ranging from 1,500 to 2,000 meters, about 120 kilometers southeast of the city of Vitoria in Espirito Santo state, just north of Rio de Janeiro state. Shell said it has a potential to produce about 100,000 barrels of oil a day, and an estimated 400 million barrels of oil reserves. First oil production at the BC-10 block could start in late 2007 or early 2008, Shell said in March. Until recently, Shell was the only foreign firm producing oil in Brazil. It currently pumps some 30,000 b/d from the Bijupira and Salema oil fields in the Campos Basin. Spanish-Argentine oil firm Repsol-YPF (REP.MC) in April became the second foreign firm to produce oil in the country due to a 10% participation in the Albacora Leste field, which now produces close to 180,000 b/d. Petrobras holds the other 90% in that field.