MercoPress. South Atlantic News Agency

Brazil launches project to become leading oil super-power

Brazil government managed energy company Petrobras on Friday lifted the first sub-salt oil from the massive, ultra-deep, offshore Tupi field in the Santos basin, an action Brazil's government hopes will launch a new era for Latin America's largest economy.

“It is a historic moment, a new era” said President Lula da Silva said at an onshore ceremony commemorating the first oil from the Tupi field, after bad weather diverted his plans to visit the platform 300 kilometres offshore.

The Tupi is not be the first sub-salt oil produced off Brazil, but it will set the tone for development of the rest of the 200-km-wide sub-salt band stretching 800 kilometres down the coast.

If reserve estimates for the Tupi are confirmed, it would vault Brazil into the world's top 10 oil producing countries. The government plans to use the wealth generated by these resources to transform Brazil into a developed country.

“We are going to discuss what we want with from this oil, what we want for the Brazilian people” said Lula da Silva referring to the government's decision to change the regulatory framework for future sub-salt oil exploration and production.

The Tupi field discovery was announced November 2007 and is estimated to hold a recoverable volume estimated between 5 and 8 billion barrels of oil equivalent. Soon after the size of Tupi was announced, the Brazilian government suspended all oil round auctions of sub-salt blocks.

The field lies 7,000 meters below the ocean surface and below 2,000 meters of corrosive salt at mind-numbing pressures and temperatures, 300 km offshore.

Although the government and Petrobras Chief Executive Jose Sergio Gabrielli say the technology and the will exist to profitably produce oil at these extremes, industry specialists are more sceptical.

Extraction will be done from platform vessel FPSO BW Cidade de São Vicente, which will operate the Extended Well Test (EWT) and is capable of processing 30,000 barrels of oil per day and will be anchored in ultra-deep waters (2,140 meters from the water line). The Tupi EWT will collect during 15 months technical information for the development of the reservoirs in the Santos Basin.

“This information will be decisive not only to define the development model to be used in the Tupi area, but also the one that will be used for the other pre-salt accumulations located in that sedimentary basin which, together, represent one of the biggest discoveries the oil industry has ever made”, pointed out an official release from Petrobras.

Petrobras is operator of the Tupi field, part of a larger concessionary block BM-S-11. The block also contains the Iara field, which Petrobras estimated had 3-4 billion recoverable boe. Petrobras has a 65% stake in BM-S-11 with partners, Britain's BG Group and Portugal's Galp 25% and 10%.

Following the fifteen months trial a pilot production program is slated to begin in 2010, which should boost output to 100,000 bpd from the Tupi. Commercial production should begin in 2013 with 219,000 bpd and rise to 368,000 bpd in 2014, 582,000 bpd in 2015, 952,000 bpd in 2016 and 1.315 million bpd in 2017.

By 2020, Petrobras plans output from the sub-salt basin at 1.815 million bpd with 23 sub-salt production platforms in place. Petrobras is working on estimates of oil at 35-40 US dollars a barrel

Around 80% of Brazil's current domestic oil output of about 1.9 million barrels a day comes from the Campos Basin at much shallower depths. Petrobras is widely viewed as one of the most adventurous and technically capable oil firms in the world.