As I scribble this month’s column, West Texas Intermediate is trading a few cents short of $115 a barrel, Brent is only a couple of bucks below and the oil price has become a hot topic. Big Oil is in the headlines for something else, too: the largest oil discovery made in decades and, before that, at least two finds that may turn out to be super-giant fields.
Between them, they may contain tens of billions of barrels. Already, Brazil’s Santos Basin is being described as shaping up to be the “The North Sea of the South”.
As you can imagine, mainstream media have seized upon that news with glee.
“Does this mean that it’s going to cost a lot less to fill up the car?” one idiot was heard to ask some energy pundit dragged out of a cupboard somewhere in London and dusted off.
“If they’ve found so much oil, does that mean we won’t have to stick up any more wind turbines?” asked another.
This time, the clearly knowledgeable target of said question knew his stuff and was doing his best to be patient.
But, in a way, both questions were totally legitimate. Do the finds in Brazil made this year and last, not forgetting the huge US Gulf of Mexico discovery of 2004, in fact mark the start of a whole new era for the industry – a bonanza of super-giant fields in places petroleum companies had not previously probed?
Does this therefore put paid to Peak Oil and the heated debate that the notion has attracted?
It is perfectly possible that Jack, Tupi and the vast new 33billion barrels (or whatever) Carioca successes really do mark a new era. They open a fresh chapter in the astonishing story of petroleum. These are ultra-deepwater subsalt discoveries of a type for which – while various geologists and petro-physicists figured out that they probably did exist – the technology to drill that deep wasn’t around even a few years ago.
It happens that the finds were made offshore the Americas; so does this mean there are analogues on the other side of the Atlantic, especially West Africa – and what about Europe? Are the deepwater and ultra-deepwater finds of Angola and Nigeria simply the precursors to something even more spectacular.
I think we have to believe that this will, indeed, be the case, but it will take many more years to demonstrate.
However, what such finds do not do is alter the fact that climate change is a reality and that the whole approach to using fossil fuels will have to change – possibly dramatically, though carbon capture is currently being held out as something of a holy grail.
Because of climate change, the march of wind turbines across the planet is probably unstoppable, and other renewables technologies will have to be pursued with vigour.
Nor do these huge new finds alter the fact that Peak Oil is inevitable; it’s just a question of when.
Right now, there is some consensus that conventional light crudes output probably peaked a couple of years ago. Might we be saying that in a few years’ time if companies like Chevron and Petrobras make further huge oil strikes? Only time and the expenditure of huge sums of money will determine that.
However, can such discoveries be brought onstream rapidly enough to keep pace with rocketing global demand and current decline in output? Not at present they can’t; we simply don’t have the resources to hand.
But you have to admit that it is exciting for Aberdeen or, indeed, any major upstream centre with a high-calibre offshore capability. And with Surf City taking shape rapidly at Westhill, just outwith Aberdeen city, news of mega finds in places like Brazil and the US Gulf just has to be music to the ear.
Doubtless Tupi and Carioca, especially, will be the talk of this year’s Offshore Technology Conference in Houston, even if there hasn’t been sufficient time to build them into the mainstream conference agenda.
Meanwhile, Petrobras is wasting no time at all setting to work with the drillbit again (something Chevron was unable to do with Jack because of rig shortages). It has been reported as preparing to drill two more exploration wells in the subsalt Carioca area of the Santos Basin.
Partex, Petrobras’s partner in block BM-S-10, has said that the Brazilian national oil company is currently drilling one exploration well on the block and plans two more late this year and in early-2009.
The current probe is being drilled in 2,100m water depth using the still new super-drillship, DrillMax 1, which belongs to Stena.
The drillsite lies west of the Tupi discovery in block BM-S-11, north-east of the still unacknowledged discovery in block BM-S-8 on the Bem-te-Vi Prospect and north of the Carioca (Sugar Loaf) discovery in BM-S-9. Located to the south are the Caramba and Jupiter discoveries in block BM-S-21. Petrobras is the operator of the concession, holding 65% participation. Partex has a 10% shareholding interest and BG the remaining 25%.
Needless to say, BG’s share price has responded strongly here in the UK.
What are the facts? Nothing that firm except that we are told that Carioca may be four to five times the size of the giant Tupi discovery nearby – that it may contain some 33billion boe, whereas Tupi is estimated by Petrobras to hold 5-8billion barrels of mostly light oil. These fields will, quite literally, quadruple Brazil’s oil reserves base of 12billion barrels.
Of course Petrobras is being cautious in what it says and it will take some time yet before a clear picture starts to emerge – not that this company has ever hung about as it is among the most aggressive, imaginative players in the offshore oil&gas game.
For sure, whether it is Brazil or the US Gulf of Mexico, where Chevron has started looking at development options for Jack and its neighbour, the St Malo field, this ultra-deep play represents a terrific opportunity for the supply chain.
One must hope that the Aberdeen contingent will pursue this with the utmost enthusiasm.
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