Brazil re-injects more natural gas in wells than it imports from Bolivia

Sept 24, 2019

Despite the potential for natural gas production, Brazil has been re-injecting more fuel into the wells than it imports from Bolivia since 2018. Without limitation to practice, one third of the extracted fuel is returned to the wells to expand oil production or due to lack of infrastructure for delivery to the coast.

The scenario is incompatible with federal government plans. The objective is to promote the production of natural gas, especially from the pre-salt reserves. The economic team argues that fuel reduction measures, provided for in the New Gas Market program, will rekindle the production of Industry and, consequently, the Brazilian economy.

In line with the thinking of Minister Paulo Guedes (Economics), the ANP studies whether it will limit the re-injection of gas to wells today, there is no rule about the practice. The early-stage study, according to the agency, seeks to provide a general preliminary estimate of the additional gas that would be being re-injected and could be tapped.

In the opinion of Luiz Costamilan, Executive Secretary of Natural Gas at IBP, possible conditions to limit fuel return should consider technical and economic aspects for each field.

“I doubt the ANP will limit the amount. It will evaluate the technical solution proposed by the operator, if deemed appropriate. Operators have data to justify volumes and discuss technically, ”he said.

According to Costamilan, gas repression is the first option of oil companies in the current scenario. Practice, he explains, prevents the pressure drop in the reservoir, which increases the recovery of liquids. “The main objective is to maximize the recovery of oil from the reservoir, which reflects in the financial result.”

According to data from the regulatory agency, natural gas production in Brazil has doubled. The volume that hits the market, however, does not keep pace. According to Abegás estimate, the equivalent of R$ 48.7 million are reinjected daily in the wells. If this volume were made available on the market, there would be a 64% increase in domestic gas supply.

Market offer

Fuel flow to the coast, however, runs into a lack of infrastructure. Brazil has only 9,400 km. of pipelines. Argentina, USA and Europe have respectively 16,000 km, 497,000 km and 200,000 km of pipelines. There is, however, no short- and medium-term strategy for expanding the network.

Abegás estimates that for the re-injected volume to reach the market, an investment of U$ 19.5 billion is required. “We need to have new flow routes, processing units for this gas to reach the market,” says Marcelo Mendonça, the association’s Director of Strategy and Market.

In Congress, the proposal to create a fund to finance the construction of pipelines, the Brasduto, is still underway. Bill 3.975 / 2019, already approved by the House, must pass through the Senate. The text determines that part of the resources of the Social Fund, today destined for health and education, go to the expansion of the pipeline network.

But as far as Paulo Guedes and his team, Brasduto is set to die. The minister is against creation of the fund. If it becomes law, Guedes will recommend the veto. The government argues that the proposed measures to open the sector, under the New Gas Market program, will stimulate these investments by private initiative.

Mendonça believes that actions, such as breaking Petrobras’ monopoly, are welcome, but do not happen at the expected speed. He says that it is necessary to think of a program that integrates gas supply with market demand.

Source: Power 360