NOV 28, 2019
Although pre-salt is the crown jewel of Brazil’s oil sector, the government is preparing a set of new measures to also stimulate onshore areas. The goal is to almost double production over the next ten years in these fields from 270,000 barrels of oil equivalent daily to 500,000 barrels of oil equivalent by 2030. The strategy for achieving this goal is outlined in the set of proposals Reate 2020 presented this week in Mossoró (RN). The disclosed action plan must also be submitted to the National Energy Policy Council (CNPE). The collegiate will meet on December 12 to evaluate the proposal to create a 4-month Inter-Ministerial Committee, which will be responsible for implementing work and actions under Reate 2020.
Estimates from the Ministry of Mines and Energy indicate that natural gas will grow faster than oil during this escalation of land asset production. To get an idea, the volume of gas would go from the current 25 million cubic meters per day to over 50 million. The government considers that there are 14 states with potential for onshore production: Alagoas, Amazonas, Bahia, Ceará, Espirito Santo, Minas Gerais, Maranhão, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Piaui, Rio Grande do Norte, Santa Catarina and Sergipe.
But to unlock production from these states, action will be needed on four work fronts already identified by the Ministry of Mines and Energy. In the first one, which involves regulation and innovation, for example, one challenge refers to the delay in the environmental licensing process. In the assessment made by Reate, this slowness is due to some factors, such as the lack of environmental knowledge of the areas and the poor equipment of environmental agencies. To reverse this, the program proposes measures to make the process faster and more effective. One is the promotion of good practice and harmonization of environmental licensing procedures. The expected result is to reduce schedules and costs involved in licensing.
Reate’s second front concerns the multiplication of oil and gas companies and goods and services. To this end, the idea is to study new business models and map new sources of funding for onshore projects. Another measure is the creation of a calendar of events for the dissemination of terrestrial activities in order to disseminate the potential of these assets. Thus, the government hopes to encourage the emergence of domestic companies, including startups, and stimulate foreign investment.
In the third front of the program, the idea is to discuss the technical, economic and market potential of Brazilian basins with government institutions, academia and industry agents. In the view of the Ministry of Mines and Energy, there is still a lack of more in-depth geological studies that stimulate interest in land exploration and production activities. Thus, Reate’s proposal is to create a report containing the mapping of the potential of Brazilian onshore basins, with georeferencing of effective plays, volume and cost estimates, and infrastructure analysis.
Finally, on the fourth front, the idea is to propose actions that encourage competition and improve the trading conditions of onshore production. A study presented by the government indicated that independent producers pointed out difficulties in marketing their productions with Petrobras, virtually the sole buyer, precisely because of the high costs involved in the transactions. Reate’s goal is to find avenues that enable commercialization at competitive prices.
UNCONVENTIONAL RESOURCES: PILOT PROJECT IN PLANNING
Reate’s action plan indicates that Brazilian sedimentary basins with shale oil and shale gas potential are on the agenda of several hydrocarbon exploration companies. The most prominent areas in this regard are the Paraná, Parecis, Parnaíba and Recôncavo basins. However, the document points out that there are many terrestrial basins that lack geological and geophysical data, making it difficult to identify resources more accurately.
Nevertheless, Reate works with estimates that indicate a “relevant development potential of the unconventional industry in Brazil”. In addition, there is the expectation of “gas resources in strategic locations and close to the consumer market”.
Another obstacle to exploiting these resources is concern for the environment and possible risks of groundwater contamination. Therefore, one of the actions of Reate 2020 is the creation of a pilot project for petroleum resources in low permeability reservoirs (unconventional), called Transparent Well. The objective of this initiative would be to assess and monitor impacts, as well as empower expertise and create technological and operational solutions for unconventional resources.