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Brazil Still Dominates South America Activity

Aeolian overlying fluvial deposits at Puente Picun Leufu (Quebrada del Sapo Formation), Neuquén Basin.
Aeolian overlying fluvial deposits at Puente Picun Leufu (Quebrada del Sapo Formation), Neuquén Basin.
Pedro Zalán
Pedro Zalán

Out of all the leading oil and gas plays in South America, the 8,000-pound elephant in the room hasn’t changed, said Pedro Zalán.

“The pre-salt play of the Santos and Campos basins (in Brazil) continues to be the world’s hottest spot in deepwater and ultra-deepwater exploration, yielding several new large discoveries of mostly light oil every three or four months,” he noted.

Zalán, an AAPG member, is consultant geologist with Zag Consultoria em Exploração de Petróleo in Rio de Janeiro and will serve as Brazil Session co-chair at AAPG’s International Conference and Exhibition in Cartagena, Colombia, in September.

He predicted even bigger news out of Brazil, soon.

“In October, the world will watch with astonishment the auction of a super-giant discovery, the Libra discovery, with recoverable volumes estimated at around 8-12 billion barrels with 26-42 billion barrels in-place. The bonus already established by the government is $7.5 billion,” he said.

Magdalena Valley – Chaquira Valle del Magdalena – Chaquira.
Magdalena Valley – Chaquira Valle del Magdalena – Chaquira.

The “great exploratory highlight in Brazil this year” has been the 11th Bidding Round carried out by Agência Nacional de Petróleo (ANP) in May, the country’s first exploration-area offering in five years, he said.

In all, “142 blocks were licensed out of 289 blocks offered. There were bids in all 11 sedimentary basins offered. A total of 30 different companies, 12 native and 18 foreign, won these blocks and will act as operators,” Zalán said.

“The total bonus paid by the companies for the blocks amounted to about $1.4 billion. The amount of investments offered by the winning companies in terms of seismic acquisition and drilling of wells added up to around $3.5 billion,” he noted.

In the bidding round, two areas emerged as important future exploration arenas, according to Zalán. Brazil’s equatorial Atlantic Margin encompasses five offshore sedimentary basins – from west to east: Foz do Amazonas, Pará-Maranhão, Barreirinhas, Ceará and Potiguar.

“The first received the highest bid ever offered in Brazil, $170 million for one block. The great appeal of this margin is the geological analogy with the offshore basins of the homologous margins of Ghana and Ivory Coast in Africa,” he said.

“Several deepwater discoveries in Cretaceous turbidites have been made in these African countries,” he added, “of which the Jubilee field is the greatest star, with recoverable volumes estimated at one billion barrels and already producing around 100,000 barrels/day.”

Here, There and Everywhere

In nearby French Guyana, the ultra-deepwater Zaedyus discovery just 30 miles (50 kilometers) from the border with Brazil sparked intense competition for the blocks of the Foz do Amazonas Basin.

“In the deep and ultra-deep waters of the equatorial margin of Brazil, several leads constituted of shining bright – in seismic amplitudes – turbidites pinching out updip, seeming to replicate the histories of exploratory successes in the Ghanaian and French Guyanese basins,” Zalán observed.

Another emerging exploration area is the onshore Parnaíba Basin in northeast Brazil.

“This huge intracratonic, Paleozoic basin was totally disregarded by the companies until a few years ago. After a successful exploratory campaign, the Brazilian company OGX found four commercial discoveries of gas and put one of them, Gavião Real, into production,” Zalán said.

“In that area, all 20 blocks received offers in a fiercely disputed contest, since gas is nowadays a highly valued commodity in Brazil,” he explained.

Brazil isn’t the only hot exploration region in Latin America, and Zalán cited several other prospective areas to watch:

Peru.

“Significant gas and condensate discoveries are being made in the Peruvian sub-Andean fold-and-thrust belts, the Ucayali Basin, in the central-eastern part of the country by Petrobras and Repsol, all adjacent to the giant Camisea gas and condensate complex,” he said.

Argentina.

“In the Neuquén Basin, the Vaca Muerta and Los Molles formation shale gas and shale oil potential are estimated in the order of 600 trillion cubic feet of gas and 20 billion barrels of technically recoverable shale resources,” he noted. “Tens of wells already have been drilled and tested with good results.”

Uruguay.

“In an auction held last year, eight blocks situated mostly in deep waters were awarded to major companies such as BP, Total, BG and Tullow. Besides that, Petrobras, YPF and Petrogal were already established in other offshore blocks,” Zalán said.

French Guyana.

“On the steps of the Zaedyus discovery a large increase in the exploratory activity is expected for this ultramarine department of France as well as for its neighbors,” he said.

Earlier this year, partners in the Zaedyus play decided to extend drilling operations after a confirmation attempt intersected a 165-foot gross section of oil-stained sands in the lower part of the Bradypus fan, which was not a target formation. Partners include Shell France, Tullow Oil PLC, Total SA and Northpet Investments.

The late-2011 Zaedyus discovery discovered 236 feet (72 meters) of net oil pay in two turbidite sand systems, comparable to the Jubilee field offshore Ghana.

Colombia.

“A great surge in production in recent years was not followed by significant discoveries,” Zalán said. “The reserve/production ratio is starting to be worrisome.

“However, there are several underexplored sedimentary basins in the country with great exploratory potential,” he added, “and several opportunities to be followed.”

The Lower Magdalena Valley, Catatumbo, Cesar-Rancheria and Cauca-Patia are areas with numerous indications of hydrocarbons and several poorly imaged, complex structures waiting to be defined by better seismic, he noted.

“The Amazonas Basin is a remote frontier whose geological similarity with the adjacent Brazilian Solimões Basin, the third largest hydrocarbon producing basin of Brazil, allows geologists to imagine the continuation of the gas/light oil trends into Colombia,” he said.

Unconventional Potential

Unconventional resource development will take place in Latin America, although plenty of conventional plays remain to be explored, according to Zalán.

“The large Paleozoic and Proterozoic Brazilian onshore basins are in general under-explored for gas in conventional ways. The exception is the highly productive Solimões Basin,” he said.

“So, for most of the huge Brazilian onshore, intracratonic basins, the exploration for conventional resources will be the norm for several decades ahead. There are simply not sufficient wells drilled to pinpoint sweet spots for the source rocks,” he added.

But the situation is dramatically different in the Cretaceous marginal basins. Reconcavo, Potiguar and Sergipe-Alagoas are mature basins with conventional resources practically exhausted.

In these basins the only way for the companies to develop new significant reserves is to engage in the exploration of nonconventional resources, Zalán noted.

“These are the basins with the greatest potential and best infrastructure for the beginning of the exploitation of unconventional resources in Brazil,” he said. “And this may just happen by the end of this year when the ANP will hold its twelfth bidding round, specially geared toward gas in onshore basins.”

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Emphasis: International