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Petrobras Pumps First Crude from Massive Tupi Field Offshore Brazil

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Tupi Field, Santos Basin
(Click to Enlarge)

RIO DE JANEIRO (Dow Jones Newswires), May 1, 2009

Brazilian state-run energy giant Petrobras (PBR) celebrated May Day in style Friday, pumping the first crude from the Western Hemisphere's largest oil discovery in 30 years.

Petrobras CEO Jose Sergio Gabrielli and Mines and Energy Minister Edison Lobao officially started a 16-month test at the Tupi field in a ceremony aboard the BW "Cidade de Sao Mateus" floating production, storage and offloading vessel, the company said.

The event marked Brazil's official emergence as a nascent global oil power. In November 2007, Petrobras caused a stir in the international oil industry with the announcement of the Tupi discovery, estimated to hold recoverable reserves of between 5 billion and 8 billion barrels of oil equivalent.

Tupi is located in the Santos Basin's subsalt layer off the coast of Rio de Janeiro and Sao Paulo states. Development of the reserves is expected to be pricey and complicated, with the reservoirs under 2,000 meters of water and a further 5,000 meters below sand, rocks and salt.

Petrobras is lead operator of the BM-S-11 block containing Tupi, with a 65% stake. BG Group PLC (BG.LN) holds a 25% share, while Portugal's Galp Energia (GALP.LB) has the remaining 10%.

The first well, dubbed 1-RJS-646, will produce about 14,000 barrels a day. Testing of the well will continue for six months. A second well, 9-RJS-660, is expected to produce about 15,000 barrels a day during a nine-month test.

In December 2010, Petrobras plans to start a pilot production program at Tupi. Tupi is expected to produce 100,000 barrels of crude daily and 4 million cubic meters of natural gas.

A long-term test at the Iara prospect, located in a separate section of the same BM-S-11 block, is expected to start in late 2012 or early 2013. Iara was estimated to hold between 3 billion and 4 billion recoverable BOE.

Petrobras produced its first oil from the subsalt layer in September last year, connecting the 103 well to a rig in the Jubarte field. Jubarte lies off the coast of Espirito Santo state. The company is currently producing about 50,000 barrels of crude a day from the subsalt deposit at Jubarte.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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