Anadarko Petroleum is excited about the potential of its pre-salt Wahoo and Ipaitu discoveries offshore Brazil, and views its Brazilian interests as a springboard for expanding into other Latin American countries, said Gregory F. Hebertson, general manager of South American exploration for Anadarko, at the LatAm Oil & Gas Outlook conference in Houston on Thursday.
Hebertson said Anadarko's deepwater expertise, a major part of the company's growth strategy, can be successfully applied to the Brazilian market, noting that Anadarko has installed more subsea deepwater systems than any company. "The company's efforts to hire the smartest, most capable workers, along with the access to advanced drilling technology it gained through its Kerr-McGee acquisition, and proven project management skills will enable the company to successfully pursue pre-salt opportunities offshore Brazil," Hebertson said.
Brazil is still finalizing details of the exploration and production framework for the Santos and Campos basins following the nation's presidential elections, but the promise of Brazil's pre-salt potential has companies flocking to Brazil. Activity in Brazil's oil and gas sector is expected to grow significantly as Petrobras and other exploration and production (E&P) companies seek to develop pre-salt discoveries, which could boost Brazil's proven reserves from 15 billion BOE to between 70-100 billion BOE range.
Brazil's local content policy creates a shield for local companies operating in Brazil. As a result, service companies are setting up subsidiaries in Brazil or buying interests in local service companies to get a foot in the growing Brazilian market.
Modal Administradora de Recursos (MAR), the private equity branch of the Modal Group, has raised US $1.1 billion since its inception in 2009, mainly with local pension funds and BNDES, the Brazilian state-owned development bank, to fund Brazil's oil and gas industry through two private equity funds. The Oil & Gas (O&G) FIP, the first and only oil and gas private equity fund in Brazil, completed its first and final closing in May with approximately US $280 million. Through this fund, which has the official support of Petrobras, MAR seeks to acquire minority stakes in companies operating in the oil and gas supply chain, either as a service provider or manufacturer.
MAR said in a statement that it believes there is a unique opportunity for Brazilian O&G suppliers to grow exponentially over the next decade, based on Petrobras's plans to invest US $224 billion over the next five years, significantly higher than the US $79 billion invested in the last five years. "In addition, Petrobras has just completed the largest ever equity in the world, raising approximately US $70 billion that will be used to fund its investment plan."
Brazil's pre-salt discovery potential has become a major topic of recent media reports, but E&P opportunities in other parts of Latin America also are attracting interest from foreign companies, including companies from China, as global energy demand grows and new resources must be tapped. Roger Tissot, an independent energy economist who focuses on the Latin America market, told conference attendees that Latin America will become a key oil and gas supplier to emerging markets such as China and India while continuing to supply the North American market.
Operating in Latin America presents significant, sometimes expensive challenges but significant awards as well, said Steven Crowell, CEO of Buenos Aires-based Pluspetrol, a private onshore oil and gas company that operates in six countries in South America, including Bolivia, Argentina, Peru, Colombia, Chile, and Venezuela. The company is the largest oil and gas producer in Peru and fourth largest producer in Argentina.
The company's willingness to pursue exploration and production projects in challenging geological formations such as the Andean fold belt, to invest infrastructure to allow its oil and gas finds access to markets, and to successfully execute a project while investing time and money to address local population's concerns over the environment, has enabled Pluspetrol to grow over the past 15 years.
Crowell highlighted the challenges of working in South America with details of the company's Camisea project in Peru's Cuzco Basin. The local river in this province is only deep enough to float equipment to the work site four months out of the year. "You know that whatever equipment you need has to leave the U.S. or wherever it's coming from to arrive in Quito by early January; if you miss the deadline, you have to wait a year to transport the equipment."
The company also has had to adapt to working in a changing environment with its Centario project in Argentina. The project began outside the borders of a local town, but over time, the city grew and now encompasses the field site. "We have wells at the airport and have a golf course nearby," Crowell noted.
To produce the Ramos gas field in Argentina, the company invested $400 million in thermal power generation assets to create a market for the field's gas rather than shut-in the field or dump gas on the local market.
Like other regions of the world, South America does have untapped shale gas plays; however, the investment infrastructure needed to explore for and develop unconventional gas resources is not in place. "Challenges of the current pricing infrastructure, including price controls, make it difficult to explore for and develop conventional gas resources," Crowell noted. But with easy oil and gas gone, companies must be willing to invest in and adapt to the challenges of new markets.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you