Professor Cleveland M. Jones, DSc. (left), and Professor Hernani Aquini Fernandes Chaves, DSc.

Part 4: Report from Peter Howard Wertheim and Dayse Abrantes, in Rio de Janeiro, Brazil, based on papers and interviews with Professor Cleveland M. Jones, DSc., and Professor Hernani Aquini Fernandes Chaves, DSc., geologists. For Scandinavian Oil-Gas Magazine (Oslo, Norway).

Professors Cleveland M. Jones and Hernani A. F. Chaves believe that besides modelling postulated accumulations in the pre-salt, the assessment methodology also assesses individual accumulations already identified in the area of study, and considers them discovered accumulations, even if they have not yet been fully assessed by their respective operators. Declarations of commerciality will come at an even slower pace, since they depend on very strict guidelines, and will not be announced all at once, even for fields that are put into production.

Recognising the volumes of discovered resources included in the results for the total recoverable accumulations indicated to exist in the pre-salt region, the assessment methodology also provides an indication of YTF total recoverable accumulations. This is the total volume of resources contained in new discoveries (with individual size above a minimum of 20 million barrels), to be made from now until the end of the exploratory cycle of the pre-salt region.

Result screenshot for the total YTF recoverable resources in the area of study.jpg

The 2015 assessment pegs that total between 119 (P90) and 217 billion barrels (P10). The fact that these results also fall within the P90/P10 ranges of the previous estimates (115 to 289 billion barrels, respectively), demonstrates that additional information available did not prove prior findings wrong, had new results been either much higher or much lower than prior estimated volumes. Instead, the current results show that the methodology utilised is consistent, and that consistency, in the face of much new information considered, tends to further validate the methodology employed.

It is important to keep in mind that the exploration cycle for the pre-salt region may well last for many decades, so new discoveries will require much new exploratory efforts (wells drilled), and a long time to carry out, especially if the exploratory rhythm remains slow, as is the case currently.

Understanding the YTF oil potential of the pre-salt region can help the country define its oil production policy in a way that will maximise the benefits from monetising the exceptional wealth of the preset region. Given the immense resources present, Brazil must avoid the risk of not exploring and producing its oil wealth at a sufficient pace to ensure that when the oil age begins to wane, even if decades from now, it will already have produced and monetised that wealth. It would be ironic if instead, it found itself with large unproduced pre-salt oil resources, when a new energy age makes these oil resources no longer attractive as an energy source.

The results of this assessment also have profound geopolitical implications for world oil markets, since country and company energy policies depend on the ability to identify regions that may contribute significant sources of new production in the future. That is all the more important as existing fields mature, their production declines, and producers vie for market share to offset that production decline.

The two pre-salt assessments so far, as well as future updates that may be carried out in the coming years, represent the contribution that research efforts can make towards a transparent discussion of how to deal with the oil wealth described. As society is better informed about the YTF potential of the pre-salt region, wider participation from all stakeholders involved can take place, and better decisions can be expected.

Scandoil – Petrobras geologists say that it is viable to extract oil and gas from the pre-salt at the present low oil prices, around USD 50. Do you agree? In your opinion what oil price is needed to make pre-salt exploration and production viable?

Professor Jones - "Petrobras will be able to continue to operate profitably in the current USD 40-60 oil price environment, and continue to develop major new projects, even in challenging regions, such as the pre-salt, ultra-deep waters, etc."

"The crisis will come in a few years, as these projects are completed, and new ones are not made available to continue the process, because the investment plan cutbacks cancelled projects that would have come online in later years. The long lead times of these projects is working in favor of Petrobras now, but when these are exhausted, those same long lead times will make it very difficult to regain a production growth path."

"Finally, I have dedicated a good amount of effort to tracking important technology developments that could significantly impact the oil and gas industry. That is a separate subject matter, but there is no question that Petrobras is also following those trends, and has indeed chosen to apply new concepts that may well provide large cost reductions, not merely lowering cost increases. Such possibilities are generally poorly understood and hardly considered in assessing future cost trends, yet they will likely allow the industry to operate at current oil prices."

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Professor Cleveland M. Jones, DSc.
Member, Geosciences Advisory Board - NXT Energy Solutions
Researcher of INOG – Instituto Nacional de Óleo e Gás/CNPq
FGEL - Faculdade de Geologia/UERJ - University of Rio de Janeiro state
Campus de Maracanã, Sala 2028A
Rio de Janeiro, RJ 20550-013
www.clevelandmjones.com

Prof. Chaves is Visiting Professor Emeritus (FAPERJ), and retired Petrobras geologist. He is currently Scientific Coordinator of the Graduate Seismostratigraphic Interpretation Course, at the Faculty of Geology of the State University of Rio de Janeiro (UERJ), a joint UERJ-Statoil-Schlumberger project, and Vice-Coordinator of INOG – Instituto Nacional de Óleo e Gás/CNPq. He is one of the founders of Mathematics and Computers in Geology, and of basin analysis studies in Brazil.

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Part 1: Evaluation of Yet-to-Find (YTF) Oil in the Pre-salt area of Brazil

Part 2: Current Issues Affecting Petrobras

Part 3: Petrobras Step by Step Assessment of Pre-Salt Plays

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Peter Howard Wertheim and Dayse Abrantes can be reached at peterhw@frionline.com.br