GEO ExPro

Brazil Declines

… as exploration activity is becoming more diversified in South America.
This article appeared in Vol. 13, No. 4 - 2016

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Historically, offshore exploration activity in South America had been dominated by Brazil. Over the last two years, this picture has changed, as drilling activity in Brazil declined and activity grew in other parts of the region. 

At the beginning of this decade, Brazilian exploration activity peaked at more than 120 exploration wells drilled per year. Petrobras and OGX led the charge by exploring the Campos and Santos Basins. Since then, exploration activity has declined in Brazil: only 35 exploration wells were drilled in 2015, and the number will fall to about 20 wells this year. 

While activity in Brazil has declined, exploration in the rest of South America has been growing. In fact, 2016 will be the first year in history where the number of spudded wells outside Brazil exceeds those in Brazil. The growth is driven by a number of countries, including Suriname, Guyana, and the Falklands.

  • Number of spudded offshore exploration wells in South America by country. (Source: Rystad Energy ECube)

In Suriname, the national oil company drilled two wells in 2015, while Apache and Inpex drilled one each, although none of these resulted in a major discovery. In 2016, Petronas and DEA plan to drill a well on the Roselle prospect, offshore Suriname. 

In Guyana, ExxonMobil found the giant Liza field last year, the largest oil discovery globally in 2015, which is estimated to be able to produce 1 Bboe. Exxon plans to appraise the discovery in 2016 and will target other prospects in the same block, bringing the total number of exploration wells for the year to around five. 

Two other high impact exploration wells drilled this year were Total’s Raya (Uruguay) and BHP’s LeClerc (Trinidad & Tobago). At 3,412m below sea level Raya is the world’s deepest water hydrocarbon well ever drilled. This well could open up one of the greatest exploration opportunities this century, as predicted by studies carried out on Spectrum seismic on both sides of the Atlantic margin. LeClerc is notable as it is the first deepwater well off Trinidad and Tobago. 

As exploration activity started to fall in 2012, so did exploration results. In the period 2008–2012 the average annual discovered offshore volumes for South America were around 9 Bboe; in 2015, this number had dropped to about 1.1 Bboe. In total, the average discovery cost per barrel has increased from ~1.3 to ~7.0 US$/boe over this period. This shows that South America, along with the rest of the offshore world, is struggling to deliver the necessary exploration results. The opportunity to diversify the exploration effort around the continent might be one way of reversing this development.

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