July 25, 2017
Author: Kjetil Solbraekke, Head of Rio Office, Rystad Energy
By far, Brazil is the largest economy in South America within the oil and gas area. In this article, we will look a bit closer into what is really happening offshore in the region outside of Brazil. Guyana is emerging from a once anonymous position, Trinidad reports on new discoveries, and Anadarko has created curiosity for what the deep water outside of Colombia might hide. Who are the operators in this region? What is the number of wells planned for drilling and are they expecting to find gas or oil? The region offers offshore activity in a time where Brazil halts and Mexico has just began offering licenses.
Let us start by confirming the dominance of Brazil in the offshore oil and gas activity in South America. As can be seen in figure 1, the production from Brazil accounts for 90% of the total offshore production of oil and gas in the region, when excluding the offshore activity in water depth of 0-100 meter (this is basically excluding Venezuela Maricaibo offshore).
North of Brazil, the regions of Guyana, French Guiana, Surinam, Trinidad and Tobago and even offshore Colombia are opening new opportunities and markets for the industry. In figure 2, we can see the number of exploration wells expected to be drilled in the next 7 years outside of Brazil.
Over 100 exploration wells are expected to be drilled in South America outside Brazil over the next 7 years, and as indicated, we see that it is in the north you find most of the action. We also see that Guyana, Trinidad and Colombia are where we will find the deepest and most complex wells. In figure 3, we can see that we are talking about a number of wells to be drilled at extreme water depth. It is interesting to note that the deepest wells are to be drilled in Colombia and Guyana, two countries with fairly limited experience of drilling deep-water wells.
The numbers indicate that more than 50 wells will be drilled in south America in water depth over 1,000 meter until 2023, and as previously indicated most of these wells are concentrated in the northern off shore regions in south America. Even though few wells have been drilled in ultra-deep water by these countries, the operators are well known. Anadarko, Exxon, Shell and BHP all have good track records in drilling deep water exploration wells.
If we look at the area on the map in figure 4, we can make several interesting observations. The area was dominated by gas discoveries offshore until Exxon had success with finding oil in Liza outside of Guyana in the Stabroek block. It is also interesting how the offshore activity in the area has been concentrated to Trinidad and Tobago waters, with only a few exceptions. It also shows the relative size of the discoveries in Guyana and are by far the largest oil discoveries made in this part of the world. It becomes interesting to see what kind of potential that remains to be found in between Trinidad and Guyana. Exxon’s block stretches all the way to the border of Trinidad. In Trinidad, BHP recently made a significant gas discovery in DeClerk. There could be more good news from future exploration for both Guyana and Trinidad in this area.
Anadarko has had success on bold moves in exploration before. Their drilling campaign in Colombia represents a new frontier and geological model. It is assumed to be a fairly high chance on finding gas, but the company is hoping for a new oil province. Exxon continues to drive the success even further in Guyana who is already a multibillion barrel oil nation, we expect more to come there as well. The final comment we will make is linked to Trinidad & Tobago, who has seen a gradual decline in gas supply over the last couple of years. In our recent update for the country, we have included the two recently announced new discoveries from BP TT - Savannah and Macadamia – and together with the recent sanctioning of the Angeline project, we believe a long term trend has been broken. Trinidad is expected to again realize an increase in gas production towards 2019 and 2020.
We also see that the situation starts to look better in the longer run for Trinidad & Tobago. BP TT, Shell and BHP have all actively shown willingness to step up investments and efforts to find and develop more projects in the waters outside of Trinidad.
The region, including Trinidad & Tobago, Guyana, Surinam, French Guiana and Colombia offshore, has attracted the interest of the major players. It shows that capital finds the way to where the balance of opportunities and framework conditions forms the most attractive conditions. Pre-salt in Brazil and Mexico bid rounds has competition in the region from a group of smaller, but very interesting players. We are excited to follow up the development in the future.
Contact: Kjetil Solbraekke, SVP South America
Phone: +47 24 00 42 00
Contact: David White, Marketing Manager
Phone: +47 24 00 42 00
About Rystad Energy
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.
Rystad Energy’s headquarters are located in Oslo, Norway. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), Brazil (Rio de Janeiro), as well as Singapore and Dubai.