The Brazilian government has approved its 12th bidding round, making available more than 163,000 sq km (62,935 sq miles) spanning seven onshore basins believed to hold natural gas and shale potential.

Speaking to a crowd gathered Aug. 8 in Houston to hear about the upcoming presalt and onshore bidding rounds, the director-general of the Brazilian National Agency of Petroleum and Biofuels (ANP) glorified the region’s prospects and pointed to a photo of a large flame in the Paraná basin’s Barra Bonita field as evidence.

“Gas for sure is there. The field is a small field, but I can assure you that from my years in the petroleum sector I’ve never seen such a basin so big with only one discovery,” Magda Chambriard, director-general of ANP, said a day after the 12th round was green-lighted. “For sure we have much more. We have to invest to look for more gas in this area.”

She, then, turned attention to a photo of the Teles Pires River in the Parecis basin. “In this river, we have 800 m (2,625 ft) of bubbling gas,” Chambriard said. “The gas is bubbling so strongly that we can even record the sound.”

The bid round – which will offer in November 2013 acreage in the Acre, Parecis, Paraná, Parnaíba, Bacia de Sergipe-Alagoas, Recôncavo, and São Francisco basins – is important to Brazil because it includes unconventional opportunities, Chambriard said. Using the Barnett shale with reserves of 30 Tcf as its analogue, forecasted in situ volumes are 64 Tcf for Parnaíba, 124 Tcf for Parecis, 20 Tcf for Recôncavo, and 80 Tcf for São Francisco. Based on data from the US Energy Information Administration, the forecasted volume was 226 Tcf for Paraná.

“No one else can doubt Brazil has great opportunities in great areas, enormous areas, with great potential,” Chambriard said.

Presalt Round

Possibly holding between 8 Bbbl and 12 Bbbl of recoverable oil, the Libra prospect is much bigger than the ANP first thought. The new estimate, up from 5 Bbbl, is based on new 3-D seismic data and is sure to attract more interest in the highly anticipated presalt bidding round set to take place in October.

“This is something that is very unusual in the whole world because we don’t have any notes about any other country offering such an opportunity [that is] already drilled, already discovered, already tested,” said Chambriard. “We tested the well that discovered the Libra area. … From this well, we got a net pay of 326 m (1,070 ft).”

Producing 27°API oil, the well flowed at 3,667 b/d during a first test and 1,057 b/d in a second test, Chambriard said, later adding that the well could be a good producer, yielding 25,000 b/d to 30,000 b/d easily. As of April 2013, there were 295 MMb/d of oil and 9.9 MM cm/d (350 MMcf/d) of gas of presalt production with the highest amount coming from four wells in the Lula field.

Unlike the 12th bidding round, which is concession based, the presalt round will mark Brazil’s first use of the production-sharing model. The winner will be the company that brings the best offer. Petrobras, however, will serve as operator with at least 30% participation. The government’s take will be the sum of the signature bonus, income tax, and a percentage of profit oil, coming to 75%.

Some of the terms of the production-sharing contract, however, appeared to generate concern by some in attendance. Despite the potential, few – if any – can overlook challenges being experienced in Brazil. These include supply chain problems, infrastructure woes, and other delays caused by customs clearance issues as well as concerns about taxes and environmental issues.

One person questioned whether the 30% and operating requirements for Petrobras could be flexible. “There is the question of whether Petrobras can actually handle everything that it is going to be required to do the way you designed the regime.”

In response, Chambriard said it is the law. “Law is something that is very well defined. We’ve spent some years discussing this with the Brazilian society, including Petrobras.”

Brazil had proven reserves of about 15.3 Bbbl of oil and 459 Bcm (16,209 Bcf) of natural gas in 2012. The country produced about 2.2 MMb/d of oil and NGL and about 71 MMcm/d (2,507 MMcf/d) of gas. Hopes are to double each of these figures in the near future, according to Chambriard’s presentation. Investment in Brazil’s oil and gas sector for 2013 to 2016 is set at about US $17.8 billion (R $405 billion), more than six times the amount directed toward the automotive and mining sectors.

Contact the author, Velda Addison, at vaddison@hartenergy.com.