Reuters: Brazil may need $60 oil to tap subsalt finds-CERA:
Petrobras (PETR4.SA) (PBR.N) may need benchmark oil prices near $60 a barrel to profitably tap Brazil’s massive subsalt offshore finds, Cambridge Energy Research Associates (CERA) said.
“We’ve evaluated the economics and believe that (Brazil’s subsalt oil) can be developed with WTI or Brent at $60,” said Enrique Sira, CERA’s director for Latin America and co-author of an upcoming report on Brazil’s subsalt oil.
“If all goes well, Petrobras and partners could reach a significant production level after 2019.”
Petrobras and partners have found up to 14 billion recoverable barrels of subsalt oil since 2007. Brazilian officials believe the reservoirs contain 30 billion to 100 billion barrels, rivaling Europe’s huge North Sea finds of the 1970s.
But estimates vary on oil price levels needed to economically exploit Brazil’s new oil, which is located beneath 3 to 5 miles (5 to 8 km) of water, sand, stone and a Jurassic-era salt layer.
Chief Executive Officer Jose Sergio Gabrielli said last week that state-controlled Petrobras could tap Brazil’s subsalt oil even with oil at $45 a barrel. Petrobras plans to spend $29 billion on the subsalt areas by 2013.
Cera said its $60-a-barrel estimate is preliminary, and added Petrobras may be able to tap subsalt blocks with oil in the $45 to $60 range, but $40 oil would likely make them unattractive. U.S. benchmark oil traded above $63 a barrel CLc1 on Wednesday.
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Higher world oil prices and lower drilling costs could help Petrobras secure the funding it needs. Since 1980, benchmark oil prices, adjusted for inflation, have averaged around $44 a barrel. Crude dipped as low as $32.40 last December.
Am I the only one who sees this as yet another argument about angels dancing on the head of a pin?
14 billion barrels? At 85 million barrels/day for world consumption, or 31 billion barrels/year, that’s 164 days of world consumption. Even the 30 to 100 billion barrels is at most a little over three years, and that production (assuming it ever reaches anywhere near that level) will be spread over decades.
Does anyone reading this site think that in the coming years $60/barrel won’t sound ridiculously quaint? And I honestly don’t understand the point of adding historical pricing data ($44/barrel averaged over 29 years?) to this article; the only value of such information lies in its predictive value for future prices, which in the case of oil at this point in time, is precisely zero.
The mainstream perception of the world oil situation will be transformed in the next couple of years just as radically as our perception of climate change has been in the last ten.
