Chevron may start work to tap deep-water reservoirs beneath a layer of salt in late 2011 or early 2012, said Ali Moshiri, head of exploration and production for Africa and Latin America. The San Ramon, California-based company, which currently produces oil from shallower deposits above the salt layer at the Frade field in the Campos Basin, may add a second output platform if it strikes large reserves lower down, he said.
“Frade has been a good surprise so far regarding production,” Moshiri said yesterday in a telephone interview from Houston. “Our desire is for it to be large enough for a stand-alone development.”
Chevron is seeking to replicate the success of Petroleo Brasileiro SA, Brazil’s state-controlled oil producer, which has found oil deposits buried beneath existing offshore fields. Two of Brazil’s 10 most productive wells were discovered in Petrobras’s Jubarte field, also in the Campos Basin, after the company drilled beneath the salt layer.
Output at Frade will reach 90,000 barrels a day this year, up from 80,000 barrels now, Moshiri said. Chevron operates Frade with a 51.74 percent stake. Petrobras and a joint venture of Inpex Corp., Sojitz Corp. and Japan Oil, Gas and Metals National Corp. also hold stakes.
Chevron also owns a 20 percent stake in the Olivia and Atlanta oil fields, where partner Royal Dutch Shell Plc is seeking to sell its 40 percent operating stake. Chevron would "consider" selling its stake in the fields in the Santos Basin, which aren’t yet producing, should it get an offer, Moshiri said.
“We always consider any type of transaction and if an offer comes our way, we’ll be glad to consider it, but at the moment our focus is on Frade and Papa Terra,” he said. “If we find something bigger and farm out the smaller one, that’s a process we do.”
Chevron is a minority partner with Petrobras at the $5.2 billion Papa Terra project in Campos, where production is set to start in 2013 and eventually reach 140,000 barrels a day.
Chevron may participate in two exploration bidding rounds that Brazil is planning for this year, Moshiri said. Brazil plans to auction onshore and offshore areas in the north of the country in the first half and deep-water blocks later in the year, Energy Minister Edison Lobao said Jan. 7.
“If opportunities are there we will participate,” Moshiri said. “Brazil is a core country for us.”
Companies including BP Plc, Sinochem Group and A.P. Moeller-Maersk A/S bought stakes in Brazilian oil projects last year as a delay in bidding rounds increased demand for exploration acreage.
Brazil tightened the state’s grip on the domestic oil industry after the discovery of the Lula field, formerly known as Tupi, and Libra, which hold 6.5 billion barrels of oil and as much as 15 billion barrels, respectively.
In December, Brazil’s Congress approved legislation to make Petrobras the operator of all new projects in the pre-salt and other areas deemed “strategic.” The companies that offer the biggest share of oil output to the government will win the contracts under the so-called production sharing model.
Disclosure I am long CVX shares.