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Pre-Salt Brazil

Past, Present and Future Opportunities


In offshore drilling, “ultra-deep” is considered anything deeper than 5,000 feet (1,520 meters). But to reach the rich oil and gas reserves of the pre-salt Brazil, producers must go much, much deeper. Consider the pre-salt Libra field of the Santos Basin; drillers must first reach the ocean bed under 11,500 feet (3,510 meters) of South Atlantic Ocean, punch a hole through more than a mile (1.6 kilometers) of post-salt rock, then drill 6,600 feet (2,010 meters) through a gigantic salt dome to reach the hydrocarbon prize of the pre-salt shale formations beneath. That’s akin to flying 30,000 feet (9+ kilometers) above the earth and attempting to hit a soda can on the ground with a 6 mile (9.7 kilometers) long straw. It’s extremely difficult to say the least.

Despite the difficulty of reaching and extracting pre-salt hydrocarbons, Brazil has nonetheless conquered its ultra-deepwater reserves and achieved ranking in the top 10 biggest oil producers in the world just in the past few years. How did we get here? Read on for the pre-salt Brazil backstory, the internal and external forces that led up to full scale commercialization, and the future of Brazil and its pre-salt reserves.

What Is the Pre-Salt Brazil?


Located along the continental shelf of South America, pre-salt Brazil formations contain a significant fraction of the world’s oil and gas reserves. Characterized by giant fields with high quality carbonate reservoirs, the thick layers of the pre-salt Brazil offer high permeability and high porosity that result in wells 10 times more productive than post-salt wells. Despite the technical challenges of extracting pre-salt hydrocarbons with ultra-deep offshore drilling, the pre-salt basins of Brazil have attracted supermajors and leading oil companies.

When Did Brazil Start Producing Oil?

Brazil has a long history of oil production dating back to the first oil discovery in Bahia, Brazil in 1930. The first offshore project was developed in 1968 and in 1974 the Bacia de Campos was discovered, one of the world’s largest offshore oil reservoirs.

What Is Pre-Salt and Post-Salt?

The pre-salt layer is a geological series of formations located on the continental shelves; the most notable pre-salt oil basins are found in offshore Brazil, Angola and the Gulf of Mexico. Mostly comprised of halite, anhydrate and other evaporites, the salt domes of the pre-salt layer provide excellent reservoir traps for hydrocarbons. The “post-salt” refers to shallower oil and gas reservoirs that overlay the pre-salt layer and may contain hydrocarbons with a younger depositional history or oil that has migrated upward from the pre-salt.

Pre-Salt Oil Region in Brazil

The pre-salt reservoirs of offshore Brazil represent an oil and gas producing region 120 miles wide (200 kilometers) that runs 500 miles (800 kilometers) along the coast from the Brazilian state of Espírito Santo to Santa Catarina. First explored in 2005 by Petrobras, the Brazilian pre-salt oil region contains extensive reserves trapped beneath 6,600 feet (2,000 meters) of salt that sits below 6,600 feet (2,000 meters) of post-salt sediments, all under 6,000 feet (1,830 meters) to 11,500 (3,600 meters) of ocean.

What Is the Depth of a Pre-Salt Reservoir?

The depth of Brazilian pre-salt basins ranges from 18,000 feet (5,500 meters) to 25,000 feet (7,600 meters) below sea level in the Libra field of the Santos Basin. These extreme depths, coupled with technically challenging offshore drilling, create high pressure conditions and limit development to a handful of operators.

Basins of the Pre-Salt Brazil

Brazil boasts 12 coastal sedimentary basins of which the following basins are of most immediate interest to pre-salt oil and gas development due to their prolific carbonate reservoirs. They were formed following the breakup of Gondwana in the early Cretaceous period (about 145 to 130 million years ago) when rift basins formed on each side of the South Atlantic, giving rise to the pre-salt formations of the Santos, Campos and Espírito Santo Basins of Brazil and the Kwanza, Congo and Namibia Basins of southwestern Africa.

Santos Basin

About 136,000 square miles in area (352,000 km2), the Santos Basin is located 190 miles (300 kilometers) southeast of the port of Santos in the Brazilian state of São Paulo. The Cabo Frio High separates it from the Campos Basin in the north, with the Florianópolis High separating the Santos Basin in the south from the Pelotas Basin.

Campos Basin

Primarily spanning a large swath of the South Atlantic Ocean with a small portion located onshore near Rio de Janeiro, the Campos Basin of pre-salt Brazil is an increasing focus of oil and gas development in the pre-salt oil layer. The basin spans an area of 44,000 square miles (115,000 km2).

Espiritu Santos Basin

Situated on the north central coast of Brazil’s state of Espírito Santo and the south coast of Bahia, the Espírito Santo Basin is bounded on the south by the Campos Basin and the Mucuri Basin in the north. The offshore portion of the basin spans an area approximately 15,000 square miles (38,000 km2) at depths up to 9,800 feet (3,000 meters).

Top Oil Discoveries of the Pre-Salt Brazil

The first large oil discovery in pre-salt Brazil was made in 2006 at the Tupi field (renamed Lula), which is estimated to hold 8 billion barrels of oil. The Júpiter field is estimated to hold 2 billion barrels of oil and 17 trillion cubic feet of natural gas. Several supergiant fields have recently been discovered, including the Libra field (8 to 12 billion barrels) and the Búzios field, which is reported as the largest offshore field in the world.

Commercial Development of Pre-Salt Brazil

The Tupi exploration wells established the commercial viability of pre-salt Brazil, however, full scale development was initially deferred with the discovery of supergiant post-salt Tertiary and Upper Cretaceous turbidite reservoirs at shallower depths. Technical challenges of ultra-deepwater drilling, hazards of drilling through thick layers of salt, and lack of midstream infrastructure and takeaway capacity also delayed pre-salt Brazil commercialization.

Despite these obstacles, pre-salt production development in Brazil accelerated with the depletion of shallow post-salt reservoirs, successful development of the Libra field in 2017, and introduction of alternative methods to store and transport oil amidst challenging deepwater offshore conditions.

What Is Happening in the Pre-Salt Brazil Right Now?

Pre-salt Brazil oil and gas development is hallmarked by rapid change both among government regulators and response of energy companies to capitalize on the region’s prolific giant and supergiant oilfields. The following sections summarize the key challenges for pre-salt drilling in Brazil’s ultra-deepwater, regulatory and competitive landscapes.

Pre-Salt Brazil Drilling Processes

Everything about deepwater drilling is larger and vastly more capital intensive than onshore drilling. Drill ships that are continuously positioned with thrusters and GPS data begin pre-salt well construction by lowering and embedding a base pipe into the sea floor, followed by drilling of the top section, casing and cementing before a subsea wellhead and blowout preventer are installed ahead of producing formations. Using riser pipe, wells are drilled to depth while periodically setting casing, a process made even more complex while drilling through thick salt layers where wellbore closure presents significant challenges.

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What Are the Dangers of Pre-Salt Drilling?

Pre-salt drilling presents unique challenges as drilling fluids physically alter and deform salt due to its low hardness (only a little harder than talc on the Mohs scale), a process known as “salt creep.”  Different types of salt sediments, e.g., halite, anhydrate and carnallite have varying creep rates with some deforming faster than others, resulting in potential for wellbore closure when pulling out of hole.

Is the Brazilian Pre-Salt Oil Competitive?

Historically, oil and gas development in Brazil was not competitive with a monopoly effectively granted to state-controlled Petróleo Brasileiro (Petrobras).

In October 2013, the Brazilian energy regulator Agência Nacional do Petróleo (ANP) selected a group of foreign oil companies to co-develop the Libra field (known as Libra Oil & Gas), comprised of Petrobras (40%), Total (20%), Shell (20%), CNPC (10%) and CNOOC (10%).

However, the inflexibility of concessions and the requirement to source support services and materials from Brazil’s limited local supply chain (known as the “local content” rule) did little to stimulate pre-salt development. However, following the introduction of a new government agency specifically tasked with awarding production sharing agreements in the pre-salt Brazil (Pré-Sal Petróleo SA or PPSA), competition has led to a burgeoning oil and gas sector centered around large-scale offshore projects.

Other Risks of Drilling in the Pre-Salt

In addition to risks of drilling through layers of salt, ultra-deep water drilling poses many logistical and safety challenges, requiring crews to continuously test blowout preventers and drill at a relative snail’s pace compared to onshore drilling. Not all pre-salt Brazil wells are as productive as top performing assets or even produce at all (dry holes), creating additional risk from poor or no return on investment in some cases.

How Many Oil Companies Are in Brazil?

The first supermajor to operate in the pre-salt was Shell, with commercial oil development in the Salema and Bijupirá fields of the Campos Basin. Relaxing of strict local content regulations and production sharing agreements have subsequently attracted many other international oil companies with experience in deepwater operations, including BP, Repsol, Chevron, Anadarko, El Paso, Galp Energia, Equinor, Sinopec, Sinochem and BG Group. OGX and other domestic oil companies also began operating in the Campos Basin in 2011.

Pre-Salt Brazil Oil and Gas Production

In 2017, pre–salt oil production exceeded all other fields in Brazil for the first time, reaching record level production of 1.9 million barrels per day in 2020 and accounting for more than 70% of Brazilian oil output. The Libra field alone is expected to produce as much as 1.4 million barrels of oil per day by 2022.

Pre-Salt Brazil Oil Storage

Given the extreme depths of the pre-salt Brazil and that full scale oil production has only recently started, the offshore region lacks any subsea gathering and transportation pipeline infrastructure. Instead, Petrobras began operating multiple floating production storage and offloading (FPSO) vessels starting in 2018. Effectively a floating oil rig complete with high pressure oil, gas, and water separators, these ships take the place of typical semi-submersible deep water rigs. And unlike traditional rigs, FPSOs can disconnect from their subsea wellheads to avoid catastrophic weather or move to a new location when a field has been depleted. The combined takeaway capacity of pre-salt Brazil FPSOs is 1,350,000 barrels of oil per day, as seen in the following table.

FPSO Name Capacity
(barrels per day)
P–74 150,000 Buzios field
P–75 150,000 Buzios field
P–76 150,000 Buzios field
P–77 150,000 Buzios field
P–68 150,000 Berbigão and Sururu fields
P–67 150,000 Tupi field
P–69 150,000 Tupi field
P–70 150,000 Atapu field
Campos de Campos dos Goytacazes 150,000 Tartaruga Verde field

The Future of the Pre-Salt Brazil

With record output levels continuing to increase, Brazil is now among the top 10 largest global oil producers, with the biggest production growth outside of the Permian Basin and OPEC+. Two key drivers are set to accelerate pre-salt Brazil oil and gas development further: breakeven price and midstream takeaway capacity.

Pre-Salt Brazil Breakeven Costs

Less than a decade ago, breakeven price for pre-salt wells was as much as $70, underscoring the need to reduce ramp up and lifting costs despite attractive production volumes. Favorable regulatory and tax reform, pooled expertise of Petrobras and joint venture partners, standardization of drilling processes based on lessons learned, and technical advancements in subsea and topsides infrastructure have led to a sharp decrease in breakeven costs that cut as much as 40% of initial project costs in the Tupi/Lula field alone, which accounts for 1 million barrels of pre-salt production.

Pre-Salt Brazil Midstream Capital Investment

Over the next five years, Petrobras plans to invest nearly $70 billion in pre-salt projects and infrastructure, including the construction of 13 FPSOs. These FPSOs will be deployed in the Buzios, Sepia, Mero, Itapu, Tupi/Lula and Marlim pre-salt fields, bolstered by the largest FPSO to date (P–80) and bringing total FPSO storage capacity in the region to 2 million barrels per day by 2025.

With breakeven expected to fall below $40 over the next decade and a clear focus by Petrobras and Brazil’s energy regulators on expanding pre-salt production, the velocity of pre-salt Brazil oil and gas development is increasing. Over the next five years, pre-salt production is expected to grow 5% year over year and potentially reach as much as 4 million barrels per day by 2030. While pre-salt oil and gas commercial development was slow to ramp up to full scale, internal and external forces have finally aligned to position Brazil as one of the largest global oil exporters for decades to come.

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