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In offshore Brazil oil and gas drilling, “ultra-deep” is considered anything in waters deeper than 5,000 feet (1,520 meters). But to reach the rich crude oil and raw gas reserves of Brazil’s pre-salt, producers must go much, much deeper. Consider the Libra field of the Santos Basin, where drillers must first reach the ocean bed under 7,000 feet (2,133 meters) of South Atlantic Ocean. Then they punch a hole through more than a mile (1.6 kilometers) of post-salt rock. And then drill 6,600 feet (2,010 meters) through overlying sediments and a gigantic salt dome to reach the hydrocarbon prize of the Cretaceous Period pre-salt formations beneath. That’s akin to flying 17,000 feet (5+ kilometers) above the earth and attempting to hit a soda can on the ground with a straw. It’s extremely difficult, to say the least.
Despite the difficulty of reaching and extracting pre-salt hydrocarbons, Brazil oil production has nonetheless conquered its ultra-deepwater reserves and achieved ranking in the top 10 biggest oil producers in the world within the past few years. How did we get here? Read on for the pre-salt backstory, the internal and external forces that led up to full-scale commercialization, and the future of Brazil and its pre-salt reserves.
For information about oil exploration and production beyond Brazil, visit our Global oil and gas data page.
Located along the continental shelf of South America, Brazil’s pre-salt formations contain a significant fraction of Global oil and natural gas reserves. Characterized by thick carbonate reservoirs with high permeability and porosity, the giant fields of the pre-salt boast wells that average 10 times as much Brazil oil and gas production as the post-salt. 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.
Brazil has a long history of oil production dating back to the first discovery in Bahia, Brazil in 1930. The first offshore Brazil oil and gas project was developed in 1968, and in 1974 the Bacia de Campos was discovered, one of the world’s largest offshore oil reservoirs.
The pre-salt layer is a geological series of formations located on the continental shelves. The most notable examples are found off the coasts of Brazil and Angola. Mostly comprised of halite, anhydrite and other evaporites, the salt layer provides excellent reservoir traps for hydrocarbons. Post-salt refers to reservoirs that overlie the salt and contain younger hydrocarbon reservoirs with oil that has migrated upward from the pre-salt.
Brazil’s offshore pre-salt reservoirs 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 region contains extensive reserves of 30-40 billion barrels of oil equivalent. These offshore blocks are in high demand for oil leases, drilling – and cause the Brazil oil production forecasts to be very robust.
The depth of pre-salt oil reservoirs in Brazil ranges from 18,000 feet (5,500 meters) to 25,000 feet (7,600 meters) below sea level in the Santos Basin. These extreme depths create high-pressure conditions, coupled with technically challenging offshore drilling and high costs that limit development to only a handful of oil & gas exploration and production operators.
Brazil boasts 12 coastal sedimentary basins. The following basins are of most interest to pre-salt 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 and Brazil oil and gas deposits in the Santos, Campos and Espírito Santo Basins – and the Kwanza, Congo and Namibia Basins of southwestern Africa.
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.
Primarily spanning a large swath of the South Atlantic Ocean with a small portion located onshore near Rio de Janeiro, the pre-salt Campos Basin of Brazil is an increasing focus of exploration and production for the Brazil oil and gas industry. The basin spans an area of 44,000 square miles (115,000 km2).
The first supergiant discovery in Brazil’s pre-salt was made in 2006 at the Tupi field, which is estimated to hold 8 billion barrels of oil. The Júpiter field is estimated to hold 2 billion barrels and 17 trillion cubic feet of natural gas. Several other supergiant oil and gas fields have recently been discovered, including the Libra field (8 to 12 billion barrels) and the Búzios field (~13 billion barrels), one of the largest offshore fields in the world.
The Tupi exploration wells established the commercial viability of Brazil’s oil and gas producing deposits. But full-scale development was initially deferred due to the ongoing development of supergiant post-salt Tertiary and Upper Cretaceous turbidite reservoirs at shallower depths in the Campos Basin. 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 oil production and commercialization.
Despite these obstacles, development and production from Brazil pre-salt deposits accelerated with the depletion of shallow post-salt reservoirs and the introduction of alternative methods to store and transport oil amidst challenging deepwater offshore conditions.
Development of pre-salt giant and supergiant Brazil oil & gas production fields has required rapid change among both government regulators and energy companies. The following sections summarize some of the key operational, regulatory, and economic challenges faced in Brazil’s ultra-deepwater plays.
Everything about deepwater oil and gas drilling is vastly more capital intensive than onshore drilling. Although the offshore blocks offer the most potential to increase Brazil oil production, the oil leases and offshore rig costs and risks are substantial. Drill ships that are continuously positioned with thrusters and GPS data begin well construction by lowering and embedding a base pipe into the sea floor. This is followed by drilling of the top section, casing and cementing. Then 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.
Pre-salt drilling in Brazil’s productive oil basins presents unique challenges. 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, anhydrite and carnallite, have varying creep rates with some deforming faster than others. This results in a potential for wellbore closure when pulling out of hole.
Historically, oil and gas production 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, comprised of Petrobras (40%), Total (20%), Shell (20%), CNPC (10%) and CNOOC (10%) and known as Libra Oil & Gas, to co-develop the Libra field.
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) continued to stifle pre-salt development. Only after 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) has competition led to a burgeoning oil and gas sector centered around these large-scale offshore projects.
In addition to the risks of drilling through layers of salt, ultra-deep water drilling poses many logistical and safety challenges. Offshore Brazil oil producers require crews to continuously test blowout preventers and drill wells at a relative snail’s pace compared to onshore drilling. And some pre-salt Brazil wells are not as productive as top-performing assets or don’t produce at all (dry holes), adding financial risk.
The first supermajor to operate in the pre-salt was Shell, with exploration and commercial oil production in Brazil’s Salema and Bijupirá fields of the Campos Basin. Relaxation of strict local content regulations and production sharing agreements subsequently attracted many other international oil companies with experience in deepwater operations, including BP, TotalEnergies, Repsol, Chevron, Galp Energia, Equinor, Sinopec and Sinochem. PetroRio and other domestic companies are also present in the Campos basin.
In 2018, for the first time, oil production of Brazil pre-salt exceeded that from all other fields in the country. Output from the basin reached a record level of 2.8 million barrels per day in 2020, accounting for 70% of Brazilian output. The Tupi and Búzios fields alone currently produce a combined 1.4 million barrels of oil per day.
Given the extreme depths of the pre-salt deposits and the fact that full-scale Brazilian oil production has only recently started, the offshore region lacks any subsea gathering and transportation pipeline infrastructure. Thus, Petrobras began operating multiple floating production storage and offloading (FPSO) vessels starting in 2018. Complete with high-pressure oil, gas and water separators, these ships effectively serve as mobile oil production facilities, able to 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) | Location |
| P–74 | 150,000 | Búzios field |
| P–75 | 150,000 | Búzios field |
| P–76 | 150,000 | Búzios field |
| P–77 | 150,000 | Búzios 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 |
| Cidade de Campos dos Goytacazes | 150,000 | Tartaruga Verde field |
With output continuing to increase, Brazil oil and gas production levels are now among the top 10 largest global oil producers, with the biggest growth outside of the Permian Basin and OPEC+. Two key drivers are set to accelerate pre-salt development further: breakeven price and midstream takeaway capacity.
Less than a decade ago, the breakeven price for pre-salt Brazil oil production was as much as $70 per barrel of oil equivalent (BOE), reflecting the negative impact of ramp-up and lifting costs despite large production volumes. However, favorable regulatory and tax reforms, the pooled expertise of Petrobras and joint venture partners leading to standardization of Brazil oil and gas drilling processes, and technical advancements in subsea and topsides infrastructure have led to a sharp decrease in costs, cutting as much as 40% from initial project estimates in the Tupi field alone.
Over the next five years, Petrobras plans to invest nearly $40 billion in pre-salt projects and infrastructure, including the construction and installation of 12 FPSOs. These FPSOs will be deployed in the Búzios, Mero, Itapu and Jubarte pre-salt fields, headlined by the largest FPSO to date (P-80) and bringing total FPSO processing capacity in the region to 2 million barrels per day by 2025.
With break-evens 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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