How huge is the Pre-salt field? The Iara discovery bolsters estimates that it could contain 70 billion to 110 billion barrels of oil, said Segen Estefan, a professor of ocean structures at the Federal University of Rio de Janeiro, a leading petroleum research center.
For comparison, proven reserves in Venezuela, the United States and Canada stood at 87 billion, 29.4 billion and 27.6 billion barrels, respectively, at the end of 2007, according to the U.S. Department of Energy.
For The Record
Los Angeles Times Thursday, September 25, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 36 words Type of Material: Correction
Oil field: An article in Business on Wednesday about the Pre-salt oil field in Brazil said the state-controlled oil company Petrobras made its announcement about the exploratory wells last week. The announcement was made Sept. 10.
"There is no question there is a lot of wealth down there," said Joao Carlos Ferraz, research director at Brazil's national development bank, known by its Portuguese initials BNDES. "But there are uncertainties in terms of its size and the technical difficulties you will face."
Brazil ranks 15th among nations in oil reserves and 11th in production with a current average of 2.3 million barrels pumped daily. Unlike Latin American energy leaders Mexico, Venezuela and Colombia, where reserves and production are flat or falling, Brazil has doubled reserves and output since 1998.
A key to Brazil's success has been its advanced exploration and drilling techniques that enable it to exploit once-inaccessible oil deposits one mile or more beneath the ocean floor. Just as important was the decision in 1997 to open Brazil to investment by foreign oil companies. Dozens now operate in the country, usually in partnership with Petrobras.
The salt layer sitting above the deep-water reserve represents a new technological challenge. It's a shifting mass that makes the integrity of wells difficult to maintain, like "drilling through marshmallow," as geologist Estefan put it.
Added to the complexity is the depth of the deposit, a mile deeper than Petrobras has ever drilled.
"Pre-salt is a new frontier but it's not impossible," said Reginaldo Takara, a senior director at debt-rating firm Standard & Poor's. "The level of technology that company already has will allow it to move forward."
Another challenge is simple logistics. The crude is as much as 150 miles from shore, which means the oil companies would have to build an enormous infrastructure of pipelines, floating gas liquefaction facilities, boats, helicopters and shuttle stations to access and service the reserve.
Investment bank UBS figures the development cost could be as much as $600 billion over the next two decades. To move forward, energy companies would be betting that oil prices would remain high enough to recoup their costs and generate a profit.
