BG Group (LON:BG.), the FTSE 100 gas giant, has issued a significant upgrade for its interests in the pre-salt Santos Basin, offshore Brazil. The company is now estimating mean total reserves and resources to be some 6 billion barrels of oil equivalent (boe) net, with an upside potential of 8 billion boe net. The upgrade represents a doubling of BG’s previous best estimate of 3 billion boe, which was published in February 2010. The news pushed the BG share price up by 5% to 1417.5p in early trading.
The aggregate range of total reserves and resources net to BG now stretches from 4 billion boe (P90) to 8 billion boe (P10). Existing discoveries account for 96% of the new calculation, which has been modelled using BG’s internal analysis based on probabilistic modelling of its Santos Basin interests. The analysis is based on a range of data, including the results of 29 drilled wells on existing discoveries, with two wells drilled on Lula since November 2010 proving particularly important in delineating the flanks of the field. Production from the first permanent floating production, storage and offloading vessel on Lula commenced in October 2010. The company has also shot more than 14,400 sq km of 3D seismic and said that full analysis of a completed extended well test on Lula Sul and the early results from the Guará EWT had indicated very large hydrocarbon volumes connected to each of the wells.
Sir Frank Chapman, BG’s chief executive, said: “The doubling of our estimated Santos Basin mean reserves and resources is clearly significant and demonstrates the continued rapid evolution of our understanding of these enormous discoveries. Robust economics and solid progress with the fast-track development programme will see gross installed production capacity rising steadily to reach more than 2.3 million boe per day by 2017. I believe this – alongside progress with major ventures in Australia, the US and across our global portfolio – will transform the scope, scale and value of BG Group.”
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