Equinor, Exxon agree to expand Brazil oil operations

Modec

17/05/2022 13:44

(Repeat with no changes in text)
    By Sabrina Valle
    HOUSTON, May 17 (Reuters) - Equinor SA  EQNR.OL  and Exxon
Mobil Corp  XOM.N  have taken the first steps to expand an $8
billion oil development off Brazil's coast, the Norwegian oil
producer told Reuters.
    The firms want to boost future production from the Bacalhau
oil field, Equinor's largest project outside of Norway with more
than 1 billion barrels of oil, the company said. 
    A second drilling rig and a second floating production
platform are being considered for the next phase along with a
more than 100-mile-long gas pipeline, three people close to the
discussions said.
    For Exxon, Bacalhau could provide its first barrel of oil
from offshore Brazil, one of its top growth prospects, and a new
supply of oil from lower carbon operations. First oil is due in
2024 from the venture's 220,000 barrel per day (bpd) production
vessel. 
    Exxon referred questions to Equinor, which operates the
field. Equinor told Reuters it plans to drill a new appraisal
well in the north of the Bacalhau field next year "to better
understand the reserves base for the Phase 2 development."
    The partners are assessing awarding a contract for a second
drilling rig. Pre-drilling of phase 1 wells should start in the
third quarter this year, a spokesperson said. Equinor did not
comment on plans for a new FPSO or pipeline.
    
    INVESTMENT MAY DOUBLE 
    "Bacalhau is a globally competitive project with a break
even below $35 in a key energy region," the spokesperson said in
response to Reuters questions.
    The second phase could potentially double the project
investment if the new exploration works are successful, two
people close to discussions said. 
    One of the issues to be decided is whether the field will
produce enough oil to justify a second floating platform, or
FPSO, and a gas pipeline to bring the field's natural gas to
shore, two of the people said. 
    Equinor and Exxon could use a subsea tieback if the findings
do not justify a second platform, two of the people said. Wells
would be connected to the first FPSO, which would reinject the
gas into the reservoir.
    The first FPSO is being built by Japan's Modec Inc and was
designed to keep greenhouse gas emissions intensity 65% below
Exxon's average, according to a company presentation.  
    
    DRILLING TO COMMENCE 
    The partners last year signed a $380 million, four-year
contract with Seadrill Ltd  SDRL.OL  for the phase 1
campaign. urn:newsml:reuters.com:*:nFWN2MK02Y
    Bacalhau is Brazil's first pre-salt field not to be
developed by state-controlled Petroleo Brasileiro SA, which made
the discovery in 2012 and sold it to pay down debt. Equinor
holds a 40% stake, as does Exxon. Petrogal Brasil owns a 20%
share.
    Seadrill's West Saturn rig will drill Bacalhau's first six
of 19 approved wells, according to Equinor. It is the same rig
that Exxon has used in offshore blocks it operates in Brazil,
with no exploration success.

 (Reporting by Sabrina Valle; Editing by Sam Holmes)
 ((sabrina.valle@tr.com | Twitter: @sabrinavalle))