Equinor, Exxon Plan $8B Investment in Brazil's Bacalhau Offshore Field
Norwegian energy giant Equinor and its partners are set to invest a staggering $8 billion to develop the lucrative offshore Bacalhau field in Brazil. The company, together with its partners ExxonMobil, Petrogal Brasil and Pré-sal Petróleo SA (PPSA) announced they have reached the final investment decision for phase I of the project in the pre-salt Santos area.
“Bacalhau is the first greenfield development by an international operator in the pre-salt area and will create great value for Brazil, Equinor and partners. Good cooperation with partners, Brazilian authorities and suppliers has resulted in an investment decision for the Bacalhau field,” said Arne Sigve Nylund, Equinor’s executive vice president for Projects, Drilling and Procurement.
She added that Bacalhau is a globally competitive project with a break-even below $35 in a key energy region. The estimated recoverable reserves for the first phase are more than one billion barrels of oil.
The Bacalhau field is situated across two licenses, BM-S-8 and Norte de Carcará, and it contains light oil with minimal contaminants. It is located at a water depth of 2,050 meters, about 100 miles off the coast of Sao Paulo.
The development plan calls for 19 subsea wells tied back to a floating production, storage and offloading unit (FPSO) located at the field. It will be one of the largest FPSOs in Brazil with a production capacity of 220,000 barrels per day and two million barrels in storage capacity. The stabilized oil will be offloaded to shuttle tankers, and the gas from phase I will be re-injected in the reservoir.
An FPSO contractor will operate the FPSO for the first year, and after this initial phase, Equinor plans to take over operations itself until the end of the license period.
The partners project first oil in 2024, although the Covid-19 pandemic and related uncertainties could necessitate adjustments.
“The development of the Bacalhau field is a strategic investment in our global portfolio and has the potential to bring high returns for ExxonMobil, our partners and the Brazilian people,” said Juan Lessmann, Lead Country Manager for ExxonMobil in Brazil.
Equinor, which will be the operator, and ExxonMobil hold a 40 percent stake each while Petrogal Brasil will control the remaining 20 percent.
According to the partners, significant efforts have been made to reduce emissions from the production phase, including implementing a combined cycle gas turbine system to increase the energy efficiency of the power station. This gives an efficient electrical power production and flexible heat supply. With these improvements, the field's lifetime average CO2 intensity is expected to be less than nine kilos per barrel produced, significantly lower than the global average of 17 kilos per barrel.