Vertigo: Brazil's Libra oilfield

Author Chicago Jack View Profile Add to favourites Ignore Date posted Saturday 18:21 Message Vertigo; I think we visited this previously when ILS got all wound up about a few details showing what oil is worth and how far down you have to go to get it, and where you have to got to get it, snorkel anyone. Regards CJ Ring any bells. ILS. Note the words 'final value.' You understand what they mean, I presume. Unless you believe that the entire asset base of the Conpany will be taken out for five, six or seven Pounds (in the event of a full asset sale) then my statement is not inaccurate. For me the only fly in the ointment is the politics. That's the one thing that could upset any plans in the pipeline. The Board isn't the problem. Nor is geology, the weather, accessibility, route to market or demand for the asset we have. Patience and the passage of time. All that's needed.. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx So Vertigo is correct , its a matter of applying sound economics with paitence and politics, ESPECIALLY for those who frequent the Economics school of Business. Try this simple bit of reading and try to grasp the realities of what is under the ground where GKP as been successful in drilling 17 wells plus. The Political situation as been in play from day 1, and has a large impact, but in saying that, is GKP downgraded by far more than it should be? IMO its is well down in comparison to where it should be currently. If you doubt the asset and its value, then you must simply not understand the enormity of what the proven resources so far are worth- and I use that term loseley-as I would assume the proven resources on ultra cautious . So to the reading and grasping of a few facts, something they simply don't teach you in the business of economics in the UK. You have to study the detail and , but Kurdistan is not Brazil or offshore and I am pretty confident in it holding well in excess of what Libra Filed is reported to hold betewen 8 and 15 billion barrels of OIL The below is worth reading and digesting each part and reflecting on the assets under GKP's PSC agreements. then decide which you would like to develope and take into production http://blogs.wsj.com/moneybeat/2013/08/08/brazils-oil-field-may-be-the-worlds-most-expensive-to-develop/ Oil majors interested in snapping up Brazil’s largest offshore oil discovery had better be prepared to write some very large checks. The total cost of developing the giant Libra field over the next 35 years could be at least $174 billion, making it the most expensive single oil field project ever developed—more than the Kashagan field in the Caspian Sea, which is expected to cost at least $150 billion, according to IHS Energy Insight. Sure – the cost is only two-and-a-bit months’ worth of bond purchases by the U.S. Federal Reserve. But it’s a mind-boggling amount. So is the 8 billion to 12 billion barrels of crude oil that is estimated to be held by Libra, a huge field that lies deep beneath the Atlantic seabed off Brazil’s southeast coast. The government is preparing to auction Libra to the highest bidder in October. Rather than seeking a cash bid, the winner will be the firm that, after covering its costs, promises to deliver the most oil to the government. The winning bidder will have to team up with state-run oil company Petróleo Brasileiro SA, or Petrobras, which—under new legislation passed specifically for the pre-salt fields—is obliged to hold a minimum 30% stake. The huge price tag is expected to attract only the biggest players in Big Oil—companies with enough time and money to sink billions of dollars into a project that is unlikely to generate any payback for nearly a decade—although there may be some smaller firms involved as minority partners. The companies also need to cope with the huge risks associated with drilling kilometers into the seabed in deep Atlantic waters, potentially very dangerous operations. Still, despite costs and risks, some simple math suggests the cost extracting each barrel from Libra would be about $15, making it cheaper to develop than other recent discoveries off the coast of West Africa or the Gulf of Mexico, where costs range between $22 and $30 per barrel. With oil prices hovering above $100 a barrel, the potential profits will likely be worth the risks. “That’s perfectly reasonable on a per-barrel basis and certainly comparable with existing pre-salt developments in Brazil,” said Ruaraidh Montgomery of consultants group WoodMackenzie. Oil companies are still being coy, wary of changes to legislation that have yet to be fully understood. But it’s the sheer size of Libra, which is not only Brazil’s largest offshore oil find but one of the biggest made in the world over the past three decades, that has grabbed their attention. “Everything leads us to believe that there will be a lot of interest in the auction,” said Lincoln Guardado, chief executive of Queiroz Galvão Exploração e Produção, a small Brazilian oil and gas firm. “I don’t see any reason why there wouldn’t be.” Brazil has been portraying itself as a country that’s keen to welcome the oil industry, providing a degree of economic and political stability that stands in contrast to neighboring Argentina and Venezuela, where Big Oil has been happy to do business. There are challenges, to be sure. Firms must deal with Brazil’s Byzantine bureaucracy and inflexible labor laws. Chevron Corp. was recently targeted with a $20 billion civil lawsuit after spilling a relatively modest amount of oil leaked from an offshore well in Brazil. Companies must also adhere to strict rules requiring local goods and services to be purchased locally, aimed at boosting a burgeoning oil-services industry, but which some argue pushes up costs. But for Big Oil with cash to burn and a thirst for crude, Brazil is once again open for business. http://www.iii.co.uk/investment/detail?code=cotn%3AGKP.L&display=discussion&threshold=0&action=detail&id=10775772 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Of course it was considered a ramp by sone. So I just replied it was a few details. the Brazil article....First it was not a ramp, its was a sensible article based on fact and what is going to happen to those billions of barrels under the sea, it was to give a little glimpse into BIG OIL. What gets lost is peoples willingness to discount the amount of oil under GKP PSC's. Production of mineral never stopped one of the worlds leading companys paying a large amount of money for unproven resources, they snapped them up before the chinese got a sniff. Its time some people learnt Oil finds a way to market and production is not the only requirement to secure an asset for the future. Can anyone show the worlds last largest oil discovery that was made by an independent oil company of this size that was not working for a National Government /State owned oil company. A snippet , as anyone looked at Linc Energy and the possibilities of what it might have . Regards CJ Its the assets stupid, don't lose sight when the M&G gang want a quick sale. http://www.iii.co.uk/investment/detail?code=cotn%3AGKP.L&display=discussion&threshold=0&action=detail&id=10776959 ============ Author leesbillbob View Profile Add to favourites Ignore Date posted Saturday 20:38 Subject Re: Vertigo: Brazil's Libra oilfield. View parent message Votes for this Posting Voted 27 times. Message Good to see you posting Jack;I have pretty much abandoned iii and left it for another sight that the "Gurus" (or as I call them chihuahuas) have not gained editorial control. GKP is a much bigger,much better find than offshore Brazil.S7 is going to be a game changer.The OIP will be upgraded greatly and I hope it won't be sludge;the deeper drills have seemed to found better quality APRs.We will find out. exactly where it should be. "Do you think Todd would put this kind of effort into drilling down 5000 meters if he didn't believe the big columns of oil were there?" Rig 319 Heavy Duty, 3,000 HP General Description Design Branham/Swift-Lift Estimated drilling depth rating 25,000 ft (7,620 m)* Camp capacity.................... 80 Estimated total rig move loads 120 truck loads Estimated total camp move loads 20 truck loads Mast Type Branham/Swift-Lift Height 157 ft (47.8 m) API rated simultaneously load capacity of setback and rotary 2,395,748 lb (1,086,693 kg) Static hook-load capacity 1,597,900 lb (724,795 kg) Setback capacity 797,848 lb (361,898 kg) Substructure Type Branham Swing lift, self-elevating Height 34.9 ft (10.67 m) Clear height, rotary beam to ground 26.9 ft (8.23 m) Casing capacity 1,597,900 lb (724,795 kg) Setback capacity 797,848 lb (361,898 kg) Drawworks Type National 1625 UBDE Power rating 3,000 HP Input power 3 � General Electric GE-752, 1,000 HP each Drilling line diameter 1-5/8 in. Auxiliary brake Baylor/Elmagco 7838 Top Drive/Swivel Type Canrig/1275 AC Capacity 1,653,467 lb (750,000 kg) Torque 51,400 ft-lb at 120 rpm Rotary Table Type National/D-375 Table opening 37-1/2 in. Drive type Independent GE 752, 800 HP each Engine Engines 5 � Caterpillar D-399, 1,215 HP each Generators 5 � Kato, 1,500 kVA, 600 V, 60 Hz SCR/DC-DC General Electric, type U drill Well Control Diverter 1 � Hydril, MSP 29-1/2 in., 500 psi Low-pressure annular 1 � Hydril MSP 21-1/4 in., 2,000 psi Low-pressure ram preventer 1 � Cameron, Type U, 20-3/4 in., 3,000 psi, double High-pressure annular 1 � Shaffer Spherical, 13-5/8 in., 10,000 psi High-pressure ram preventer 1 � Cameron, type U, 13-5/8 in., 15,000 psi, double 2 � Cameron, type U, 13-5/8 in., 15,000 psi, single Choke-and-kill manifold 3-1/16 in., 15,000 psi, hydraulic/manually operated Accumulator unit ..................Koomey 80 MC 220-11SB, 3,000 psi, 9 stations Mud System Mud pumps ...................... 3 � National 12-P-160, triplex single acting Power rating 1,600 HP Pressure rating 7,500 psi Active mud volume 2,000 bbl Reserve mud volume 1,000 bbl Shale shakers .................... 6 x Derrick/2L/M48-90F-3P Desander Not available Desilter Not available Mud cleaners King Cobra with 3 each, 10 in.+ 24 each � 4-in.cones Sack storage capacity 2 pallets at each hopper Enhancements Crane Not available Forklift Caterpillar 966-D forklift, convertible to loader � 5 ton Kelly spinner/pipe spinner I.T.C./A6-C2 Kelly spinner/ Varco or equivalent drillpipe spinner Desert-style moving capacity ======================== Protests, strike against big Brazil oil auction expand Fri, Oct 18 12:22 PM EDT * Strike has had limited impact on output so far * Union says contingency teams suffered two "small" spills * Gov't to deploy troops to ensure security at auction By Jeb Blount RIO DE JANEIRO, Oct 18 (Reuters) - Brazilian oil workers said on Friday they managed to reduce oil and fuels output from state-run oil company Petroleo Brasileiro SA for a second day after launching a strike for higher pay and against a planned auction of the country's largest-ever oil discovery. Platforms in the Campos Basin run by Petrobras, as the company is known, have been below full capacity for 36 hours, said Marcos Brida, the press spokesman for Sindepetro Norte-Fluminense, the union responsible for Petrobras offshore production platform and land-terminal workers in the Campos Basin, home to about 80 percent of Brazil's oil production. Brida also said contingency teams for Petrobras suffered two "small" oil spills at the PCE-1 and P-15 oil platforms in the Campos Basin. The union also announced the spills in a note. Petrobras officials were not immediately available for comment. Sindepetro Norte-Fluminese is part of a national strike by Brazil's National Oilworkers' Federation (FUP) that began at midnight (0300 GMT) on Thursday. It has seen workers walk off the job at most of Petrobras' 12 refineries, some of its oil terminals and pipelines plus scores of oil production sites. Natural gas and oil pumping operations and fuel production at refineries were also reduced, said Alessandra Muteira, press official for FUP in Rio de Janeiro. Neither Brida nor Muteira were able to quantify the reductions. Petrobras was not immediately able to comment on the strike. Petrobras has said it has contingency plans to ensure that energy and fuel supplies are maintained during strikes and that the safety of its facilities is not compromised. Strikes have rarely had any significant impact on output or supplies in Brazil. Top Petrobras officials have told Reuters in the past that the company can face strikes of about two weeks without any major impact. To prevent the strike from interfering with the auction of the massive offshore Libra field on Monday, the government will provide police and army units to ensure the smooth operation of the sale. On Thursday, oil workers briefly occupied Brazil's mines and energy ministry in Brasilia in protest. Libra holds an estimated 8 billion to 12 billion barrels of recoverable oil, according to both Brazil's oil regulator and Dallas-based oil-reserve certification company Degolyer & MacNaughton (D&G). If the projection holds up, Libra could nearly double Brazil's oil reserves or have enough oil to supply the world's crude demand for as much as 19 weeks. Libra, billed by the government as the largest offshore oil are ever sold, is the latest in a series of "subsalt" finds beginning in 2007 that struck oil southeast of Rio de Janeiro, trapped deep below the seabed by a layer of salt. Brazil is expected to get at least $7 billion in up-front fees from the winning company or group. Petrobras by law will have to take a minimum 30 percent stake in any winning group and run the project as operator. Opposition to the sale of Libra is strong among Petrobras unions. The unions still protest the 1997 end of Petrobras' monopoly over exploration, production and refining and regularly attack any non-Petrobras involvement in oil production, whether the involvement is domestic or foreign. The union's nationalist sentiment is shared by many in Brazil. The creation of Petrobras 60 years ago this month is still considered by many, especially older Brazilians, as an act of national liberation. Ildo Sauer, a former Petrobras gas and energy chief, has filed a lawsuit seeking to block the Libra sale. To date, oil regulator ANP has managed to get all suits seeking injunctions against the sale quashed. ================ Brazil's oil regulator says 2014 concession auction unlikely Thu, Oct 17 16:13 PM EDT By Jeb Blount RIO DE JANEIRO (Reuters) - The head of Brazil's oil regulator said on Thursday that her agency is unlikely to recommend an auction of oil exploration concessions in 2014, raising doubts of a revival of an annual auction cycle after a five-year hiatus. "I'm not so concerned about having annual auctions as I am about having good areas to sell," Magda Chambriard told reporters in Rio de Janeiro. "Right now I think it unlikely that we will recommend an auction next year." On May 15, Brazil raised about $1.4 billion at its first oil rights concession auction since 2008. From 1999 to 2008 Brazil held annual auctions for on-shore and offshore areas. Many investors and experts consider annual auctions essential to the long-term health of the Brazilian oil industry, allowing companies to plan while knowing they have or can buy new projects to replace any old or diminished field. During the 1999-2008 period Brazil experienced rapid oil output growth that transformed the economy from one dependent on imports into a net exporter of crude. Oil output rose, on average, more than 5 percent a year in the period. Brazil ended its annual auction system after a series of giant offshore discoveries south of Rio de Janeiro known as the "subsalt" starting in 2007. Subsalt refers to oil strikes made under a layer of salt deep beneath the seabed. The auctions were canceled to allow the government time to draft and pass a law that boosted government control over those new discoveries and adjacent areas. Since then, output has faltered, growing an average of 2.35 percent a year. Output even fell 5.3 percent in 2012. The first auction under that new framework is scheduled for Monday. Chambriard, who has headed the regulator known as ANP since last year, has billed the sale of the Libra area, which contains an estimated 8 billion to 12 billion barrels of oil, as the largest offshore oil prospect ever sold. If the projection holds up, Libra could nearly double Brazil's oil reserves and would contain enough oil to cover world crude demand for as much as 19 weeks. Chambriard said Thursday that she expects production to peak in Libra at about 1.4 million barrels a day in a decade, though some in the government suggested that production could rise to more than 2 million barrels a day. That auction will be for a production-sharing contract, an accord that will go the company or group that offers Brazil the largest share of "profit oil," or oil produced after investment costs are recouped, to sell on its own account. State-run Petroleo Brasileiro SA (PETR4.SA), or Petrobras, will have to lead any winning group as operator of Libra and take on a minimum 30 percent ownership and investment stake. Chambriard said it was also unlikely that a new production-sharing auction would be held next year as the oil prospects in the area covered by the new framework are too large and require too much investment to be tendered on an annual basis. The concession system gives exploration and production rights to the highest bidder, Brazilian or foreign, in exchange for an exploration commitment, an agreement to buy a minimum of related goods and services in Brazil- usually more than half - and the payment of a royalty. All oil produced is owned by the concession holder and can be sold wherever the owner wishes. This system still applies to all areas outside the Subsalt Polygon, an area that comprises most of the Campo and Santos offshore basins south and northeast of Rio de Janeiro, already home to more than 80 percent of Brazilian output. Those basins are also where the main subsalt finds were made. All future development in the Subsalt Polygon will be done under production sharing contracts. (Reporting by Jeb Blount; Edited by Alonso Soto and Jim Marshall) ============