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Lloyds List: Shell leaves it late to declare new Brazilian project

Published: Jan 02, 2007

SHELL has another deepwater oil project in the pipeline off Brazil after declaring the BS-4 oil discoveries a commercial project before the relinquishment deadline, writes Martyn Wingrove.

The Anglo-Dutch oil major will need to lease another floating production storage and offloading vessel and may order a subsea production system to develop the Santos basin heavy oil fields in block BS-4

Shell holds a 40% working interest in the block with state group Petrobras holding another 40% and US major Chevron 20%.

It is thought around 300m barrels of oil have been found in the block but there will be challenges as the crude is viscous and the field is in 1,500 m of water.

Shell submitted its declaration of commerciality almost at the last minute as it would have been forced to hand it back to the Brazilian government at the end of the year.

‘We know we have to continue to work on the evaluation of the discoveries and on the definition of the development concept,’ said John Haney, vice-president of Shell’s Brazilian upstream business.

Shell could be in the market for an FPSO and may opt to install a subsea separation and processing system to improve oil recovery.

The majority of recent new oilfield projects in Brazil have involved a leased FPSO and a network of subsea facilities.

Shell’s own BC-10 project in the Campos basin is the group’s second to move towards production and will involve an FPSO to produce four fields. It will use the latest subsea separation and pumping technologies to increase oil recovery.

Last month Shell contracted Subsea 7 to fabricate and install subsea systems including six steel risers and 90 km of subsea flowlines.

Shell has also contracted SBM Offshore to lease an FPSO vessel for 15 years from 2009 for the BC-10 project. It will have production capacity of 100,000 barrels a day.

Shell is the largest non-state-run producer of crude in Brazil as it operates the Bijupira and Salema oil fields in the Campos basin.

– Petrobras has started commercial oil production from the Jubarte field in the Campos basin after its P-34 FPSO was connected to the subsea systems.

Two oil wells are linked to the vessel to produce around 30,000 barrels a day, while another two will be brought on stream during the first half of this year.

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