Equinor makes FID for $8bn Bacalhau Phase 1 project

June 1, 2021, by Bojan Lepic

Norwegian oil major Equinor, along with its partners, has decided to develop phase one of the Bacalhau field in the Brazilian pre-salt Santos area.

Equinor said on Tuesday that the investment was worth around $8 billion. Its partners in the project are ExxonMobil, Petrogal Brasil, and Pré-sal Petróleo SA (PPSA).

Arne Sigve Nylund, Equinor’s executive vice president for projects, drilling, and procurement, said: “This is an exciting day. 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.

“Bacalhau is a globally competitive project with a break-even below $35 in a key energy region. Estimated recoverable reserves for the first phase are more than one billion barrels of oil”.

Equinor added that the development plan for the project was approved by the Brazilian National Agency of Petroleum, Natural Gas, and Biofuels (ANP) in March 2021.

Veronica Coelho, Equinor’s country manager in Brazil, stated: “Bacalhau is an important step towards the realization of our strategic ambition to deepen our presence in Brazil. It is also an important project for the country, as it represents significant investments, ripple effects in the supply chain and local job creation”.

Currently, first oil is planned for 2024 but due to the COVID-19 pandemic and related uncertainties, project plans may be adjusted in response to health and safety restrictions.

Juan Lessmann, lead country manager for ExxonMobil in Brazil, added: “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.

“This project has progressed due to the strong collaboration between ExxonMobil, Equinor, Petrogal, and the government”.

The Bacalhau field is situated across two licenses, BM-S-8 and Norte de Carcará. The resource is a high-quality carbonate reservoir, containing light oil with minimal contaminants.

The development will consist of 19 subsea wells tied back to a floating production, storage, and offloading unit (FPSO) located at the field. This 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 1 will be re-injected in the reservoir. The FPSO contractor will operate the FPSO for the first year. After that, Equinor plans to operate the facilities until the end of the license period.

Significant efforts have been made to reduce emissions from the production phase. Lifetime average CO2 intensity is expected to be less than 9 kilograms per barrel produced, significantly lower than the global average of 17 kilograms per barrel. Work will continue through the lifetime of the field to reduce emissions and increase energy efficiency.

Thore Kristiansen, Galp’s upstream COO, said: “Bacalhau is a world-class offshore project, with low breakeven and low carbon emissions. This project will significantly contribute to Galp´s continued competitive upstream growth”.

Eduardo Gerk, PPSA’s president director, noted: “The Bacalhau field is an accomplishment over high-complexity technical challenges, without losing track of the positive economic and social aspects. The Bacalhau field represents the great benefit that foreign companies can bring to the development of the pre-salt and Brazil”.

Equinor has already awarded several contracts for work in the field. Early last year, Modec was announced as the provider of the FPSO for the project. Also last year, Baker Hughes, Halliburton, and Schlumberger were given contracts for drilling and well services on the Bacalhau field offshore Brazil.

More recently, the Norwegian oil firm secured a four-year firm contract with four one-year options for the West Saturn drillship. The rig was hired for work on the field and the start of operations is expected in the first quarter of 2022.