Jason Barton

Professional Information and Energy News

Patience, Efficiency Are Key to Safe, Profitable Use of Brazil’s Oil

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There are a lot of people with a lot to gain from drilling this “presal” oil off Brazil’s coast as quickly as possible. I have worked with some of them and understand their desire to move forward with the extraction now, not later. I also understand their many good intentions as well as their confidence that the oil can be extracted safely using existing technology, even if I don’t agree.

I can also attest, from personal experience, to the truth of the article’s contention that government bureaucracy will be as inefficient at getting the job done as it will be at distributing any public funds to Brazilians and much needed government services. The barrier however, is not the Brazilian government, but existing technology.

And yes, prices at the pump are rising with no sign of abating, but it’s hard to see how speeding this oil drilling ahead in the next few years will do much to ease those prices in anything but the longest term. Plus, oil is a great example for supply creating its own demand. Increase the supply of oil and the lowered prices will drive us to use enough gasoline, diesel, and jet fuel to keep demand and prices high.

The first paragraph in the article below describes a process that is every bit as difficult, and as dangerous, as the one employed for the Deepwater Horizon platform formerly situated in the Gulf of Mexico. These processes and others like them can be and have been done safely, though recent experience tells us that not only is this safety far from ensured, but also that if something goes wrong, the consequences remind us exactly what the word “disaster” means.

The pressure to drill now is exacerbated by the high current demand for oil in the face of growing constraints. Some are reluctant to continue drilling off U.S. shores while the people and economies of Louisiana and other Gulf states are still reeling from last summer’s spill. Regardless of your political stripe, Middle East politics make us all a bit uneasy, especially when we think of how much of our oil comes from despotic and unstable regimes there.

Slowing our demand for oil, first by increasing efficiency and reducing use of transportation fuels, and then by continuing to develop viable alternatives to petroleum, will decrease the drive to rush drilling in places like the oil fields over 7000m beneath the ocean’s surface, through 3000m of rock and another 2000m of salt.

Given time, companies such as Petrobras will certainly improve technologies so that this oil can be reached more safely, with more effective failsafes in the event something does go wrong, and likely it will all be doable at lower costs, to the companies doing the drilling and to the consumer.

The additional time will also allow Brazil to continue eliminating corruption and streamlining its bureaucracy so that the permitting process is more efficient, as are the avenues through which the government spends its revenues and improves infrastructure.

These factors combine to create win-win-win situations for people, profit, and ecological health. Patience and efficiency are key.

Brazil’s offshore oil

In deep waters

Extracting the black gold buried beneath the South Atlantic will be hard. Spending the profits wisely will be harder

Feb 3rd 2011 | CIDADE DE ANGRA DOS REIS | From The Economist print edition

THE coast of Rio de Janeiro is 290km and 70 minutes away as the helicopter flies. High overhead, gas is flaring; underfoot, enough oil to fill 330,000 barrels is waiting to be offloaded. The ocean floor is 2,150 metres beneath. Drill past 3,000 metres of rock and you will hit a layer of salt 2,140m thick. Only after boring through that fossilised ocean will you strike oil—6.5 billion barrels’ worth in the “Lula” field alone. (Supposedly, it is named for the Portuguese word for squid, not the former president called Lula for his curly hair.)

[…]

More hopeful is the prospect that technological progress, led by Petrobras, can diversify Brazil’s economy. The company employs more than 1,600 people in research and development, says Carlos Fraga, who leads these efforts. It also works with 85 Brazilian universities and research institutes, and for every one of its own researchers, another ten outside the company are working on its projects full-time. A technology cluster is springing up around Petrobras’s research labs in Rio, with university facilities alongside new $50m laboratories built by the likes of General Electric and Schlumberger.

From this perspective, the technical obstacles of sub-salt drilling look like an opportunity. Exploiting offshore oil, says Mr Fraga, could spur Brazilian innovation just as the space race did in the United States. “Just extracting the oil is not enough to move Brazil on in technological development,” says Segen Estefan of the Federal University of Rio de Janeiro. “These are finite resources. Brazil must seize the moment to lead in technology, not just in extracting and exporting raw materials.”

Read the entire article here.