Jason Barton

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Archive for the ‘Petrobras’ tag

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.

Oil policy in Brazil: Raining on Rio’s parade

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Why The Economist would choose this picture for this article is beyond me. It’s definitely not relevant, and between the picture and the quote from President Lula chosen to end the first paragraph, it isn’t an accurate or flattering depiction of Brazilians.

As for the rest of the content of the article, it seems a bit premature, and a matter best settled by Brazilians. Petrobras estimates it will take as much as 7 more years before they begin to see any revenues from the extremely difficult to reach oil, during which time this decision will certainly be revisited.

The Americas

Oil policy in Brazil

Raining on Rio’s parade

An Olympic city faces a sudden loss of oil revenue

Apr 8th 2010 | RIO DE JANEIRO | From The Economist print edition

 Bug-eyed at the prospect of losing their oil fix

THEIR new-found hoard of oil still lies 7,000 metres (23,000 feet) beneath the Atlantic Ocean, but the signs are that it has already gone to Brazilian officialdom’s head. No sooner had Petrobras, the national oil company, announced the discovery of a gigantic cache of crude oil buried beneath a thick layer of salt below the ocean floor than every vested interest in the country had a plan to spend the windfall. Brazil’s 27 governors and its 5,600 mayors are all looking to garnish their budgets. Civic groups want their cut of royalties to fight poverty, scientists to fight climate change and students to improve education. “Pre-salt oil is like a pretty woman on a dance floor full of men,” Luiz Inácio Lula da Silva, Brazil’s president, put it bluntly. “Everybody wants a go.”

Read the entire article here.

Written by Jason

April 9th, 2010 at 3:11 pm

Petrobras imports gasoline on demand surge

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Darn! Brazil was doing so well with their energy independence. Even with slumping ethanol supplies, demand side management looks like it could have solved this problem without the imports.

SAO PAULO, Feb 17 (Reuters) – Brazil’s state-controlled oil company Petrobras (PETR4.SA)(PBR.N) said on Wednesday it is importing gasoline to ensure supplies to the domestic market after a spike in demand for the motor fuel.

Demand for gasoline in Brazil has jumped on falling production of sugar cane ethanol, which in Brazil is often used as an alternative fuel for cars, as heavy rains cut into the sugar crop.

Read the entire article here.

Written by Jason

February 18th, 2010 at 7:47 am

Brazil opens world’s first ethanol-fired power plant

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Projects like this are encouraging, especially if the priority remains focused on decreasing energy consumption. Other companies, such as Community Power Corporation (CPC) of Colorado, already have modular electricity generators that use biomass as a feedstock. The high glucose content in sugarcane should make Petrobras and GE’s efforts that much more efficient. Brazil’s ethanol refineries generate about 3% of the county’s electricity by burning the biomass left over after the sugar is extracted from cane to make ethanol for transportation. So this project has the potential to create highly versatile powerplants that can produce electricity as well as liquid fuels, depending on the proportion demanded by each location. The aspect to keep in mind when considering these developments is that unlike CPC, which uses waste products to generate electricity, sugarcane needs to be grown on arable land, a limited and highly valuable resource.

* State-run Petrobras opens first ethanol power plant

* Petrobras, GE, hoping other governments will adopt

By Denise Luna

JUIZ DE FORA, Brazil, Jan 19 (Reuters) – Brazil on Tuesday opened the world’s first ethanol-fueled power plant in an effort by the South American biofuels giant to increase the global use of ethanol and boost its clean power generation.

State-run oil giant Petrobras (PETR4.SA)(PBR.N) and General Electric Co (GE.N), which helped design the plant, are betting that increased use of ethanol generation by green-conscious countries will boost demand for the product.

Brazil, the top global ethanol exporter, is already in talks with Japan to develop biofuels power generation there.

Read the entire article here.