ExxonMobil and Equinor plan to expand oil operations in Brazil - Energy

Oil and gas companies ExxonMobil and Equinor are preparing to expand their offshore oil operations off the Brazilian coast, with the aim of exploring new areas and increasing production.

In this context, the two companies revealed that they are taking steps to expand an oil project worth $8 billion, and boost production in the Baklio oil field, which is Equinor’s largest project outside Norway with more than one billion barrels of oil.

These plans include the construction of a second drilling rig, another floating production platform, and a gas pipeline more than 100 miles long.

ExxonMobil and Equinor each own a 40% stake in the Baklio field, while Petrogal Brazil owns the remaining 20%.

Expansion plans

ExxonMobil and Equinor expect first oil production from the Baklio field in 2024, and oil and gas production is scheduled to reach approximately 220,000 barrels per day.

ExxonMobil and Equinor
Floating production, storage and offloading unit designed for the Baklio field – photo from MODC website

The two companies also plan to drill a new appraisal well north of the field next year, to extract reserves for the development of the second phase, in addition to evaluating the award of contracts to build a second drilling rig.

The official spokesperson for Equinor stated that it is scheduled to start pre-drilling wells for the first stage during the third quarter of this year, according to Reuters.

Equinor said the break-even point – the point at which expenditures and revenues are equal – is less than $35 a barrel, according to previous statements by the company.

Investments in the second phase of the project can double once the new exploration works are successful, and this will depend on the field producing sufficient quantities of oil to build a second floating platform or developing a pipeline to transport natural gas from the field to shore.

ExxonMobil and Equinor can use an underwater connection if the results show that a second platform is not needed, and the wells are connected to the first floating platform.

The Japanese company “MODC” is building the first floating production, storage and offloading unit, as well as it is designed to reduce the intensity of greenhouse gas emissions by 65%.

start digging

Last year, ExxonMobil and Equinor signed a $380 million, 4-year contract with Seadrill to begin first-stage drilling in the field, according to a final investment decision.

Paglio is the first Brazilian pre-salt field to be developed by other companies, not the state-controlled Petroleo Brasileiro (Petrobras).

ExxonMobil and Equinor
Equinor’s logo – Image via Reuters

The Brazilian company discovered the Baklio field in 2012, with a water depth of about 2,000 meters, but it was forced to sell it to pay off debts.

According to Equinor’s statement, Seadrill’s West Saturn rig will begin drilling the first 6 of 19 certified wells in Bucklew.

Emission reduction

Earlier, the International Energy Agency called on companies to stop investing in new oil and gas projects to achieve carbon neutrality goals by mid-century.

Oil companies are facing pressure from investors and environmental activists to come up with plans to combat climate change, so Exxon, Equinor and Petrogal Brasil have announced an $8 billion investment in developing the deepwater Baklio field, which they expect will help reduce emissions.

The two companies indicated that the field will produce approximately 9 kilograms of carbon dioxide per barrel, compared to a global average of 17 kilograms per barrel.

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