A LITTLE BIT OF HOODOO

Shell’s Brazil Wells Come Up Dry

By Irina Slav - May 17, 2022

Three exploration wells that Shell has drilled in Brazil in hopes of making the next big discovery have come up dry, Bloomberg has reported, citing an analyst with Wood Mackenzie.

This latest turn of events adds to bad news for Brazil and supermajors’ plans to turn it into the next hot spot in oil.

Shell and several partners paid $1 billion for drilling rights for three offshore blocks in Brazil and spent three years drilling exploratory wells. None of them turned up commercially viable volumes of oil, Marcelo de Assis, chief of Latin America upstream research at Wood Mackenzie, told Bloomberg.

Exxon previously suffered even greater losses, of about $1.6 billion, when its own exploratory wells drilled in Brazilian waters over the past three years turned out unviable.

These developments are casting a thick shadow over the expected boom of crude oil production in Brazil thanks to its prolific presalt offshore zone. However, some believe all the big discoveries have already been made.

“In Santos and Campos, the big discoveries have already been made,” Adriano Pires, who was one of the candidates for new chief executive of Petrobras, told Bloomberg. “In the Equatorial Margin, we could still have surprising discoveries.”

Meanwhile, Petrobras is also drilling. Earlier this month, BNAmericas reported the Brazilian state-owned oil major planned to drill three offshore wells this year in two offshore blocks.

According to the Bloomberg report, however, since the discovery of fields such as Mero and Buzios in the Santos Basin, all of Petrobras’s finds have been relatively minor. The almost 100-percent success rate in discoveries that the Brazilian company boasted a decade ago is now long gone. Now, the success rates have fallen to what appears to be the average for the industry, at a little over a quarter of all wells drilled.