Petrobras and BG have made numerous further discoveries offshore Brazil since then, confirming the enormous potential of the basin. Now, London oil and gas explorers are starting to test the potential of several of the other most promising pre-salt basins around the world.
Peter Bassett, oil and gas analyst at Westhouse Securities, explains that pre-salt basins are found in the marine sections of the Brazilian coast, some of the West African coast - for example in Angola and northern Namibia - and parts of Kazakhstan. Such basins are called 'pre-salt' because they formed in rock intervals that were subsequently encased beneath thick layers of salt that can in some cases measure 2km in depth. The total drilling depth to reach these rocks can measure up to 7km.
While drilling to depths of 7km is challenging, it lies well within the capabilities of the oil and gas industry. However, shooting seismic surveys through thick layers of salt is not so easy. The salt tends to scatter seismic waves into multiple paths, which can blur the resultant images and make it difficult to pinpoint the optimum drill locations.
Drilling wells in pre-salt basins provides further challenges since thick layers of salt behave like unstable plastic when subjected to the huge pressures and temperatures encountered at such depths. This can lead to slippage of drilling equipment. Yet, despite these challenges of imaging and drilling, global pre-salt basins are vital because they have been found to host very large accumulations of oil and gas.
One reason why pre-salt basins can be so highly prospective is that the layer of thick salt forms an impermeable barrier that is very effective at preventing hydrocarbons from seeping away. Petrobras estimates that the Tupi field could hold between 5bn and 8bn barrels of recoverable oil equivalent (boe). This makes Tupi the largest oil discovery since the 13-bn-barrel Kashagan field in Kazakhstan, which was discovered in 2000 and is also partly pre-salt in nature.
Moreover, the prolific Pre-Caspian Basin that hosts Kashagan also hosts other super-giant fields lying in salt and pre-salt geology, including Karachaganak and Tengiz. Petrobras's Guara discovery, which like Tupi also lies in the Santos Basin, holds an estimated 1.1bn to 2bn boe.
Total discoveries of resources in Brazil in 2008 ranked among the top 10 largest in the world that year, according to Cambridge Energy Research Associates (CERA). CERA's preliminary evaluation estimated that those discoveries totalled more than 50bn barrels of oil, almost all of which lies beneath thick layers of salt.
A spokesperson for oil major Royal Dutch Shell commented: 'With these pre-salt discoveries, Brazil becomes a key player in helping the world meet its future energy demand.' While Shell's deepwater fields offshore Brazil don't lie beneath salt, approximately 10 per cent of the group's production (in total 3.2m barrels of oil and gas per day) derives from pre-salt reservoirs in the Gulf of Mexico, Groningen in the Netherlands and Oman. Shell uses technology to correct the distortion of seismic surveys beneath thick salt and boasts a track record of high recovery rates from such fields.
Of even keener interest to investors in small-cap oil and gas firms are the ongoing and near-term pre-salt drilling campaigns in Kazakhstan and offshore Namibia. Indeed, 2012 could prove a momentous year in pre-salt exploration by London's junior explorers.
Max Petroleum is currently drilling the Emba B prospect in the Pre-Caspian Basin in Kazakhstan. Emba B has an estimated resource potential of 467m boe and around a 29 per cent geological chance of success. The well started drilling early last November and, due to a number of technical challenges, is now expected to reach its target depth of 7.25km in autumn 2012.
Emba B on its own doesn't boast the same massive scale as pre-salt prospects offshore Brazil and Namibia, although Max has ten prospects and five leads in its pre-salt portfolio. These range in size from 100m to 600m boe and Max estimates that these prospects and leads could in aggregate hold over four billion barrels of resources.
Most of these potential resources, including Emba B, are hosted in what Max terms 'Type II' prospects. These are believed to be ancient coral reefs that can be likened to the super-giant fields found in the Pre-Caspian Basin. The significance of Type II prospects is that they all share a common primary risk factor: reservoir quality, and in particular porosity, which is the ability of a reservoir to absorb hydrocarbons.
What this means is that should the Emba B well make a successful discovery that proves good reservoir quality, the result would greatly de-risk the other Type II prospects in Max's portfolio. A successful drill result would almost certainly prove transformational for Max Petroleum and its investors.
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