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Petrobras Brings in Garden Banks Winner

September 26, 2005
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Brazil's state oil company Petroleo Brasileiro (Petrobras) announced last Tuesday it had found "high quality" gas reserves in a Garden Banks 244 Block well, operated by its subsidiary Petrobras America in the deep water Gulf Of Mexico.

The company said the well was an extension of the Cottonwood discovery in over 2,000 feet of water. The formation was 132 feet thick. Other wells drilled by the previous operator resulted in only non-commercial volumes of oil and gas.

Petrobras America, which has been a very active and successful bidder in recent offshore lease sales in the GOM, said it intends to implement an accelerated development program for the Block 244 reserves, aiming to begin production by the start of 2007. The company picked up another Garden Banks block in the last lease sale by the Minerals Management Service (MMS). Petrobras has an 80% participation in the new discovery and is the block operator. Mariner Energy Inc. is the other partner, with the remaining 20%.

The Garden Banks site is one of the four focus areas selected by Petrobras with precedence for its exploratory activities in the American sector of the Gulf of Mexico. The other areas of interest are the ultra-deep waters of the Gulf, ultra-deep gas objectives in shallow waters and the western portion of the region. According to the company's business plan over the rest of the decade it will be allocating US$1.5 billion in GOM investment. Petrobras said it plans to enter the next decade with 100,000 boe/d production from the Gulf.

Petrobras America was the highest bidder for 53 blocks, the highest number of winning bids of any company in the western Gulf Sale 196, held by the MMS last month. The high bids totaled $30.1 million. Petrobras will be the operator on a set of blocks comprising eight prospects with high potential for oil and gas reserves, from which three are in the ultradeep waters, four in the western area of the Gulf and one in deep waters in the Garden Banks quadrant. (see NGI, Aug. 22).

The company has invested heavily in other Gulf lease sales in the past. Petrobras staked a claim in the Garden Banks area in 2001 when it was one of three companies which together put in the highest bid of $8.3 million for Garden Banks Block 245 in the MMS Lease Sale 180. The other two companies were Kerr-McGee and Amerada Hess. In that sale Petrobras had the third highest number of high bids (30) (see NGI, Aug. 27, 2001).

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