El Paso to invest US$510mn in oil, gas E&P through 2006

US oil and gas company El Paso plans to invest as much as US$510mn in Brazil through 2006, mostly on the development and appraisal of its oil and gas fields, the company's South American Production President Ric Barton said Friday. Planned investment for 2004 is US$110mn, and US$400mn in the two following years. This follows US$100mn invested in 2003 and US$300mn invested since 2000, when operations in the country started. Along with Shell, El Paso is the only foreign company to have commercial exploration success in Brazil since the country eased its state monopoly of the oil industry. More than 30 companies have successfully bid for exploration blocks. "Our strategy has proven very successful because we decided to prospect in shallow waters in regions that already have producing wells," Barton said. "The bottom line is a reliance on strong technical skills." El Paso is exploring 14 different oil blocks in Brazil by itself and with other companies. All except one are offshore in the northern Potiguar basin, the northeastern Camamu Basin and the southeastern Espirito Santo and Santos basins. In the Potiguar basin, El Paso could drill a horizontal well to explore its 100 million cubic feet a day (mcf/d) deliverability. Santos has proven 88 billion cubic feet (bcf) reserves in two drilled wells in the BS1-Luana discovery, and El Paso's options there for building exploration facilities range from a US$36.9mn investment in sub-sea tieback to the Merluza field, to a US$240mn investment in the drilling of a third well and laying a pipeline to shore. In Camamu, where there are net reserves of 780bcf, the company is studying ways to make the wells profitable.