The South Atlantic's next wave of oil and gas exploration is likely to focus increasingly on ultra-deepwater prospects, with Brazil's untested Pelotas Basin emerging as one of the region's most promising frontiers, Wood Mackenzie strategists said in a report on Tuesday.
Wood Mackenzie analysts said that a comparison of the mature Santos Basin offshore Brazil and the lightly explored Southwest African Coastal Basin shows how improved seismic imaging and deeper-water exploration could unlock significant volumes in the Upper Cretaceous sandstone play.
The South Atlantic's five key offshore basins, Brazil's Campos and Santos, Guyana, Cote d'Ivoire and the Southwest African Coastal Basin, share geology formed after Africa and South America began separating during the Early Cretaceous.
Operators have drilled over 1,400 exploration wells across the five basins, with about a quarter resulting in discoveries. Wood Mackenzie said about 57% of those discoveries were in Upper Cretaceous sandstone plays.
However, the consultancy said that exploration maturity varies across the region.
Santos and Campos are mature basins, Guyana is in a period of strong exploration momentum, Cote d'Ivoire has yet to achieve a major step-change, while the Southwest African Coastal Basin remains untested relative to its mapped prospective area.
The shift toward deeper water began as companies moved beyond the shallow-water geology that had driven early exploration offshore Brazil.
Advances in seismic imaging and drilling technology opened up deeper parts of the South Atlantic, culminating in Exxon Mobil's (XOM) 2015 Liza discovery offshore Guyana, which helped establish the basin as one of the world's major new oil provinces.
Wood Mackenzie said the deeper margins contain some of the region's thickest reservoirs, most continuous fairways and most effective seals, supported by extensive post-rift sedimentation and basin-floor fan systems.
"Discovered volumes across the five basins confirm that the deeper the water, the larger the discovery," the consultancy said.
Wood Mackenzie analysts said Santos and the Southwest African Coastal Basin provide a useful comparison because they sit at opposite ends of the exploration cycle while sharing key geological characteristics.
Santos has been drilled for almost five decades and has extensive production and cost data, while the Southwest African Coastal Basin remains largely untested.
The two basins share an Aptian source-rock system and some reservoir intervals, allowing companies to make a more direct geological and economic comparison.
Exploration spending on the Santos Upper Cretaceous play has been absent since 2015, but the consultancy expects ultra-deepwater exploration to resume in the basin in 2027.
Together, Santos and the Southwest African Coastal Basin are projected to account for 43% of drilling across the relevant South Atlantic basins through 2028.
Wood Mackenzie said Santos' discovered ultra-deepwater reserves may also understate the basin's potential because earlier wells were drilled before the widespread adoption of ocean-bottom-node 3D seismic technology.
The technology can provide a more detailed picture of complex subsurface structures, potentially improve prospect definition and reduce exploration uncertainty.
The two most recent wells drilled in the Santos Cretaceous play produced larger discoveries, according to Wood Mackenzie, reinforcing the possibility that improved imaging and deeper-water targeting could deliver better results from the mature basin.
Meanwhile, geological and development characteristics are comparable, operating costs and fiscal terms create a larger distinction between the two margins than capital expenditure.
Wood Mackenzie estimates similar capital costs for the two basins, consistent with development concepts based on floating production, storage and offloading vessels.
Operating expenditure per barrel in Santos, however, is almost twice that of the Southwest African Coastal Basin.
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