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Petrobras to Drill Horizontal Wells at Iara in Brazil, Galp Says

Petroleo Brasileiro SA and partners BG Group Plc (BG/) and Galp Energia SGPS SA will drill horizontal wells to compensate for low flow rates at one of Brazil’s largest oil finds, according to Galp’s chief executive officer.

“The Iara field is an excellent field, with great oil resources, commercially viable and valuable, but it has relatively low permeability,” Manuel Ferreira de Oliveira told reporters in Rio de Janeiro today. “We are going to work with horizontal wells to increase well production” to the level of other nearby fields, he said.

Petrobras, as Brazil’s state-owned producer is known, is the operator of Iara and said in 2008 that the field held as much as 4 billion barrels of recoverable reserves. BG, the U.K.’s No. 3 gas producer, and Lisbon-based Galp hold minority stakes in the field, about 230 kilometers (143 miles) from the coast of Rio de Janeiro and one of Brazil’s five biggest discoveries. Petrobras is already pumping as much as 36,000 barrels out of individual wells at the nearby Lula field.

Lula and Iara are located on the same exploration block and are part of the so-called pre-salt region, discovered by Petrobras in 2007 when it found crude trapped under a layer of salt below the Atlantic seabed. Growing pre-salt output helped both BG and Galp beat earnings estimates in the first quarter.

Petrobras’s press office didn’t immediately respond to a request seeking comment. The Rio-based company said May 13 that it may “use special techniques for stimulation and well geometry” at Iara. The partners still have to declare the field commercial, Ferreira de Oliveira said today.

To contact the reporter on this story: Rodrigo Orihuela in Rio de Janeiro at rorihuela@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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