July 26 (Bloomberg) -- BG Group Plc said test results at its Iara field in Brazil were “extremely good” and the reservoir size is similar to the nation’s largest field.
The British company along with Petroleo Brasileiro SA and Galp Energia SGPS SA this month completed an appraisal of the fourth well at the field, “which has oil in place similar to Lula,” BG said today in a statement. BG and its partners plan to install eight production units at Lula, which is the biggest oilfield in Brazil, and have so far designed two at Iara.
The comments about Iara were more optimistic than Chief Executive Officer Chris Finlayson’s guidance about the project in May, when he described it as having “poorer reservoir properties” than Lula. Today, in a conference call, he said it was “an absolutely excellent well.”
The well flowed 7,500 barrels a day during tests, which was limited by equipment in place, he said.
“This is extremely good news,” Finlayson said. “This is a key piece of information for our plans” as the companies evaluate an announcement on the commercial future of the project. He declined to discuss how BG might expand investment on the field.
The company’s comments “hinted at potential fast-tracking of the Iara project, given strong results from the Iara-4 appraisal well,” Oswald Clint, an analyst at Sanford C. Bernstein & Co. in London, wrote in an e-mailed report today.
Petrobras, the world’s biggest producer from deep waters, encountered rocks with low permeability in sections of the Iara field, three people with knowledge of the project said in May. 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 offshore Brazil.
Subsea 7 SA in June said it experienced delays at Guara-Lula fields in Brazil during the second quarter because of problems with the supply chain and adverse weather conditions.
BG and partners haven’t so far experienced any equipment delivery delays for their projects in Brazil, Finlayson said.
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