(Bloomberg) – Equinor ASA says it could soon start producing at a large deepwater oil field off the coast of Brazil after suffering delays at a project that’s crucial for its growth strategy.
The $8 billion Bacalhau project, the largest new development in its business plan, was initially scheduled to start in 2024. Equinor will start with one well during the commissioning process — when technicians and engineers test and activate the equipment — and more wells are scheduled to come on line in the months ahead, the company said Friday in a response to emailed questions from Bloomberg News.
The delays to the initial startup at the Bacalhau oil field, situated off the coast of São Paulo, underscore the technological challenges oil producers face when developing projects more than 1,000 feet underwater. It’s also a speed bump for Equinor’s growth strategy.
Bacalhau is expected to produce as much as 220,000 bpd. It was one of the first assets Brazil’s state oil company, Petroleo Brasileiro SA, sold when it began divesting some of its oil fields a decade ago, underscoring how Bacalhau is even more complex than other projects in Brazil’s so-called pre-salt region.
“Ultra-deep reservoirs, high pressure, and full gas reinjection have stretched costs and project timelines,” said Andre Fagundes, a vice president at energy consultancy Welligence who covers Brazil. “As first oil approaches, Bacalhau remains a defining test of Equinor’s ability to deliver complex pre-salt projects at scale.”
Equinor began a program to drill a total of 19 wells at Bacalhau in 2022. Chief Financial Officer Torgrim Reitan said in an earnings call on July 23 that the project was “going according to plan” and that Equinor would have “a handful of wells producing by year-end.”
The elevated levels of reservoir pressure at the field make it technically complex. Equinor said it requires high-pressure compressors to be able to reinject the gas, and that it will flare from the first well until it has tested equipment needed to inject the fuel back into the reservoir.
Bacalhau is the first project in the pre-salt region that’s been developed by a foreign oil company. The floating production and storage vessel, known as an FPSO, arrived at Bacalhau in late February.
It has taken Equinor longer to reach first oil at the FPSO compared with similar vessels operated by state-controlled Petroleo Brasileiro SA. Petrobras, as the Rio de Janeiro-based producer is known, reached first oil at the Alexandre de Gusmão FPSO in May, only three months after it had arrived at the field.
