Cleaner oil gives Brazil an advantage in the decarbonization race

Brazil plays a prominent role in the energy transition thanks to the favorable conditions for the production of a wide range of renewable sources, from traditional wind and solar to so-called “future” fuels, such as green hydrogen.

But the country has another asset, this one less obvious: oil. Yes, that’s him.

It is a fact that climate change has led to the imposition of targets for “decarbonization” of the economy, which requires the gradual abandonment of fossil sources such as coal and oil itself. However, this process will not be quick or cheap – nor will it be able to completely dispense with oil in the short and medium term.

In this scenario, oil from the pre-salt layer – which currently accounts for three quarters of national production – emerges as a good transition alternative. The reason: it is “cleaner” than its competitors. It emits up to 70% less greenhouse gases than the world average, according to Petrobras.

The company seeks to highlight this point at a time when Brazil is questioned, in international forums, for positioning itself as a “green” country and at the same time allocating billions of dollars to the search for new oil fields.

Pre-salt oil is lighter and less polluting than average

Compared to other oils extracted from the marine subsoil (“post-salt” layer) and from onshore fields, pre-salt oil is less dense and has less sulfur in its composition. As a result, it gives rise to a larger fraction of noble derivatives, such as aviation kerosene and gasoline, and is therefore worth more than heavy oil. As it is also less polluting, it tends to be increasingly valued amid the energy transition.

“The energy transition is very complex and Brazil is offering to meet a growing demand for decarbonized oil that not all countries meet. Those who will lead are Brazil, Kuwait and the United Arab Emirates. The world wants an increasingly refined product and ours has resilience and low carbonization”, says the president of the Brazilian Oil and Gas Institute (IBP), Roberto Ardenghy.

For the president of S&P Global Commodity Insights, Saugata Saha, countries that offer oil with low carbon emissions intensity stand out as suppliers in the global market when it comes to energy transition.

“In the past, the oil market took more into account the cost of production and the chemical aspects of the product, for example, whether the oil was light or heavy. The new factor entering these discussions is the carbon intensity of production. This is a big difference”, said the executive in an interview with the EPBR website.

Another good news for Brazil is that oil from the Equatorial Margin – a new exploratory frontier on the country’s north coast – also tends to be of the light type, judging by the oil that has already been discovered and is being explored in Guyana.

“Normally pre-salt oil contains less sulfur and other elements that contribute to the formation of atmospheric pollutants when burned. Furthermore, it is lighter oil, with low density, which means it contains less carbon per unit volume” , explains Leandra Ribeiro, strategic planning advisor at Pré-Sal Petróleo (PPSA), the state-owned company in charge of managing production sharing contracts.

Petrobras reinjects carbon dioxide into pre-salt fields

Two other aspects help pre-salt oil gain market muscle in the energy transition race. One of them, says Ardenghy, from IBP, is that lighter oil is more easily removed from the seabed. This reduces operating costs and is reflected in gains in competitiveness.

“It is a very popular oil in the world, as it is a light component with a low sulfur content. Nature already helped us at first,” he says.

The other aspect is that Brazil knew how to enhance nature through technology. Petrobras has developed a pioneering system to reduce the environmental footprint of the pre-salt.

Created around 15 years ago, as soon as the pre-salt was discovered, the system was named CCUS (Carbon Capture, Utilization and Storage) – an acronym that in Portuguese means “carbon capture, use and storage”.

In this system, the crude oil “sucked” by platform ships (known in the sector by the acronym FPSO) undergoes treatment in which carbon dioxide (CO₂) is separated and then reinjected into the well.

Petrobras is also studying implementing an unprecedented technology called HISEP to further increase efficiency and decarbonization. The pilot project, announced this Tuesday (20), in Rio de Janeiro, carries out the underwater separation of carbon still on the seabed, and not in the FPSO. It will begin to be put into practice in the Mero field, in the Santos Basin.

According to Petrobras, all 21 pre-salt platforms in the Santos Basin have CCUS technology. In 2022, says the company, 10.6 million tons of CO₂ were reinjected into pre-salt reservoirs – a world record, which represents 25% of the total reinjected by the industry in the world that year. The goal is to reach 80 million tons reinjected by 2025.

The oil company also uses other projects to mitigate greenhouse gas emissions, such as reducing gas burning in torches (flaring), controlled gas release (venting) and leaks (fugitive emissions).

Leandra Ribeiro, from PPSA, adds that, among the tools for decarbonizing oil in the pre-salt industry, electrification of platform equipment, use of hybrid vessels, operation with combined cycle turbines and increased productivity and efficiency in production processes in general.

Pre-salt oil in Brazil produces around 15 kilos of CO₂ per barrel. It is half the world average, highlights Ardenghy, from IBP, who adds: “In Canada it can be 70 kilos of CO₂ per barrel”.

In 2023, 76% of all oil and gas produced in Brazil came from the pre-salt. There were just over 3.3 million barrels of oil equivalent per day, according to the National Petroleum, Natural Gas and Biofuels Agency (ANP).

The Tupi field, in the Santos Basin, is the largest deep water producing field in the world, according to Petrobras. With 60 wells, it is the one that produces the most oil (with 804 thousand barrels per day) and also natural gas (40 million cubic meters per day) in Brazil.

Equatorial Margin: expectations of large deposits of light oil

Wanted by People’s Gazette, Petrobras did not respond until the conclusion of this report. On its website, it informs that the pre-salt continues to be the center of its operations, “as its oil emits up to 70% less CO₂ equivalent per barrel than the world average”.

The company notes that the International Energy Agency (IEA) predicts demand for 20 million barrels per day of oil by 2050 – and most of this volume has not yet been discovered.

Hence the company’s effort to convince Ibama to allow oil exploration in the Equatorial Margin. In a more conservative projection, the Ministry of Mines and Energy (MME) believes that there are around 10 billion commercially recoverable barrels in this new frontier.

This volume is close to that of proven pre-salt reserves – 11.5 billion barrels by the end of 2022, according to the ANP.

“By 2028, we will invest US$7.5 billion in the exploration of new oil and gas frontiers, with 41.5% of the amount allocated to the Equatorial Margin. The other 41.4% will be allocated to the Southeast Basins and the remainder , exploration in other countries”, says Petrobras.

As the Equatorial Margin has geological characteristics similar to those on the coast of Guyana, the expectation is that the oil will also be similar.

“The Brazilian Equatorial Margin is strategic because we have high potential there for discovering light oil, which has a greater commercial value, in addition to a strategic geopolitical location, close to the largest consumer markets in the world”, said Raphael Moura, then director of ANP, in a seminar on the region in 2021.

Petrobras wants to use pre-salt technology to reach low-carbon hydrogen

Although the current focus is the pre-salt, there are already eyes on new businesses. The next step is to use CCUS technology to achieve low-carbon hydrogen.

In December, Petrobras, owner of the technology, signed a protocol of intentions with the government of Rio de Janeiro to implement a pilot project for a CO₂ capture and storage hub in the state, including low-carbon hydrogen.

The proposal is to store 100 thousand tons of CO₂ per year from a Cabiúnas Gas Treatment Unit, in Macaé (RJ). This carbon will be sent through a pipeline and treated at the Barra do Furado Station, in the municipality of Quissamã, to then be injected and stored in a saline reservoir.

Once carbon capture in the region takes off, the idea is to scale the process and sell the carbon credits generated, as the director of Energy Transition and Sustainability at the state-owned company, Maurício Tolmasquim, told the newspaper “O Estado de S. Paulo” .

“In the future, we can also generate credits in the market. Let’s get into capture, which is CCUS, and can even generate credits [de carbono]”, stated the executive.