Just a year ago the energy world was atwitter about the potential of deepwater exploration. Especially attractive were the three areas that made up what was being called the Golden Triangle: parts of West Africa, along with the U.S. Gulf of Mexico, and Brazil's Santos Basin.
Now, only Africa continues along, mostly unchanged. Following the April BP
That hype began in 2007 when Petrobras
The excitement surrounding Tupi quickly attracted operators from around the world, including Exxon, which teamed up with U.S.-based Hess
It's normal to determine the size of a structure by drilling other holes near a discovery well. Unfortunately, and maybe even surprisingly, the second Exxon and Hess well, called Guarani, ultimately proved to be a dry hole. That was a disappointment, but not a major setback. But as Exxon has just confirmed, its third well, the Sabia-1, was also dry.
The approach the companies will now take thus becomes open to question. The deepwater wells in Brazil cost six figures each -- which obviously is tougher on Hess than on Exxon. But despite Petrobras and others having added discoveries after Tupi, it's now clear that finding oil in the pre-salt isn't a sure thing. (We're wondering how the ebullience that resulted from the Azulao well could have been so far off the mark.)
But clearly the Santos Basin isn't about to become devoid of activity. Petrobras recently completed a record share offering that added nearly $70 billion to its coffers for an ambitious multiyear program. And other companies -- including Spain's Repsol
ExxonMobil will likely just pause to re-evaluate its plans for Brazil. There's clearly oil in the Santos Basin, and I'm betting that the big company will ultimately find its share.