Shale could help Brazil gas output

Shale gas is the latest topic on Brazil's agenda to bolster its hydrocarbon reserves, as officials from several federal agencies visited Texas in May to learn more about the process.

The group — led by Joao Henrique Nascimento, a director at the government's investment and partners program — visited with oil and gas regulator the Texas Railroad Commission and discussed possible cooperation on the oversight of onshore hydrocarbons production. The group also visited a natural gas field owned by China's CNOOC, including production wells and treatment units.

Natural gas from US shale formations lead to a surge in production that lowered prices for consumers, even amid times of global turmoil, and also reduced greenhouse gas (GHG) emissions by displacing more-polluting power plant fuels like coal and fuel oil, according to Lucas Ribeiro, an economist specialized in energy and regulation, author of the paper "Unconventional gas: Forgotten energy sovereignty in the interior of Brazil."

Shale gas exploration has been controversial in Brazil for at least a decade. Contracts awarded at an auction round aimed at expanding natural gas exploration and involving hydraulic fracturing in 2014 were suspended because of environmental concerns. Hydrocarbons regulator ANP — then led by now state-controlled Petrobras' chief executive Magda Chambriard — officially terminated the contracts in 2019.

Recently, some lawmakers in states like Bahia and Mato Grosso, presented proposals to prohibit shale exploration. In Mato Grosso the governor vetoed a bill last week, saying it was a federal regulatory matter. In the national Congress a similar bill has not advanced since 2019.

Hydraulic fracturing in unconventional reservoirs involves injecting large volumes of fluids at high pressure into formations that are inaccessible through most techniques. Environmental fears stem from the potential for groundwater contamination.

Shale gas is among several Brazilian strategies to grow its gas supply on mines and energy minister Alexandre Silveira's agenda.

Brazil has been importing gas from the US for decades, including shale gas, and the Brazilian market is following the development of Argentina's Vaca Muerta shale basin, according to Fernando Xavier, partner and head of oil and gas at the Machado Meyer law firm. Brazil's own unconventional gas reserve exploration should remain on the table, he said.

Vaca Muerta holds 308 Tcf of natural gas and 16bn bl of crude, according to the US Energy Information Administration.

By Betina Moura