“Gas and oil exploration in Portugal will continue,” Luís Guerreiro, Director of Exploration and New Business at Partex, the Portuguese oil company owned by the Calouste Gulbenkian Foundation which is part of the Repsol consortium, told ECO123. Since 2011, this consortium has invested some 58 million euros purely in prospecting and research. A total of 170 wells have already been drilled, around 40 in the sea in Portuguese waters, and, according to the ENMC (National Authority for Fuel Market) “since 1939, over 900 million euros has been spent on prospecting or scientific research without ever having found oil or natural gas in sufficient quantity to make it worth extracting.” Is it worth continuing?
The price of a barrel of oil is falling, levels of CO2 emissions are very high, to what extent are these investments worthwhile?
With oil and gas, you don’t look at the short term, but rather at the long term. With offshore exploration, it can take ten years from exploration to what we call first oil or first gas. Profitability will depend on a number of factors, such as the technological complexity used at the phase of research and exploration. Normally we research for two or three years, and if the indications are not strong enough we stop.
You have been in the Algarve since 2011; three years have passed, will you continue to research? What does it cost?
It depends, in Peniche we have done a 3D seismic survey and we will be working for another year, then we will decide whether to move on to the next phase of research. If we move on to the next phase we will have to drill a well and the consortium will decide if the investment should continue. In the Algarve, a well was planned for last year, and it will possibly happen at the end of this year. If we go ahead with a well it will cost between 40 and 60 million dollars, depending on the depth and other factors, with Partex being responsible for 10%. Since 2011, Partex alone has invested around 18 million dollars.
Prime Minister António Costa says that no contracts have been signed for the exploration, will it be necessary to sign new contracts?
The contracts signed with the previous government are just for research and prospecting, if the conditions are right for going ahead commercially with the exploration, the situation will be different. In a country like ours, where a lot of people complain that we are poor, it would be a massive mistake if we did not manage to map and assess our own natural resources.
The contracts that were signed do not appear to be very transparent, local people were not consulted, local mayors were not consulted.
Does a company that is proposing to map and assess the country’s resources, natural and other resources, need to consult people in this way? Imagine a fishing company that tries to assess the places for fishing along the Portuguese coast, would it be necessary to hold a referendum? If we move on to another phase and do the research, a boat will be there for just two or three months and it will not be visible from the coast, no one will notice anything. If there is gas, we will move on to another phase. First we will have to prove that the gas is commercially viable. Then we will do environmental impact studies, consult local people and the bodies responsible will decide if the project is viable or not.
There is talk of fracking (hydraulic fracturing) and an increase in the probability of earthquakes occurring. Do you recognise that there are ecological risks associated with this?
If you ask me if the risk is zero, obviously it is not, but the risk is extremely low. Both Repsol and Partex do much more that what is required by law, we have nothing to hide. It is true, there are earthquakes. But there will not be any fracking. We are not going to fracture anything. We are not going to give rise to seismic activity, not will we be affected by it. I think people are being scared by the NGOs with fracking, with shale gas, but the impact is minimal.
Can you exclude the possibility of an accident in the Algarve like the one that happened in the Gulf of Mexico?
I can say that the same thing will not happen. The type of accident that happened in the Gulf of Mexico is completely different because it occurred at a depth of about eight thousand metres, with huge pressures offshore, and here we are looking for biogenic gas which is formed at a depth of 1,700 metres. Our target is just the biogenic gas which stretches from the Gulf of Cadiz basin, where we have the Poseidon field and we think extends as far as the Algarve..
Do you feel as if the oil industry is seen as part of the problem?
The world scene is changing. New forms of energy are appearing and shale gas is one of them. Ultra-deep offshore technology appeared in the last decade, ten years ago it was unthinkable that we would be drilling to depths of seven or nine thousand metres, as is now being done in Brazil or the Gulf of Mexico. Then renewable energies appeared, and another fundamental point, global warming is happening and is recognised by everyone. It is important not to forget that for the first time at COP21 in Paris the eight biggest oil companies were there participating in the meeting. We live in a global world, at present there are about seven billion people, and in 20 or 25 years there will be 1.7 billion more, and there will be a growth in energy of around 30%.
Will PARTEX participate in this change?
Partex is already participating, we are starting to investigate renewable energies. Companies in this area will have to keep investing in oil and gas over the next 20 to 30 years, but they have to help to reduce CO2 emissions. The transition will have to be done through gas.
If we consume energy as we do at present, global warming will increase between six and eight degrees…
We cannot imagine that we will change from fossil fuels to renewable energies from one day to the next. It is a transition that will take around 50 years or more. The use of renewable energies is currently two percent on a global scale. Pessimistic estimates say that, in 25 years’ time, renewables will account for ten percent, and the optimists say that renewable energies will represent one third of the energy used. Another third, or more, will have to continue to be fossil fuels, oil, gas and the coal which is unavoidable and which emits most CO2. Oil companies are investing sustainably, firstly by replacing oil with gas, then by investing in renewables, and thirdly in energy efficiency. The energy matrix will have to change in an intelligent manner and oil companies will also have to be part of the solution, and not part of the problem.