Shell's latest discovery, Jonker, adds to the positive outlook for the Orange Sub-Basin in Namibia where TotalEnergies, in early-2022 discovered potentially the largest ever deep-water field, known as Venus. Jonker-1 lies at a water depth of 2,210 m, about 17 km west of Shell's 2022 Graff discovery and approximately 53 km southeast of TotalEnergies' Venus-1 well. The Orange Sub-Basin formed in the Late Jurassic to Early Cretaceous period as Africa rifted apart from South America (see Figure 1). The sub-basin was filled by Cretaceous turbidite sandstones that form the main reservoir in the recent Namibian discoveries, and that are potentially present in their South American conjugate basins in Argentina, Uruguay, and Brazil. This geological similarity is what is currently fueling the exploration enthusiasm in the unexplored offshore basins in these south American countries.

In Argentina, the justice system cleared again Equinor' plans to acquire 3D seismic over the offshore CAN-100, CAN-108 and CAN-114 blocks within the Argentina Basin; and in December 2022, Equinor received authorization from the Ministry of Environment and Sustainable Development to drill the Argerich-1 exploration well within the CAN-100 block in the Argentina Basin. YPF and Shell are partners in the CAN-100 block, with 35% and 30% respectively. Argerich-1 will be drilled at a water depth of 1,527 m, to a planned total depth of 3,990 m and may be targeting Cretaceous basin floor fan sandstones similar to those targeted by Venus-1. It will be spudded in the middle of the CAN-100 block, approximately 300 km to the southeast from the city of Mar del Plata, in the Buenos Aires Province, and it is regarded as a high impact well due to its potential to open a new Orange Sub-Basin type play in the Argentina Basin's unexplored deep waters, with resources estimated at around 300 million barrels of oil equivalent (MMboe). The CAN-100 block bounds to the east with the Equinor-operated CAN-108 block and to the west with the Shell-operated CAN-107 and CAN-109 blocks. The nearest well is Pejerrey 1, which was drilled by Shell in the Colorado Basin in 1997, about 112 kilometers northwest from Argerich-1. The well, which showed only gas shows, was drilled in 88 m of water depth, and reached a total depth of 3,002 m before being plugged and abandoned.

Meanwhile in Uruguay, interest in the country's offshore blocks within Pelotas-Rio Salado basins continued to increase after the Venus discovery in February 2022. Challenger Energy was officially awarded the OFF-1 block in May 2022 with first phase commitments of seismic reprocessing and technical studies, although the company is reportedly interested in bringing a partner to expedite the acquisition of new 3D seismic data within this first period in 2023. Following the closing of the first deadline of the biannual Open Uruguay Round in May 2022, OFF-2 and OFF-7 blocks were awarded to Shell with the proposed commitments of geology and prospectivity evaluation, while OFF-6 block was preliminary awarded to APA Corp with the same set of commitments, but with the addition of drilling one well during the initial four-year exploratory period. The OFF-6 block includes the only deep-water well drilled in the area, Raya-1, at a water depth of 3,404 m that was plugged and abandoned by TotalEnergies in 2016. Raya-1 was drilled to an approximate total depth (TD) of 6,000 m to target Miocene turbidite with prospective resources that was said to be between 500 MMboe and 1.5 billion barrels of oil equivalent (Bboe) that was identified through 3D seismic but proven to be dry due to lack of effective migration pathways between the Aptian source rock and the previously identified Oligocene reservoir interval, according to reports from post-drilling analysis.

Two more blocks were later awarded in the country following the closing of the second deadline of the open round in November 2022, with OFF-4 given to the consortium APA Corporation and Shell, and OFF-5 block given to Argentine state company YPF. APA/Shell consortium's work commitment for OFF-4 block includes the acquisition, processing, and interpretation of new 2,500 sq km of 3D seismic data, as well as evaluation of geological potential and prospective resources, along with 3D gravity and magnetic data inversion and modeling of the area. For OFF-5 block, consortium's work commitment requires evaluation of geological potential and prospective resources, along with 3D gravity and magnetic data inversion and modeling of the area. Notably, only one offshore block, OFF-3, remains available for bid in the country as of early-2023. (See Figure 2).

In addition to Argentina and Uruguay, there is also a good chance that the success in Namibia could bring some interest into even more spots in South America, such as offshore Pelotas Basin, in southern Brazil, where seismic company, Geoprocesados, recently received the environmental clearance, in January 2023, to acquire 2D and 3D seismic in the area. Overall, it is reasonable to expect an increase in exploration activity in the southern portion of South America as more companies continue with appraisal and exploration programs in offshore Namibia, even though the results are unlikely to be seen for some time as the first drilling activity is not expected to occur before 2024.

Figure 1

Figure 2

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.