Brazil's government wants to start up a pilot project tapping unconventional oil and natural 

gas  reservoirs  next year,  likely in the state of Bahia, as part of broader efforts to expand 

onshore output, a Mines and Energy Ministry official said. 

Latin America's biggest country is well behind the curve in development of unconventional 

resources such as shale and tight oil and gas formations when compared with the US and 

neighboring Argentina. But much of the damage has been self-inflicted, with the governme

nt and  regulators  slow to  respond to criticisms and lawsuits against current development 

policies. 

"The idea is to  bring everybody  to the table  to gain  a  broader understanding about the 

benefits  and  risks  of non-conventionals," Joao Vicente de Carvalho Vieira, the ministry's 

director of oil and gas exploration, said on the sidelines of an industry event in Rio de Jane

iro late Friday. "There are a lot of negative reactions to the technique of hydraulic fracturin

g, but nobody knows the potential of these resources." 

Brazil could  hold as much  as 250 Tcf of gas and 5.4 billion barrels of oil in unconventional 

deposits,  according  to a study by the Energy Economics Institute at the Federal University

of Rio de Janeiro. 

Public resistance against unconventional exploration is strong in Brazil, despite the country's 

history of onshore and offshore oil production. Exploration of Brazil's onshore unconvention

al resources has been blocked by a series of lawsuits, including concessions granted during 

the country's 11th and 12th bid rounds. 

The government will host a workshop with ministries, federal and state government agencies, 

regulators,  and  officials from the National Petroleum Agency, or ANP, in August, Vieira said. 

The latest initiative would also include a pilot project to test Brazil's unconventional potential, 

Vieira said.  The  project i s still  in its infancy, however, with questions about how it would be 

funded, who would operate it and where the test would be conducted, Vieira said. 

Bahia state government officials appeared to be interested in hosting the pilot project, Vieira 

said.  Bahia  is the home  to  Brazil's  first producing oil well. Financing could also come from 

government  grants  or   research  and  development  funds,   Vieira  said. Brazil requires oil 

companies  producing there to spend a certain percentage of oil-related profits on research 

and development initiatives, typically investments in research parks and university programs. 

Bringing everybody together to discuss the country's potential could also help tame some of 

the controversy, Vieira said. "We believe that there is a lot of potential, but we have to know 

what that potential is in order to know whether it's worth the risks," Vieira said.