Colombia’s promising future

July 30, 2013

The next few years could see major investments in Colombian waters and last year’s bid round has independents, NOCs, and majors heading to the country’s Caribbean shores.

Colombia is South America’s fourth largest oil producer with 2 billion barrels of proved oil reserves, according to the US Energy Information Administration (EIA). New regulatory reforms and a close relationship with the US government seem reason enough to make investing in Colombia an attractive bet.

The country’s national oil company Ecopetrol, while 90% owned by the government, is also open to private investment and partnerships with foreign companies. Colombia has invested in security over the last few years to protect its energy infrastructure, but the country is still at odds with its longest-running rebel insurgency, the FARC (Revolutionary Armed Forces of Colombia). A cease-fire with the group ended earlier this year and attacks on pipeline infrastructure have spiked; the Cano Limon oil pipeline was bombed back in February.

Despite those woes, companies remain enchanted by Colombia’s potential. In 2011, Marcos Mozetic, Repsol Exploration Managing Director, told investors that the country is one of the places where they don’t consider the political boundaries.

“We look at the play – that is why we went to Colombia – and we acquired interest in two blocks operated by Petrobas and Ecopetrol as a partner; and we are trying to do more. It is a play that most probably will need more resources in the future and we will try to be active in other places in the Caribbean, too,” he said.

Repsol has interest in three offshore blocks in Colombia: Tayrona (near the producing Chuchupa field), RC-11, and RC-12.

Onshore exploration and production is still king in Colombia. During the country’s last bid round in 2012, Colombia’s Agencia Nacional de Hidrocarburos (ANH) made 113 blocks available, with only 11 of them located offshore.

Orlando Cabrales Segovia, President of ANH, told James Burkhard, vice president and head of oil market research at IHS, that the government had made a concerted effort to spotlight unconventionals, with 31 blocks having significant opportunities in shale gas.

However, of the 11 blocks that were offered, six were awarded when the round concluded in December 2012. Of those 11, five are considered new frontier basins.

The highest bidders on the offshore blocks were Houston-based Anadarko Petroleum, Colombia’s national oil company Ecopetrol, India’s ONGC Videsh Ltd., and Shell.

Anadarko Colombia Co. will operate one block in the Colombia (COL) basin with 100% interest. Anadarko took 50% interest in two additional offshore blocks in partnership with Ecopetrol, in the Urabá (URA) and Colombia basins.

OGNC’s block lies in the Guajira (GUA) offshore basin, while Shell Exploration and Production Colombia GMBH snatched up one block in the Colombia basin.

Cabrales Segovia told IHS that Colombia’s oil and gas industry is healthy, with seismic programs steadily increasing over last 5-6 years. Exploratory wells have also increased to 126 in 2011 from only 20 in 2004, and about 150 wells in 2012.

Exploration

Open Round Colombia 2012.Including new licenses won at the end of 2012, Anadarko has six blocks off Colombia’s Caribbean coast, totaling eight million acres. Its territory includes 100% working interest in Block COL 2, and 50% interest in blocks COL 5, Fuerte Norte, Fuerte Sur, Purple Angel, and URA 4, according to the company’s 4Q 2012 report.

Anadarko plans to conduct 2D and 3D seismic surveys this year, and has hired France’s CGGVeritas to acquire and process a 5,500sq-km seismic survey over portions of the six blocks. Work will begin 3Q 2013 with CGGVeritas using the CGG Viking for the program. The survey is scheduled to take four months to complete; the data will be processed in Houston.

Shell is following a similar plan for its deepwater COL-3 block, which spans 5000sq km. The company will conduct seismic surveys before it commits to a drilling program. The block is southwest of Shell’s GUA-3 block, which it licensed in 2011.

The Ecopetrol and Talisman Energy joint venture, Equion Energia, began drilling off Colombia last year, encountering dry gas at the Mapale-1 well in block RC5 last November. Mapale-1 was the first offshore well drilled in Colombia since 2008. Equion Energia operates the block, which it won in 2007, with 40.56% stake. Ecopetrol holds a separate 32% interest in the block, with the remainder controlled by Brazil’s Petrobras (27.44%).

Production

The shallow water Chuchupa field is the largest – and only producing offshore – natural gas field in Colombia, located on the northwestern tip of the Guajira peninsula.

Chuchupa is a dry gas field that was originally discovered in 1973 and brought into production four years later. Located in the offshore Guajira basin, it is currently operated by Chevron in partnership with Ecopetrol. The field produces 80% of Colombia’s natural gas, which is piped to both central and northern Colombia, and western Venezuela.

In 2006, Chevron began studying ways to counter reservoir depressurization in the field, settling on artificial lift technology to extend the field’s life into 2030. In 2012, net production from Chuchupa averaged 216MMcf/d. Chevron is considering installing additional compression facilities this year.

FLRSU on track

The FLRSU can convert 69.5MMscf/d of natural gas into LNG, and can temporarily store up to 14,000cu m.Canada-based, but Colombian-focused, explorer Pacific Rubiales Energy announced last month that its LNG export project is on track to begin 4Q 2014. The planned facility is a firstever, floating liquefaction, re-gasification, and storage unit (FLRSU) to operate off Colombia’s Caribbean coast (OE, July 2012).

Exmar NV was contracted to build, operate, and maintain the FLRSU, which will serve the onshore La Creciente field in Colombia’s lower Magdalena Valley basin for 15 years. The FLRSU is currently under construction at Wison Offshore and Marine’s fabrication yard in Nantong, China.

“The company has actively invested in pipelines, ports, and other infrastructure facilities over the past five years, allowing it to manage the pace of its production growth and capture additional value. The company is planning to spin out a portion of these assets, keeping operational control, to create additional value for shareholders,” said Pacific Rubiales CEO Ronald Pantin.

Once completed, the FLRSU will be able to convert 69.5 MMcf/d of natural gas from the field into LNG. The barge, which will measure 140m x 32m x 18m, and will be able to store 14,000cu m in onboard tanks. The processing unit will be moored to a jetty in 15m waterdepth. Topsides equipment will weigh about 5000t. The liquefaction plant will be built by Black and Veatch with the. total cost estimated at US$300 million.OE



Current News

FPSOs: Floating Ideas

FPSOs: Floating Ideas

Hezbollah Warns Israel against Drilling in Disputed Waters

Hezbollah Warns Israel against Drilling in Disputed Waters

BW Energy to Buy Aquadrill's Drilling Rig and Convert It into Production Floater

BW Energy to Buy Aquadrill's Drilling Rig and Convert It into Production Floater

Aberdeen Selects BP as Hydrogen Hub Partner

Aberdeen Selects BP as Hydrogen Hub Partner

Subscribe for OE Digital E‑News

Offshore Engineer Magazine