Venezuela plans Orinoco expansions

Nov. 21, 2005
Petróleos de Venezuela SA’s (PDVSA) recent strategic plan calls for the investment of about $15 billion during 2006-12 to increase heavy-oil production from the Orinoco tar belt of Venezuela to 1.

Petróleos de Venezuela SA’s (PDVSA) recent strategic plan calls for the investment of about $15 billion during 2006-12 to increase heavy-oil production from the Orinoco tar belt of Venezuela to 1.2 million b/d from the present level of 600,000 b/d.

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The first phase of the plan involves the quantification and certification of reserves in 27 blocks in four areas (Fig. 1): Carabobo (formerly Cerro Negro), Ayacucho (formerly Hamaca), Junin (formerly Zuata), and Boyacá (formerly Machete).

Seven third-party companies have agreements to study seven blocks: four in Junin, two in Ayacucho, and one in Carabobo. Corp. Venezolana del Petroleo (CVP) and PDVSA’s E&P and Intevep SA subsidiaries will quantify the reserves in 14 blocks: six in Junin, five in Ayacucho, and three in Carabobo. PDVSA will investigate the development potential of the six remaining blocks in Boyacá.

PDVSA estimates that the 55,314-sq km area may contain 1.36 trillion bbl of heavy oil in place: 489 billion bbl in Boyacá, 557 billion bbl in Junin, 87 billion bbl in Ayacucho, and 227 billion bbl in Carabobo. It expects to certify 236 billion bbl of recoverable reserves out of the estimated 313 billion bbl in the blocks.

Currently PDVSA says that the area has 37 billion bbl of proved reserves: 1 billion bbl in Boyacá, 15 billion bbl in Junin, 6 billion bbl in Ayacucho, and 15 billion bbl in Carabobo.

Current projects

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Technological advances continue to make the Orinoco resources more viable to produce. As shown in Fig. 2, production from a typical well has increased to 2,000-3,500 b/d in 2005 from 100-200 b/d in 1980. Better pumps, horizontal wells, multilateral wells, and the use of diluent are some of the technologies that have increased production rates and lowered production costs to $0.95/bbl in 2004 from the $3/bbl in 1991, according to PDVSA.

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It now believes the area can attain recovery factors greater than 20% of oil in place from the current estimated 8-12%. Fig. 3 shows the expected increase in production through 2012.

The Orinoco region at present has five active projects, four of which involve companies from outside of Venezuela operating in strategic associations. The projects convert 8-9° gravity heavy oil to a lighter, sweeter crude or syncrude at four upgraders at Jose, on Venezuela’s northern coast.

The fifth project produces orimulsion, a 70% bitumen and 30% water mixture, exported as a boiler fuel for power generation. A subsidiary of PDVSA, Bitúmenes Orinoco SA (Bitor), was initially organized to produce and market orimulsion.

The US Energy Information Agency in its country briefs indicates that the future of orimulsion production is unclear. It says production is now about 40,000 b/d down from a peak of 100,000 b/d and that in April 2005 PDVSA announced its intentions to discontinue production within 12 months due to the high oil price making the sale of heavy and extra-heavy crudes as upgraded syncrude or blended crude oil more profitable.

The single orimulsion plant in Cerro Negro has a 5.2-million tonnes/year production capacity.

EIA adds that PDVSA’s plan to cease orimulsion production has been controversy with Canada’s New Brunswick (NB) Power Group filing a $1.6 billion suit against PDVSA in August 2005 and Italy’s Enel Group having a $200 million case against PDVSA on lost orimulsion supply.

According to EIA, PDVSA still has a plan for a joint venture with China National Petroleum Corp. (CNPC) to build a 6.5 million tonne/year orimulsion plant. The Sinovensa project will initially supply 1.8 million tonnes/year of orimulsion to fuel two new 600-Mw power plants in Zhanjiang, China by yearend 2006.

The four strategic associations currently active are:

1. Petrozuata (Junin). The operator is Petrozuata CA, a joint venture of Conoco Phillips, 50.1%; and PDVSA, 49.9%. Production started in October 1998 and currently is about 120,000 b/d of 8.3° heavy oil that is upgraded to 104,000 b/d of 19-25° syncrude.

2. Cerro Negro (Carabobo). The operator is Operadora Cerro Negro CA, a joint venture of ExxonMobil Corp., 41.67%; PDVSA, 41.67%; and BP PLC, 16.67%. Production started in November 1999 and currently is about 120,000 b/d of 8.5° heavy oil that is upgraded to 105,000 b/d of 16° syncrude.

3. Sincor (Boyaca). The operator is Sincrudos de Oriente Sincor CA, a joint venture of Total SA, 47%; PDVSA, 38%; and Statoil ASA, 15%. Production started in December 2000 and currently is 200,000 b/d of 8-8.5° heavy oil that is upgraded to 180,000 of 32° syncrude.

4. Hamaca (Ayacucho). The operator is Petrolera Ameriven SA, a joint venture of ConocoPhillips, 40%; PdVSA, 30%; and ChevronTexaco Inc., 30%. Production started in October 2001 and currently is 190,000 b/d of 8.7° heavy oil that is upgraded to 180,000 b/d of 26° syncrude.

New studies

PDVSA’s plan contains an illustration of the characteristics of one of the blocks that it has evaluated in the Carabobo area. This 500-sq km block has potentially 28.9 billion bbl of recoverable heavy oil. The producing formation is at a 500-2,000 ft depth and has a 50-200 ft thickness with a 12-20 Darcy permeability, 32% porosity, and 85% hydrocarbon saturation. The 6-8° gravity crude has a viscosity greater than 5,000 cp.

The first step in the development is the quatification and certification of the reserves in the four areas. After this work, PDVSA expects to enter negotiations with the third-party companies to recovery more than 20% of the oil in place from these areas.

Third-party companies involved in the evaluation of seven blocks include (Fig. 1):

• India’s Oil & Natural Gas Corp. (ONGC), Junin SC Block.

• Russia’s Lukoil Overseas Holding Ltd., Junin Block 3 (OGJ Online, Oct. 18, 2005, and OGJ Online, June 30, 2003).

• China’s CNPC, Junin Block 4 (OGJ, Sept. 12, 2005, p. 6).

• Spain’s Repsol YPF SA, Junin Block 7.

• Russia’s Gazprom, Ayacucho Block 3.

• Iran’s Petropars Ltd., Ayacucho Block 7.

• Brazil’s Petroleo Brasileiro SA (Petrobras), Carabobo Block 1.

After the studies, the companies will begin negotiations to establish a joint project to develop the blocks.