CONOCO GROUP PLANS BIG HEAVY OIL PROJECT IN ECUADOR'S ORIENTE

July 23, 1990
A group led by Conoco Ecuador Ltd. plans a $500 million, five field project in Ecuador's Oriente region that will be the country's first heavy oil development. Reserves tentatively estimated at 200 million bbl could support production of 45,000 b/d for 20 years. No start-up date is scheduled. The project includes a large program of horizontal wells rare in Latin America-as well as vertical wells and two new pipelines, extending industry's infrastructure in the Oriente farther

A group led by Conoco Ecuador Ltd. plans a $500 million, five field project in Ecuador's Oriente region that will be the country's first heavy oil development.

Reserves tentatively estimated at 200 million bbl could support production of 45,000 b/d for 20 years.

No start-up date is scheduled.

The project includes a large program of horizontal wells rare in Latin America-as well as vertical wells and two new pipelines, extending industry's infrastructure in the Oriente farther southeast.

Ecuador, the second smallest producer in the Organization of Petroleum Exporting Countries, is hard pressed to replace its dwindling reserves, in decline since 1972. Ecuador produces about 300,000 b/d of oil.

DEVELOPMENT DETAILS

Conoco and partners are awaiting approval from state owned Petroleos del Ecuador of their plan to develop the fields, which were discovered in 1987-89 on service contract Block 16.

Plans call for a 4 year program involving drilling more than 120 vertical and horizontal wells.

Drilling generally will involve an equal number of vertical and horizontal wells in cluster patterns.

Conoco will use two or three rigs to drill the wells to an average true vertical depth of about 9,000 ft. Conoco also plans to build more than 140 km of roads and additional support facilities in the area.

Conoco will lay two parallel 160 km oil pipelines. One will move lighter gravity crude from Shushufindi field in the Petroecuador/Texaco Inc. joint venture area to Conoco's planned central production facilities near the site of the 2 Amo step-out well.

The Shushufindi crude will be blended with Block 16 crudes to reduce viscosity for shipping. The second line will move the blended 21 gravity crude to Ecuador's main trunk line for shipping to Lago Agrio and then Balao.

Blending ratio will be 1 bbl of 29.9 gravity crude to 2 bbl of Block 16 crude with average gravity of 17.

CONOCO GROUP SUCCESSES

Conoco and partners have drilled five discoveries and two successful step-outs on Block 16, which is located about 160 165 miles southeast of Quito:

  • 1 Amo, flowing a combined 1,062 b/d of 18.5-19.5 gravity through 1/2-3/4 in. chokes from three zones at 7,560-8,975 ft.

  • 1 Bogi, yielding a combined 2,102 b/d of 18.6-23.7 gravity oil from three zones at 8,440-9,800 ft.

  • 1 Daimi, flowing a combined 2,315 b/d of oil from two Cretaceous zones, Napo and Tena.

  • 2 Amo, flowing more than 4,000 b/d of oil from several zones.

  • 2 Daimi, yielding a combined 1,912 b/d of 14-190 gravity oil from three zones.

  • 1 Iro, flowing a combined rate of more than 4,500 b/d of 13-15 gravity oil on tests of intervals in the Napo U and M-1 sands.

  • 1 Ginta, yielding 2,316 b/d of 15.5-17.1 gravity oil from Napo.

The other commitment well on the block, 1 Cowi, was a dry hole.

The fields are on a north south trend extending about 25 km.

Interests in the group in addition to Conoco have been reported as being held by Overseas Petroleum Investment Corp., Maxus Energy Corp., Nomeco Latin America Inc., Canam Offshore Ltd., Lowland Marine Ltd., Murphy Ecuador Oil Co., and Ocean Drilling & Exploration Co.

MARKET IMPLICATIONS

Once the new heavy oil production is on stream, crude arriving at Balao from the Oriente can be expected to show a slight overall reduction in gravity from current levels.

The 90,000 b/d refinery at Balao can accommodate the new crude with minor operating changes. The surge of heavy crude production will affect Ecuador's slate of export crudes as well.

The crudes discovered feature gravities of 14-23, with most about 17. They are asphaltic and contain an average 2.5% sulfur and 400 ppm vanadium.

To assess the market implications and other aspects of Conoco's proposed project, Petroecuador has let contract to Institut Francais du Petrole for a feasibility study due by yearend.

IFP also will evaluate heavy oil discoveries by other companies operating service contract blocks in the southern Oriente to determine feasibility of a new trunk line dedicated to moving heavy crude from the area.

Such a line would follow a route through the southern central Oriente, giving Ecuador an alternate oil supply route to its northern trunk line. The existing trunk line was damaged in a 1987 earthquake, crippling Ecuador's crude exports.

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