Thi Chang
Oil & Gas Journal Refining/Petrochemical Editor
With completion in February of its Orinoco Oil Belt production facilities to handle production of 200,000 b/d of heavy oil, Sincrudos de Oriente Sincor CA is working to complete a heavy oil upgrader at the Jose industrial complex by the end of the year.
José Hidalgo, president of Sincor since its formation in 1997, said despite a change in governments since the project's inception, the strategy for producing, upgrading, and marketing Sincor's Zuata Sweet crude has not changed.
Sincor is owned by TotalFinaElf 47%, Petróleos de Venezuela SA 38%, and Statoil AS 15%. The $4.2 billion project was formed to make 180,000 b/d of 32° syncrude, called Zuata Sweet, from an 8.5° extra heavy crude in the Orinoco Belt in the first quarter of next year.
The Venezuelan Orinoco Belt is believed to contain some 1.2 trillion bbl of extra heavy oil (9° gravity), the largest known hydrocarbon deposit in the world.
Among its peers in the Orinoco Belt, Sincor will have the lightest quality syncrude for sale. Petrozuata, a JV between Conoco Inc. and PDVSA, will sell a 19- 25° gravity crude; Cerro Negro, a JV of ExxonMobil Corp., PDVSA, and Veba Oel, will market a 16.5° gravity crude; and Ameriven Hamaca, a JV between Phillips Petroleum Co., PDVSA, and Texaco Inc., plans to make a 26° gravity crude.
Sincor's syncrude will also have the lowest sulfur, 0.1 wt %. The next sweetest will be Ameriven Hamaca's 1.2 wt % sulfur syncrude.
Unlike the other production investments in the Orinoco Belt, Sincor's partners have no dedicated outlet for its crude on the US Gulf Coast and must sell it in international markets. Most will go to the US, however.
Upgrading plans
Sincor has drilled 193 of the 244 wells that will be online by the end of 2001. Thirty are in production.
The company's most important challenge in 2001, said Hidalgo, will be to "consolidate production." Sincor must increase its production capacity to meet the upgrader's intake needs, test the whole field including the surface facilities to ensure reliable operational rates, and test wells to increase the understanding of the reservoir.
Since Dec. 17 Sincor has been producing up to 40,000 b/d, but Hidalgo expects it to climb to 200,000 b/d by Jan. 1 for a 35-year life.
On Jan. 30 Sincor sent its first shipment to the US Gulf Coast. It shipped 600,000 bbl of diluted 16° gravity crude, called Zuata 16, a mixture of the 8° gravity extra heavy crude from Sincor's San Diego de Cabrutica field in southern Anzoátegui state and 30° gravity Mesa crude.
With the Mesa crude, Sincor is producing 65,000 b/d of diluted crude.
During Sincor's initial production phase, its agreement with PDVSA only allows production of up to 40,000 b/d of extra heavy crude.
Hidalgo said construction of the upgrader was 84% complete at the end of April. With expected completion at the end of the year, Sincor will make its first shipment of light sweet crude in February 2002.
"Our challenge for the next year," said Hidalgo, "is to initiate and stabilize upgrader operations at design capacity and pass the first-stage completion test." In March, Sincor said it had signed a pre-agreement for the sale of Zuata Sweet to a US refinery. The syncrude, said Hidalgo, will be sold on a combination of term and spot sales, mainly targeting US Gulf Coast refineries. By-products, however, will be sold on term contracts only.
"Given the high quality of the syncrude," said Hidalgo, "principally its low sulfur and high gravity, we foresee an ample market."
Also in March, Sincor signed 10-year agreements with TCP Petcoke Corp. and SSM Petcoke LLC, both based in the US, for the sale of 5,600 b/d of coke from the upgrader's future delayed coking unit.
The company is looking for long-term contracts for about 900 tons/day of its sulfur by-product.
Other issues
In developing its production and upgrading complexes, Sincor has sought opportunities to share costs with other Orinoco Belt JVs.
Although Sincor had hoped to move its products through Petrozuata's solids terminal, the deal did not occur. Thus, Sincor will build its own $194 million solids terminal.
"Later, we found it more beneficial to build our own solids handling facility to store and export by-products from Jose," said Hidalgo. "To this end, the petrochemical dock built by Pequiven will be modified accordingly."
Sincor will share a 220 km pipeline with Petrozuata to transport extra heavy crude from the Orinoco Belt's Zuata area to the Jose area.
"In the future, the operating companies will surely find more synergies, as is normally experienced in large industrial sites," said Hidalgo. Recently, all the companies in Jose formed an organization called the "Condominium" to deal with common matters.
Hidalgo said the new solids terminal and additional upstream facilities will slightly increase the $4.2 billion project cost.
At current oil prices, he expects Sincor's revenues to be about $1.4 billion/year, and said revenues would be robust even in a lower price environment.
"It [the project] was launched at a time when oil prices were quite low," he said. "I believe that the Orinoco Belt can also be considered a huge source of light crude and may compete with light crude sources elsewhere."
Involving the local community has been one of Sincor's goals. In the first stage, local involvement will reach 65%. The target for the operational phase is 85%. So far, the local share in the project has been 58% overall, with 53% in engineering, 36% in procurement, and 88% in construction.
At peak construction, the project employed 13,000 persons.
"Our management has paid more attention to site labor relations than any other site I have worked on before. Its task is immense, and it has had to deal with a large labor force, a large number of contractors, and the simultaneous reorganization of workers' organizations."
He said after Sincor's projects are completed, the only construction jobs will be at the Ameriven Hamaca project.
Contact Thi Chang at [email protected]