GARNET PLANS TO STEP UP OIL FLOW IN COLOMBIA

Garnet Resources Corp. expects to begin oil production about midyear on a 344,000 acre tract in the Putumayo area of Southwest Colombia. Production will come from four wells in Santana Block B at the foot of the eastern slope of the Andes Mountains, pending approval by the Colombia's state oil company, Empresa Colombiana de Petroleos (Ecopetrol). George Nevers, president of Garnet, Houston, said his company is seeking Ecopetrol's approval to start production from 1 Toroyaco and 1 Linda

Feb. 4, 1991

3 min read

Garnet Resources Corp. expects to begin oil production about midyear on a 344,000 acre tract in the Putumayo area of Southwest Colombia.

Production will come from four wells in Santana Block B at the foot of the eastern slope of the Andes Mountains, pending approval by the Colombia's state oil company, Empresa Colombiana de Petroleos (Ecopetrol).

George Nevers, president of Garnet, Houston, said his company is seeking Ecopetrol's approval to start production from 1 Toroyaco and 1 Linda field discoveries and 2 Toroyaco and 2 Linda delineation wells.

All four wells tap Lower Cretaceous Villeta sands at 7,500-8,150 ft. The 1 Toroyaco was drilled during November 1989, the other three wells in 1990.

Nevers said the Toroyaco and Linda wells produced at a combined rate of 4,5005,000 b/d of 26-30 gravity sweet crude. However, initial production is expected to be somewhat less.

Garnet will truck Toroyaco and Linda crude 50 miles to the trans-Andean pipeline for delivery to Tumaco on Colombia's Pacific coast.

Nevers said the trans-Andean pipeline is the only crude pipeline in Colombia with spare capacity. Current throughput is about 10% of the 400 km line's 100,000 b/d capacity, he said.

OTHER ACTIVITY

Garnet recently tested a third field discovery, 1 Mary, in Santana Block B, 61/2 miles northeast of 1 Linda. The 1 Mary flowed 1,150 b/d of 27.4 gravity oil from Villeta U sand at 7,538-7,620 ft.

The Mary strike is separated from Toroyaco and Linda fields by a tributary of the Caqueta River, making it impossible to move oil by truck to the trans-Andean pipeline. Garnet won't attempt to produce Mary field until more is known about the area.

The company's 1990 seismic program on Santana B identified five exploratory prospects. Nevers intended to propose drilling those prospects this year when he recently went to Bogota to review Garnet's 1991 exploration and production plans with Ecopetrol officials.

Garnet is producing 600700 b/d of oil from three older wells on the Nancy-Burdine block, south of Santana B. Nancy-Burdine production, also from Villeta sands, moves by pipeline to the trans-Andean line.

Garnet has conducted about 750 km of seismic data in Santana B.

OPERATING AGREEMENT

Santana B is held by Garnet and partner Aviva Petroleum, London, under a risk sharing agreement with Ecopetrol signed in 1987.

Garnet operates in Colombia through its subsidiary, Argosy Energy International. Aviva's subsidiary in Colombia is Neo Energy Inc.

Argosy has been active in Colombia since 1983. Garnet acquired Argosy in 1987.

Through their subsidiaries, Garnet and Aviva divide their share of production in Colombia on a 55-45% basis.

Initially, Argosy had to pay 100% of exploration costs. Now Ecopetrol is responsible for 30% of the exploration costs.

Ecopetrol has an option after oil is discovered to increase its 30% share to 50%. After 7 million bbl of oil have been produced, the national oil company can increase its 50% share to 65%.