Colombia: a shift to unconventional oil and gas? Derrick Dao, P. Eng.

Size: px

Start display at page:

Download "Colombia: a shift to unconventional oil and gas? Derrick Dao, P. Eng."

Christiana Clark
6 years ago
Views:

1 : a shift to unconventional oil and gas? Derrick Dao, P. Eng. ddao@mcdan.com

McDaniel & Associates is a leading international consulting firm Consulting expertise» Established in 1955» Head office in Calgary, Canada» Internationally recognized expertise in: Global presence»

2 McDaniel & Associates is a leading international consulting firm Consulting expertise» Established in 1955» Head office in Calgary, Canada» Internationally recognized expertise in: Global presence» Reserves evaluations» Resource assessments» A&D Advisory services» Geological studies» Technical studies» Expert witness testimony McDaniel & Associates oil and gas consulting expertise spans 75 countries covering many of the most important hydrocarbon basins around the world

3 having evaluated nearly 700 properties outside of Canada and United States Diversified Experience Capability Europe 15% Asia, Australia 26% Africa 20% Latin America 29% MENA 10% Unrivalled experience in preparing reserves and resources evaluations using different reserves definitions and security exchange rules, and for a variety of fiscal systems in different countries Fiscal Regimes Royalty/Tax Producing Sharing Contracts Service Contracts Compliance Distribution of Experience Strong presence and relationship with many operators in Latin America PRMS COGEH & NI Extensive experience in west and east Africa Leading evaluator in central Asia region

4 working with many of the world s leading financial institutions and multinational conglomerates TECHNICAL & FINANCIAL ADVISORY McDaniel and Associates is relied on by prospective acquirers, financial institutions and equity funds to provide objective technical and financial advice. Our wide experience in asset valuations help these institutions make informed decisions.

is a positive example of a country re-structuring Industry History Historical Production and

Ecopetrol» In 2003, Ecopetrol and the n oil industry underwent restructuring to avoid further

5 Production Proved Reserves Lack of discoveries = Declining Reserves + Production >80%

Ecopetrol s dual role of regulator and Oil Company» Role of administrator and regulator of

5 - Camo Limon Discovery (1200 MMbbls) Cusiana Discovery (750 MMbbls) Cupiagua Discovery (510

5 is a positive example of a country re-structuring Industry History Historical Production and Reserves» Since 1951 the n oil industry operated and regulated by the state-owned company Ecopetrol» In 2003, Ecopetrol and the n oil industry underwent restructuring to avoid further sliding of production and reserves Reserves (000 MMbbls),) Production Proved Reserves Lack of discoveries = Declining Reserves + Production >80% increase in production levels Oil Production (Mbbl/d)» Reforms separated Ecopetrol s dual role of regulator and Oil Company» Role of administrator and regulator of hydrocarbon resources assigned to the National Hydrocarbon Agency (ANH) Camo Limon Discovery (1200 MMbbls) Cusiana Discovery (750 MMbbls) Cupiagua Discovery (510 MMbbls) Establishment of ANH Pacific E&P acquires Rubiales field Source: BP 2016 Statistical Review - 5

6 but investment is still required to replenish reserves & production levels Ecopetrol total proved reserves Reserve Life Index (Oil) 2500 Proved reserves (MMboe) RLI (years) Ecopetrol percentage of s oil production 0 Mexico Argentina Brazil Ecuador Peru Trinidad & Tobago Venezuela Other Latin America» Current production levels are not sustainable over long term at current proved reserve levels (Ecopetrol s lowest in 5 years) Remaining Ecopetrol» 2016 Reserve life index is 6.3, the lowest in South America and one of the lowest out of all producing countries in the world» Future growth in oil production will require greater exploration and oil discoveries to replenish increase in s Reserves 6 Source: Ecopetrol SEC EDGAR Source: BP 2016 Statistical Review

7 with fears by the Office of the Comptroller General of losing its oil independence 1,000,000 Bopd peak oil production in 2013, with close to 2 billion barrels in total proved reserves 872,000 Average 2017 year end production estimate, with total proved reserves in at 1.6 billion barrels 32% down from three years earlier 2021 End of oil self sufficiency at current forecasted rates 7

Plenty of investment opportunities still exist in given the initiatives to increase reserves, particularly in unconventionals E&P investment levels in 9 8 $8.

8 Plenty of investment opportunities still exist in given the initiatives to increase reserves, particularly in unconventionals E&P investment levels in 9 8 $8.3b $7bn of investment required for country to meet government production targets Investment levels, billions $ USD $2.1bn of E&P investment still needed An increase of $2.6bn of investment coinciding with better expectations by oil & gas companies Amidst low oil prices, represents a fraction of the $8.3bn of invested into two years earlier 8

9 prompting the government to take additional measures to ensure national energy security Promoting offshore development Three special economic zones dedicated to facilitating offshore exploration in the Caribbean Sea Tax and customs incentives offered to companies drilling offshore wells, including Ecopetrol, Anadarko, Exxon, Petrobras, Repsol and Statoil Ecopetrol and Anadarko with several deep water off shore gas discoveries in the Purple Angel, Furte Sur and Furte Norte blocks, collectively covering a total of ~14,900 square kms Expediting exploration rights process Government has gotten rid of the two year auction system for allocating exploration rights Replaced with model under which companies will be allowed to bid at any time for the oil blocks put out to tender Unconventional oil and gas deposits Ecopetrol CEO Juan Carlos Echeverry announcing in August 2017 that the company will be ramping up shale oil production in the country. Recoverable oil could be between 2.5 to 7 billion barrels Shale production to drive the company s strategic focus over the next decade to boost reserves. Ecopetrol acknowledges that we are not unconventional experts and so we would seek partners with the know-how Interested parties reportedly include Occidental Petroleum and Shell 9

10 s shale prone Middle Magdalena Valley Middle Magdalena valley basin Stratigraphic chart La Luna formation 10 Source: Platts Source: ANH

11 Middle Magdalena La Luna comparison chart La Luna versus other unconventional plays Eagleford Woodford Haynesville Bakken Marcellus La Luna VacaMuerta Oil/Gas Oil/Gas Gas Oil/Gas Gas Oil/Gas Oil/Gas Depth (ft) 4,000-13,000 6,000-14,000 10,000-13,500 4,000-11,000 4,000-12,000 4,000-17,000 6,000-11,000 Net shale pay thickness (ft) TOC (wt %) Ro (%) Source: Search and discovery

12 Middle Magdalena La Luna formation good TOC and pay Parallels to Eagleford La Luna formation Comparison between core samples show comparable characteristics such as porosity, TOC and permeability Porosity Eagleford ~ 7.3% La Luna ~ 6.3% Horizontal Permeability Eagleford ~700nD La Luna ~ 920nD Similar depths and similar age Parallels to Vaca Muerta Complex stacking pattern of varying lithologies Stacked shale packages Overpressured Similar depths and size of shale packages TOC (wt%) 200 TOC (wt%) Kerogen Quality < 0.5 Very poor 0.50 to 1.0 Poor to 2.0 Fair Net shale pay thickness (ft) 2.0 to 4.0 Good 4.0 to 12.0 Very good Source: Search and discovery > 12.0 Excellent 12

$porosity 14% Overpressured formation at up to 8146 psia Flowed up to 590 bopd of 22 API oil, 118 mscfpd with virtually no water in 24 hour test in naturally fractured reservoir December 2016 - Well 2$

13 La Luna: Some of Canacol s results September Well 1 : Mono Arana Canacol shale acreage Well drilled to 9,942 feet MD 760 feet of gross pay in La Luna formation 230 feet of net oil pay, average porosity 14% Overpressured formation at up to 8146 psia Flowed up to 590 bopd of 22 API oil, 118 mscfpd with virtually no water in 24 hour test in naturally fractured reservoir December Well 2 : Mono Capuchino Well drilled to 10,023 feet MD 769 feet of gross pay in La Luna formation 406 feet of net oil pay, which consists of shales and limestones with average porosity of 15% and open fractures visible on image logs Recovered uncommercial heavy oil from La Luna but tested commercial rates from Tertiary Lisama sandstone July Well 3 : Pico Plata Well drilled to 16,406 feet MD 1369 feet of gross pay in La Luna formation 866 feet of net oil pay, average porosity 10% Three slickwater fracs, between feet thick varied between 80, , 000 pounds Variable flow rates from bopd of 31 API oil with no water Source: Canacol Source: Canacol 13

Active unconventional exploration blocks 1

Unconventional hydrocarbon deposits (ANH,

deposit Available Blocks Coal Bed Methane

Remaining unconventional hydrocarbon blocks

14 Fracking s unconventional resources? 48 Unconventional hydrocarbon blocks 11 Active unconventional exploration blocks 1 Active unconventional production block 1 Reserved block 6 Operators ANH deemed unconventional blocks (includes CBM) Unconventional hydrocarbon deposits (ANH, Feb 2017) Available Blocks Unconventional deposit Available Blocks Coal Bed Methane Active Blocks Unconventional exploration 35 Remaining unconventional hydrocarbon blocks Unconventional production Select operators Source: ANH, Geographiando 14

Environmental oppositions to s shale development Environmental and indigenous concerns Overlap of unconventional concessions with indigenous territories Black Line is area of special protection and

$dangers of fracking, government will need to balance the need for economic benefit and environmental concerns Protests against fracking in Indigenous Territories Indigenous reserves The Black Line$

15 Environmental oppositions to s shale development Environmental and indigenous concerns Overlap of unconventional concessions with indigenous territories Black Line is area of special protection and indigenous peoples affected in this area need to be consulted before project approval Blocks outside of the Black Line area not subject to same limitations Some environmental groups concerned about dangers of fracking, government will need to balance the need for economic benefit and environmental concerns Protests against fracking in Indigenous Territories Indigenous reserves The Black Line Natural National Parks Urban cabildos, rancherias and unguarded communities Colonial reserves Other Indigenous territories Unconventional blocks Coal Bed Methane blocks Unconventional blocks that overlap with Indigenous territory Coal Bed Methane blocks that overlap with Indigenous territory Indigenous peoples affected Source: ANH, Geographiando 15

16 Cautionary statements The opinions expressed within this presentation are those of the authors/presenters. No representation or warrant, express or implied, is made by McDaniel as to the certainty or completeness of the information contained in this presentation, and nothing contained in this presentation is, or shall be relied upon, as a promise or representation by McDaniel This presentation may not be reproduced, in whole or in part. The disclosure of any of the data contained herein or supplied in connection herewith or the use thereof for any other purpose, except with the written consent of McDaniel, is strictly prohibited 16

Mexico : An Emerging Opportunity. Cam Boulton, P. Eng McDaniel International Ltd. CGEF Conference World of Opportunity 2014

Mexico : An Emerging Opportunity Cam Boulton, P. Eng McDaniel International Ltd. CGEF Conference World of Opportunity 2014 Overview of Oil & Gas in Mexico 1869 First oil discovered 1938 Expropriation PEMEX