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EXPLORATION AND PRODUCTION HYDROCARBONS IN COLOMBIA Ecopetrol ecopetrol.co

EXPLORATION AND PRODUCTION HYDROCARBONS IN COLOMBIA Ecopetrol www.ecopetrol.com.co. Gulf of Mexico. Venezuela. Panamá Ecuador Peru. Brazil. Pacific Ocean. Caribbean Ocean. Colombia in Latinamerica. 40 million inhabitants 4th largest market Stable economy

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EXPLORATION AND PRODUCTION HYDROCARBONS IN COLOMBIA Ecopetrol ecopetrol.co

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  1. EXPLORATION AND PRODUCTION HYDROCARBONS IN COLOMBIA Ecopetrol www.ecopetrol.com.co

  2. Gulf of Mexico Venezuela Panamá Ecuador Peru Brazil Pacific Ocean Caribbean Ocean Colombia in Latinamerica • 40 million inhabitants • 4th largest market • Stable economy • 2nd highest sustained growth over last 25 years • Significant petroleum position • 3rd largest crude oil exporter

  3. Ecopetrol - Company Negotiation: Program and Boundaries Company Acquires technical Data Free Consultation Ecopetrol - Partner Ecopetrol Contract Signature Approval HOW TO ENTER: Direct Negotiation Process • “First Come, First Served”, fast and easy negotiation process • No “Ring Fence” • No Bonuses • Free Technical data consultation • Shape and size of areas: To be chosen • All you have to do is send us a proposal including: • Area: Coordinates • Work Program: Exploration Strategy, Activity and Time • Legal, Technical and Financial Background

  4. Open Areas Frontier Areas RESERVES Billion Estimated Potential: 47 OEB Discovered: 7.5 Exploration Areas - Produced: 5.7 Production Areas - Remaining: 1.8 Land Map Ecopetrol is constantly offering upstream opportunities in Colombia. At the present time, we have the following portfolio: Open Areas (white areas):are those available for contracting under Standard Association Contract. Frontier Areas (rounded by red line): are the inactive areas in the country or frontier areas where there is little geological information and difficulty geographic conditions. These areas are contracted underFrontier Association Contracts.

  5. Association Contract for Frontier Areas • TERM Liquid Hydrocarbons Gaseous Hydrocarbons • Exploration : 6 years 6 years • Retention : 4 years (Max. per field) • Development : 22 years 30 years (Per field) • INVESTMENT • Exploration : 100% Associate • Development : 30% ECOPETROL / 70% Associate • REIMBURSEMENT : In current dollars adjusted for inflation, with Ecopetrol’s production share • 50% 100% • PRODUCTION : 70% Company - 30% Ecopetrol up to 250 MBls (3,75 TCF) • DISTRIBUTION Afterwards, the R Factor applied per field: • R between 2,0 and 2.5 R between 2 and 3 • EXPENSES : Proportional to production share

  6. CR :Cumulative Revenue of the Associate (Volume x Price) DI : Seventy per cent (70 %) of Cummulative Development Investment A : Direct Exploration Costs incurred by the Associate B : Cummulative Reimbursement of Direct Exploration Costs (Max. 70%) OE : Cummulative Operating Costs of the Associate Association Contract – R Factor Definition CR CUMMULATIVE REVENUE OF ASSOCIATE IN EACH FIELD R = = DI + OE + A - B CUMMULATIVE EXPENDITURE Production Distribution based on the R Factor applies when the cummulative production of each Commercial Field exceeds 60 million barrels of liquid hydrocarbons or 900 billion cubic feet of gas, whichever occurs first.

  7. GASEOUS HYDROCARBONS LIQUID HYDROCARBONS - After Royalties - - After Royalties - 70 70 70/(R-1) 70/(R-0.5) Production Percentage Production Percentage 35 35 0 0 0 1 2 3 4 0 1.5 2.5 R Factor Value • R Factor Value Associate’s Production Share After 900 BCF (Gas) or 60 MMBO (Oil) of Accumulative Production by Field:

  8. Royalty System per Field 30% 25% 20% Percentage 15% 10% 8% 5% 0% 0 5 125 400 600 Daily production (KBOEPD) • For Gas Offshore: 60% of Oil Royalties (>1000 ft). Onshore: 80% • Heavy Crude Oil (< 15° API): 75% of Light Oil Royalties.

  9. EXPLORATION OPPORTUNITIES IN COLOMBIA

  10. Opportunities: Exploration Future Big Structures Projects with Potential between 1-12 TCF CARIBBEAN OFFSHORE) Turbidite Projects with Potential between 50-500 MMBOE SINU-VIM PANAMA Fractured Reservoir Projects (Cretaceous), with Potential between 50 - 100 MMBOE VMM “Foothill’s Type Projects with Potential between 50-600 MMBOE EASTERN FOOTHILL OF THE CENTRAL CORDILLERA WESTERN FOOTHILL OF THE EASTERN CORDILLERA Foothill’s Type Projects with Potential between 200-500 MMBOE LLANOS VSM EASTERN FOOTHILL OF THE EASTERN CORDILLERA COLOMBIA Projects with Potential of 50 MMBOE ECUADOR PUTUMAYO VENEZUELA

  11. Big Structures Projects with Potential between 1-12 TCF CARIBBEAN OFFSHORE) VENEZUELA COLOMBIA Opportunities: Caribbean Offshore • Resume • Available Acreage: • 100,000 square kilometers • Data Availability: • Geological Regional Studies • 40,000 kilometers of 2D Seismic • Data 0f 30 offshore wells PANAMA ECUADOR

  12. Opportunities: Caribbean Offshore • Resume • Petroleum Potential: • Source Rock: Petroleum system proven by production (oil and gas), and seafloor samples (oil). Source rocks exposed onshore. • Reservoir Rocks: Sands of cratonic (non-volcanic) origin delivered by major rivers. • Seals: Thick Middle Upper Miocene shaly units. • Play Types: Structures due to oblique subdution. Accretionary prism with thrust and strike-slip domains. • Engineering Issues: • Water Depth: From shore to 2,000 meters. • Transport Facilities: There is an oil shipping port and two gas pipeline systems (one along the coast line and the other one from the coast to the interior of Colombia)

  13. REASONS TO INVEST IN COLOMBIA

  14. Reasons to Invest in Colombia • Large offshore acreage unexplored with high potential. • Government highly interested in promoting upstream activity. • Internationally competitive economic returns (Royalty Package) • Variable Royalty scheme ( 8%-25%) • 70% production private company share • Reduction in time for enviromental permits • Strong focus on petroleum sector security • US support to security of pipeline in implementation stage • Proximity to the North American market; access from Pacific & Caribbean ports • Available pipeline infrastructure • Free available geological information (Seismic, Wells)

  15. We are working on … Security • The Colombian Government will provide assistance to handle security issues. • As a result of this security policy, the attacks to Caño Limón Pipeline decreased 75% in 2002. In 2003 the companies have acquired 1,232 kilometers of 2D seismic, 550 km2 of 3D seismic and drilled 11 wildcats Supporting Operations • Ecopetrol is supporting oil companies in social and environmental aspects when it is necessary. • Colombian Government has taken actions to provide environmental licenses for exploration and production activities in a short time.

  16. www.ecopetrol.com.co We Invite You to Invest in Colombia !

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