South America: Ecuador

SOUTH AMERICA

Stuart Wilkinson, Contributing Editor

Ecuador

Conversion to a dollar-based monetary system and general economic recovery are going better than expected. Economic growth could be restored this year, and privatization programs could be launched that would increase growth in 2001. The IMF and World Bank have approved loans to help the country’s economic difficulties.

Exploration. In May this year, Pérez Companc announced discovery of more than 500 million bbl of probable oil reserves at Block 31 in Orellana province. The find was made at 6,100 to 7,000-ft depths, and production potential is estimated at more than 5,000 bopd. The company plans to drill two more wells in the block. This is a sensitive area, however, being located within a national park. Accordingly, environmental issues and the concerns of local Indian tribes are important considerations.

Development/drilling. Wells drilled are estimated to have declined 43% last year. A 31% increase is projected for 2000. CMS Oil and Gas tested its Ginta-B 4H well on Block 16 at flowrates up to 17,750 bopd and 550 bwpd. Also in Block 16, Tivacuno, Bogi and Capiron fields are being developed in a JV comprising YPF (operator, 35%), Taiwan’s Overseas Petroleum and Investment (31%), CMS (14%) and two Murphy Oil subsidiaries (10% each). These fields are capable of producing 70,000 bopd, but constraints on the trans-Ecuador pipeline system allow only 45,000 bopd. Completion of an expansion line, due in 2001, will boost production significantly.

Bellwether Exploration signed a production sharing agreement with Petroecuador for E&P operations in the 63,000-acre Charapa field, Oriente basin, northern Ecuador. Three or four horizontal wells were to be spudded this year. Bellwether is to invest $11.7 million over the next three years in a minimum work program. Current oil production is 214 bpd of high-gravity oil, tied to an existing pipeline. To date, the field has produced 1.5 million boe.

Production. Crude output declined about 8% last year. The country’s new President, Gustavo Noboa, presented a bill regarding hydrocarbons to Congress for funding of the second 250,000-bopd export pipeline. This would bring in additional, direct foreign investment of $500 million and raise national production by 11% annually through 2005. The bill also would allow Petroecuador and private operators to reactivate field exploration and development in Ishpingo, Tambococha and Tiputini.

Former president Jamil Mahuad had planned to introduce the bill, but a coup overthrew him in January. Petroecuador plans to attract foreign investment with a tender, to be held later this year, for the country’s main oil fields (Shushufindi, Sacha, Libertador, Cononaco and Auca). Petroecuador also plans to boost production by 60,000 to 100,000 bpd and encourage foreign capital for refinery upgrades at Esmeraldas, La Libertad and Shushufindi.

The new legislation would also allow private companies to own and operate pipelines with no maximum, set period. With these developments, the country’s productive capacity could increase to 700,000 to 800,000 bopd from last year’s 373,000 bopd.