South America: Ecuador

SOUTH AMERICA

Stuart Wilkinson, Contributing Editor

Ecuador

In September, the country made the U.S. dollar the new national currency, at one dollar to 25,000 sucres (the old currency). The IMF said that fiscal reform and reduced public spending were needed. Nevertheless, state oil company Petroecuador budgeted 55% more in spending this year than in 2000. Security problems became an issue when Colombian guerrillas kidnapped 10 foreigners working in Ecuador’s oil patch.

Exploration. The ninth licensing round is being mapped out with 13 blocks: 11 onshore in the southeast and two offshore in the Gulf of Guayaquil. Ecuador’s 10th tender round for E&P contracts – its first since 1999 – is tentatively scheduled for early 2002. The tracts are primarily located in the southern Amazon, in Blocks 22, 25, 26, 29, 32 and 37.

Noble Affiliates’ Amisted 7 offshore well found gas in a deeper sand (below target reservoir) that was previously thought to be unproductive. Accordingly, reserves in the Block 3 field will have to be revised upward from the current 345 Bcfg, perhaps dramatically. The well tested 19.4 MMcfgd from 170 ft of net pay. An appraisal will be spudded in September or October 2001.

Argentina’s Pecom Energia confirmed, via an appraisal well, an oil discovery in Block 31 with estimated reserves of 500 million bbl. Pecom plans to start development in 2002.

Drilling / development. Drilling improved 41% last year. A 12.5% gain, to 54 wells, is forecast for 2000.

Rio Alto Exploration bought a 70% interest in Tiguino Block and a 90% share in Charapa Block. Mission Resources sold the stakes for $80 million. Rio will assume operatorship and fulfill Mission’s obligation to drill two wells by year-end.

Ten years overdue – and essential to the oil sector’s future – the OCP pipeline has been approved and contracted. The 175-mi (600-km) line will run parallel to the Trans-Ecuadorian pipeline and transport 300,000 to 350,000 bpd of heavy crude. A seven-company consortium will build the $1.1-billion pipeline. The consortium comprises Alberta Energy, Eni, Kerr-McGee, Occidental, Repsol-YPF, Pérez Companc and Techint. Most of the pipeline will be quickly filled when completed in two to three years, because operators have been "sitting on" reserves and production for lack of transport. However, local environmental groups have staged protests and could create delays.

Late-2000 plans to issue association contracts for development of Culebra-Yulebra and Victor Ruales Oriente fields were delayed until this year. The projects are expected to require $170 million for the drilling of 25 wells. Phillips and Clipper Energy will spend about $70 million to increase production at Atacapi-Parahaucu to 11,800 bopd. While Chinese Petroleum Corp. and Daker Petrolique will invest $23 million to hike output in Victor Hugo Ruales field to 4,700 bopd from 3,800 bopd.

Production. Petroecuador produces more than 75% of the nation’s output. The company hopes to reach 300,000 bopd by year-end, after averaging 259,000 bopd in 2000. The state firm’s gas production averaged 65 MMcfgd in 2000.