Wood Mackenzie - Venezuela - Plataforma Deltana Block 4

03/09/13Wood Mackenzie - Venezuela - Plataforma Deltana Block 4 Welcome Edmundo Salazar | My Preferences | WoodMac Home Home Analysis by Region Analysis by Topics Insight Articles Support Search Search Go Oil EOR Heavy Oil Oil Sands Water Depth Deepwater Ultra Deepwater Gas Acid gas CBM (Coal Bed Methane) LNG Shale Gas Sour Gas Tight Gas HP/HT Asset Analysis Analyses Launch PathFinder Print Friendly Version Email me when updated Downloads Sections You are in: Latin America Atlantic Venezuela Plataforma Deltana Block 4 Last updated : May 2013 Contact the analyst Joshua BraggiatoTel. +1 713 470 [email protected] Key Facts Download Table Technical Reserves Location Timetable Basin: Columbus Cocuina Field Discovery 2 First Licensing Round Licence: Block 4, Area: 201 km Issue Date Water Depth: 238m Operator Statoil Farm-In by Total Exploration Phase Ended Participants Statoil Offshore Apr 1983 Dec 2002 27 Feb 2003 Jan 2005 Oct 2007 % 51.00 www.woodmacresearch.com/cgi-bin/wmprod/ups/asset.xpg?id=-600230142&BV_SessionID=75660DB5CD5FC9AB90622DF5E8D2BCCE.wmprod-02-nod… 1/7 there are still no formal agreements in place in regards to the projects' development. Plataforma Deltana Block 4 lies adjacent to T&T's Block 5b.2 2. A reduction in natural gas prices in the Atlantic Basin as well as growing domestic gas needs fueled the decision. while local wages have continued to increase. Cross-border fields A number of cross-border fields are situated in the Plataforma Deltana region between Venezuela and T&T. For the purposes of this analysis and until commercialisation becomes clearer. the Venezuelan government signaled its commitment to encouraging more domestic gas production by reaching a sales agreement with a competitive tariff of US$3. there remains considerable uncertainty over how Cocuina gas will be commercialised. periodic devaluations of the Venezuelan Bolivar have protected companies from extraordinary inflation in dollar terms. Key Issues For additional countrywide key issues.wmprod-02-nod… 2/7 . Inflation and currency Over the past decade. leaving Block 4 tightly drawn around Cocuina.69 per million BTU for the Perla development. In the oil industry. Hurdles to the speedy exploitation of Plataforma Deltana gas are many. After the Plataforma Deltana acreage was re-awarded in 2003. we do not include a cash flow. Cocuina straddles the border with Trinidad & Tobago (T&T) and a northern extension of the field into T&T is known as Manakin. going forward. confirming a sizable deposit. Location Maps Index Map www. where it is known as Cocuina. The initial exploration programme was completed in October 2007 and the operator is considering development options. which is operated by BP. Over time. Furthermore.Venezuela . averaging 25-30% per year. Correspondingly. The original discovery of the Cocuina field was made by PDVSA in 1983 after which it turned its attention elsewhere. At the same time.xpg?id=-600230142&BV_SessionID=75660DB5CD5FC9AB90622DF5E8D2BCCE. On the commercial side. However.00 Hydrocarbon Quality Calorific Value (btu/scf) Sulphur (%) Reservoir Depth (m) 1. we classify reserves in Block 4 as technical. The two countries signed a Memorandum of Understanding (MOU) in August 2003 to progress in talks towards unitisation and joint development of the fields.000 0. which is licensed to BP and Repsol.500 Summary and Key Issues Summary Plataforma Deltana Block 4 is an exploration licence located in offshore eastern Venezuela. However. Statoil drilled an appraisal well on Cocuina in late 2006.woodmacresearch. such as Plataforma Deltana. Cocuina's commercialization Commercial exploitation of Cocuina is still years off as the area is devoid of infrastructure (at least on the Venezuelan side of the border). in dollar terms.com/cgi-bin/wmprod/ups/asset. The Manakin field extends into Plataforma Deltana Block 4. Further wells on the Ballena and Orca prospects were less successful and the acreage around these prospects was relinquished. We assume inflation on total operating costs will be around 3% per year. of which a substantial portion is local labour. Technical Reserves Source: Wood Mackenzie Wood Mackenzie . the Venezuelan economy has had some of the highest inflation rates in the world. LNG off the table The Venezuelan government announced the suspension of LNG plans for its major offshore gas projects. expensive pipeline infrastructure is required to link the fields to markets.Plataforma Deltana Block 4 Total 49. please see the Venezuela Country Overview. Cocuina is not thought to be big enough to support any kind of stand-alone development. in 2011. this has mainly affected companies' operating expenses.03/09/13 Primary Reservoir(s): Neogene\Pliocene Recoverable Reserves (p+p)1 1 mmbbl Cond 400 bcf Gas Remaining Reserves at 01/01/2013 1 mmbbl Cond 400 bcf Gas Contract Concession 1. Venezuela .woodmacresearch.03/09/13 Wood Mackenzie .wmprod-02-nod… 3/7 .com/cgi-bin/wmprod/ups/asset.Plataforma Deltana Block 4 Detail Map www.xpg?id=-600230142&BV_SessionID=75660DB5CD5FC9AB90622DF5E8D2BCCE. the Government entered into direct negotiations with a number of preferred bidders for the exploration and exploitation of non-associated gas in the area. PDVSA undertook exploration work in Plataforma Deltana in 2002 with plans to hold a licensing round. The merger became effective in October 2007 and the new entity was called StatoilHydro. www.wmprod-02-nod… 4/7 . Statoil and Norsk Hydro announced plans to merge their respective upstream operations. Acreage further south. Statoil and Total bid signature bonuses of US$32 million and US$5. Statoil announced that it had farmed out a 49% non-operated interest in the block to Total.03/09/13 Wood Mackenzie .com/cgi-bin/wmprod/ups/asset. In January 2005. In December 2006. Full details can be found in the Regulatory Framework section of the Venezuela Country Overview. The Gas Apertura and the associated legislation behind it provided the catalyst for the development of the nation's nonassociated gas reserves. around the Orca and Ballena exploration prospects. In December 2002.woodmacresearch. was also returned to the state. Effective November 2009.15 million respectively.Venezuela . History The Gas Apertura ("Opening") policy was introduced in 1999 in order to expand the role of gas in the economy.Plataforma Deltana Block 4 Participation Plataforma Deltana Block 4's participation is divided between Statoil (51%) and Total (49%). Statoil’s bid was accepted and the licence for Block 4 was issued in February 2003. the name was changed to Statoil. A large proportion of Block 4 was later relinquished with the operator only keeping an area around the Cocuina discovery. In parallel.xpg?id=-600230142&BV_SessionID=75660DB5CD5FC9AB90622DF5E8D2BCCE. Three obligation wells were www. Hydrocarbon traps were formed by an easterly-trending Pliocene-Pleistocene wrench fault system with its associated anticlines and bisecting normal faults. Subsequently abandoned.com/cgi-bin/wmprod/ups/asset. with a number of reservoir horizons. deposited in three clastic sequences that coarsen upwards.200 to 4. Pleistocene (East Manzanilla.500 Source: Wood Mackenzie Well Data Download Table Well Name Operator Type Cocuina-1 Exploration Ballena-1X Exploration PDVSA SpuddedTMD(m) Result Completed WD(m) 25 Feb 1983 2.woodmacresearch.985 Gas Shows 354 Drilled 80 metres south of Ballena-1X. followed by a late Pleistocene transgressive sequence.499 * Gas 23 Apr 1983 134 Statoil Cocuina-2XStatoil Appraisal Ballena-1X RE Exploration Statoil 01 Jan 2005 01 Jun 2005 24 Aug 2006 24 Nov 2006 25 Dec 2006 08 Jan 2007 Discovery Field Comment Cocuina field discovery well. 355 Ballena-1AX Statoil Exploration 10 Jan 2007 10 Jul 2007 3. 3. Flamboyant) and Oligocene Cipero Formation (Mahogany). Source The ancestral Orinoco River deposited very thick layers of sediments (over 6.123 Dry Hole 538 Dry hole Statoil Source: Wood Mackenzie * Technical Discovery Exploration Exploration commitments Block 4 was awarded in February 2003 with a four-year initial term. Reservoirs Hydrocarbon accumulations occur in Pliocene-Pleistocene sediments.960 metres).600 Dry Hole 355 Well suspended owing to rig problems (PTD was 3. Reservoirs are all in the depth range 1.03/09/13 Wood Mackenzie . Horizontal drilling of wells and 'frac and pac' completion work. The geology is very complex. Poui).000 metres) in the sub-basin. 2.Plataforma Deltana Block 4 Under the terms of the 2000 Gas Law. There are two main structural units: ENE trending anticlines and NW-SE orientated east-dipping normal (extensional) faults. Structure The Columbus sub-basin was affected by compressional and wrench tectonics in the Pliocene and Pleistocene.600 metres. north-east of Venezuela. 3. Producing reservoirs in Trinidad & Tobago are the Lower Pliocene Gros Morne Formation (Samaan.959 Gas Shows Re-entry of the Ballena-1 well. PDVSA has the right to back-in to any of the Plataforma Deltana blocks with equity of up to 35% after declaration of commerciality. Orca-1X Exploration 12 Jul 2007 31 Oct 2007 4.xpg?id=-600230142&BV_SessionID=75660DB5CD5FC9AB90622DF5E8D2BCCE.wmprod-02-nod… 5/7 . as seen in some Trinidad & Tobago fields. will probably be required. Download Table Field Hydrocarbon Characteristics Field Calorific Value Reservoir Depth btu/scf m Cocuina 1. Geology The Plataforma Deltana region is situated in the offshore Columbus sub-basin.406 Gas 205 Three intervals tested and dry gas confirmed.Venezuela . Extends north into BP's Manakin field in Trinidad & Tobago waters.000 2. Pliocene (Cassia). Targeting Pliocene and Pleistocene. the Upper Pliocene (Teak). 03/09/13 Wood Mackenzie . The company committed to drill three exploration wells and in January 2005. Ballena-1X. we classify Cocuina and Manakin as technical reserves.583 metres. Manakin. a declaration of commerciality will be required in order to keep any acreage. including all the area around the Ballena and Orca prospects. Talks are understood to be underway between partners and the Venezuelan government over domestic monetization options for the larger gas fields. Gas (mmbbl) (bcf) (mmbbl) (bcf) Cocuina 1 400 1 400 Source: Wood Mackenzie Development Domestic commercialization Despite outlining ambitious development plans for its offshore gas acreage involving LNG. and if. however.wmprod-02-nod… 6/7 . has been relinquished and Block 4 is now tightly drawn around Cocuina. although further appraisal is possible. The platform on Loran could be connected to a CPF sited in the north of the field. If Cocuina is ultimately developed in conjunction with Trinidad's Manakin field. Early activity The Columbus sub-basin is well explored on the Trinidad & Tobago side of the border but is only sparsely explored on the Venezuelan side. 36inch pipeline would be expected to connect the field to the CIGMA plant onshore. although further appraisal may prove up additional reserves. We understand there has been no declaration of commerciality for Cocuina. it spudded the Ballena-1X exploration well. led to a six-month extension. it will likely be tied back to a Wellhead Platform on the Loran field. Gas Cond. has another 1 tcf or so). However. the Cocuina field in Block 4 will likely be exploited using a fixed platform and tied-back to any CPF planned on the Loran field.woodmacresearch. to appraise the shallower reservoirs probed by Cocuina-1 and secondly. Transportation It is likely that if Cocuina ever comes onstream. The operator next decided to target the relatively lower risk Cocuina-2X well. Before either field is properly developed. Reserves Gas Cocuina is believed to hold around 400 bcf of recoverable gas (its northwards extension into Trinidad & Tobago. a 295-kilometre. the Manakin gas field was discovered within Block 5b in May 2000. Loran will likely be connected to the CIGMA industrial via a 295 kilometre gas export pipeline. The operator is eligible for a two-year appraisal period for any finds before a decision on development is made.Venezuela . Problems with the first well. At that point. Future activity No further exploration drilling is currently expected. The initial exploration commitment was completed with the drilling of Orca-1X.20 kilometres. Recent activity Block 4 was licensed to Statoil in February 2003. targeting a structure 30 kilometres to the southeast of Cocuina. As there is no clear development plan. Manakin also holds around 1 million barrels. It had two objectives: firstly. Depending on where the production facility for Cocuina would be situated. The well was located 240 kilometres from the Orinoco Delta. In Trinidad & Tobago.com/cgi-bin/wmprod/ups/asset. to explore deeper targets. When. the vast majority of the original block. Download Table Technical Recoverable Reserves (Remaining Reserves at 01/01/2013) Init Init Rem Rem Cond. development takes place. next to the border with Trinidad and Tobago and from there. with further development dependent on a Unitisation Agreement.Plataforma Deltana Block 4 required. once development moves forward there.xpg?id=-600230142&BV_SessionID=75660DB5CD5FC9AB90622DF5E8D2BCCE. www. Manakin is the northern extension of Cocuina and is operated by BP. it is also possible Cocuina could be developed in conjunction with the Manakin field in Trinidad and Tobago. transport options are unclear as there is limited infrastructure nearby. It logged 100 metres of net pay in seven sands and tested 25 mmcfd of gas in a single DST from the 15L sand at a depth of 2. However. subject to agreement with the Venezuelan authorities. followed by delays in securing a second rig. Manakin is a northwards extension of Cocuina. Condensate The gas is very dry and liquids volumes are minor. We estimate Cocuina holds around 1 million barrels of condensate. a unitisation agreement between Trinidad and Tobago and Venezuela would have to be reached. the tie-back could be 15 . Caracas has decided to re-focus efforts on domestic commercialization of its non-associated gas fields. Statoil's exploration programme cost around US$175 million. special conditions were put in place to foster investment in the exploration & exploitation of nonassociated gas reservoirs. although Ballena1AX took longer. Moreover. the current arrangement with Colombia has been extended through 2015. No gas sales agreements (GSAs) have been signed for any Plataforma Deltana gas. although PDVSA has announced that the country's non-associated gas should be channelled to the domestic gas market. Currently. given growing domestic gas demand in Venezuela. we assume if Cocuina is ever brought onstream. The other wells were budgeted at around three months each. Non-associated gas exploration & exploitation activities are subject to income tax liability of 34% (as opposed to the higher rate of 50% for associated gas). it seems likely the CIGMA plant will ultimately be connected to the Faja. it will be tied-back to Loran to help meet any of Loran's commitments. In particular. The Plataforma Deltana gas licensing round offers were awarded to the bids with the largest signature bonus.com/cgi-bin/wmprod/ups/asset. the planned development of the Carabobo acreage in the Faja heavy oil belt will further boost domestic gas demand.Venezuela . The Ballena-1X well ran well over budget and was suspended after six months. The royalty rate for volumes of non-associated gas sold into the market from Plataforma Deltana is a fixed 20%.Plataforma Deltana Block 4 Costs Exploration Costs We estimate that between 2001 and 2003 PDVSA spent US$200 million on exploration in the Plataforma Deltana region (approximately US$150 million on drilling). Venezuela imports around 200 mmcfd from Colombia and the former was expected to reverse flow in 2012 to begin supplying its neighbour.03/09/13 Wood Mackenzie . Copyright Notice and General Terms and Conditions www. Sales Contracts For the benefit of this analysis. domestic gas demand has been supported by growing power usage and further development of the petrochemical segment. At the same time. the recent GSA for the offshore Perla project. which was reported in December 2011 with a tariff of US$3.wmprod-02-nod… 7/7 .xpg?id=-600230142&BV_SessionID=75660DB5CD5FC9AB90622DF5E8D2BCCE. The licences offered during the 2001 gas licensing round were awarded to the bidder offering the highest additional royalty rate above the 20% rate as defined in the Gas Law and Regulations.69 mmcfd suggests the gas fees that other offshore gas fields may be able to secure in the future. © Wood Mackenzie 2013 | Conditions of Use | Data Protection & Privacy Policy | Disclaimer. However. Taxation In accordance with the terms of the 2000 Organic Law of Gaseous Hydrocarbons and the Regulations to the Gas Law.woodmacresearch.