(Energy Analytics Institute, Piero Stewart, 24.May.2019) — As part of Energy Analytics Institute’s ongoing coverage of the Latin America and Caribbean energy sectors from conventionals, unconventionals to renewables, Colombia’s Hydrocarbons National Agency (ANH) weighs in on some of our Colombia-related questions.
What follows are excerpts from our series: LatAmNRG Q&A
Energy Analytics Institute: With gas reserves now enough to last for 9.8 years, where would Colombia turn to import gas in the future between 2021-2023 as mentioned by Mining and Energy Minister Maria Fernanda Suarez: the USA or other countries?
ANH: Due to product availability and competitive price, the natural market to supply gas insufficiency in Colombia would be the supply available in Trinidad and Tobago and the Gulf of Mexico, including the United States trading companies that operate there. It is also important to point out that Colombia has a regasification plant in Cartagena, which allows the entry of this fuel through the Caribbean.
Energy Analytics Institute: What can be done to quicken efforts to boost conventional oil and gas exploration offshore and onshore Colombia in order to boost first reserves and then production?
ANH: To accelerate the exploration and production of oil and gas in Colombia, and in order to increase reserves and production, the government launched the new Permanent Process of Area Allocation (PPAA) in February 2019. Initially, the ANH offered a package of 20 blocks for Exploration and Production (E&P), 18 Onshore and 2 Offshore; whose offer, award and signature is expected to be completed at the beginning of the second half of 2019. Additionally, the process allows investors to suggest and offer areas that are of their particular interest at any time of the year.
Another initiative that is contemplated is a regulatory adjustment that will allow the arrival of medium and small investors to the industry; it is what we have colloquially called the “B League”, so they can efficiently operate discovered and undeveloped minor fields. In the future, because it is a permanent process, we expect that a regularized cycle of exploration, discovery and production will guarantee the country’s energy self-sufficiency and maintain an adequate level of reserves.
Energy Analytics Institute: With offshore exploration activities announced so far by Shell, Noble and others, how long more or less before we could expect to hear some news from them?
ANH: In 2019, Colombia, through the National Hydrocarbons Agency (ANH), has signed five offshore exploration and production (E&P) contracts with Ecopetrol, Shell and Repsol. In the contracts signed with Shell, Noble Energy came as a partner (40%) and operator. It is expected to sign four additional contracts with Anadarko, whose definition depends of Oxy the moment it takes control of the company. The first exploration wells are expected to start drilling in the second half of 2020 and the first results of the exploratory program are expected to be known towards the end of 2021.
Energy Analytics Institute: Oil reserves are now enough to last for 6.2 years compared to 5.7 years, what needs to be done to continue this trend of finding more oil reserves?
ANH: Apart from the periodic subscription of E&P contracts in Onshore and Offshore areas, which can deliver medium and long-term results, projects for Enhanced Oil Recovery (EOR) and Incremental Production (PPI) are being promoted for the short and medium term, as well as the assignment of discovered and undeveloped minor fields. In addition, the transfer of the Ecopetrol Agreement areas is being promoted so that new investors can come to repower them. Finally, the government studies the possibility of allowing the development of exploration pilots in Unconventional Reservoir in some very specific areas of the Colombian territory. All this, together with an effective coordination strategy with all the entities that grant the permits the oil operation requires (Anla, Ministry of the Interior, among others) and the start-up of the “B League” to allow the entry of many companies into the business and accelerate the drilling of A3 wells.
— With assistance from Pietro D. Pitts
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