Producing Assets
OVERVIEW
Pacific Rubiales has one of the most talented and experienced production and engineering teams in Latin America.
Over the last four years, the Company has transformed the Rubiales field, located in the Eastern Llanos Basin, into the largest producing field in Colombia, and one of the biggest onshore fields in all of Latin America.
The Company continues to demonstrate dynamic year-over-year production growth, nearly doubling every year since 2007.
The Company continues to expand and to build its production portfolio outside of the Rubiales field. The Quifa heavy oil field contiguous to Rubiales is ramping up to large scale production, and the natural gas field La Creciente, and six producing light and medium oil properties throughout Colombia, provide the Company with a diversified asset base.
THE LLANOS BASIN
Building Capacity in Colombia’s Most Important Heavy Oil Basin
The Llanos Basin is the most important heavy oil basin in Colombia. The Company is working to secure market access and maximize production in this highly prospective region.
Description
The Rubiales field, which comprises the Rubiales and Piriri Blocks in the Eastern Llanos Basin, is the main contributor to the production portfolio of the Company. The Rubiales field represents approximately 85% of the Company’s total gross operated production, and is the largest producing field in Colombia.
The Rubiales field consists of mostly basal sands, which produces heavy oil of 12.5° API, and has an independently certified Stock Tank Oil Initially in Place (“STOIIP”) value of 4.17 billion barrels of oil.
The strategic partner for this asset is Ecopetrol with a 50% working interest in the Piriri Block and a 60% interest in the Rubiales Block.
The table below shows the increase in the Rubiales field’s production in the last three years:
| Average Daily | 2008 | 2009 | 2010 |
|
Net Production
(bbl/d)
|
13,288 |
30,514 |
53,065 |
|
Gross Production
(bbl/d)
|
36,816 |
68,827 |
123,581 |
Production
The Company has demonstrated consistently over the past several years that it can ambitiously increase the production from this asset. In 2010, average daily gross production at the Rubiales field was 123,581 bbl/d (53,065 bbl/d net before royalties). This was an increase of nearly 80%, as it produced 68,826 bbl/d (30,514 bbl/d net) in 2009. By February 28, 2011 the Rubiales field was producing 205,000 bbl/d gross (79,800 bbl/d net after royalties).
This production growth was made possible by the Company drilling 146 producing wells at the Rubiales field in 2010, as well as the completion of Central Processing Facility 2 (“CPF-2”) to enable full production to the end of the field’s 2016 contract period. The Company has boosted its gross production capacity to 220,000 bbl/d, which will be fully utilized once the expansion of the OCENSA pipeline is complete.
The Company made the following construction upgrades to the production facilities at the Rubiales field in 2010:
• 24.7 km of new roads
• 5 km of flow lines between 10” and 30”
• 4 new electrical power substations
• 1.2 km of new field electric network
• new water treatment facilities at CPF-1 to handle an incremental volume of 100,000 barrels of water per day (“bwpd”) reaching a total 1.2 mmbwpd of water from 400,000 bwpd in 2009
• 135,000 bwpd additional water disposal capacity in the new injection pad
Also located in the Llanos Basin contiguous to the Rubiales field is the Quifa Block. The Company has an initial 60% working interest in Quifa with Ecopetrol (40%), and the asset produces 13.5° API heavy oil.
In 2010, the Company drilled 30 producing wells at Quifa and the Company’s average gross operated production was 4,819 bbl/d (2,812 bbl/d net before royalties).
The Company is building the necessary heavy oil infrastructure for Quifa to ramp up to large scale production. In 2010, the Company completed the Central Processing Facility (“CPF”) at the block, which allowed the field’s production to reach a target of 30,000 bbl/d by the end of the year. Present production stands at 35,000 bbl/d.
The 2011 exploration plan for Quifa includes processing and interpreting 294 km2 of 2D seismic acquired in Q4 2010, and converting 251 mmbbl certified gross resources into 2P reserves, with the drilling of 7 exploratory/appraisal and stratigraphic wells during Q1 2011.
Completion of Central Processing Facilities and Construction Upgrades
In 2010, the Company completed and inaugurated CPF-2 at Rubiales, which added an additional capacity of 70,000 bbl/d to the Rubiales field. The Company also inaugurated, the CPF at Quifa, which has a capacity of 30,000 bbl/d.
The Company made the following construction upgrades to the production facilities at the Quifa field in 2010:
• 40.1 km of new roads
• 29.5 km of flow lines between 10” and 24”
• started operating CPF at Quifa, with an oil treatment capacity of 30,000 bbl/d and a water treatment capacity of 100,000 bwpd
LIGHT & MEDIUM OIL PRODUCTION
The Company is not only a producer of light and medium crude, but also a buyer and seller for both the dilution of its heavy streams and for trading. In 2010, the Company purchased 12,731 bbl/d of light crude in the eastern Llanos for the purposes of securing diluents for Rubiales crude oil, and increasing the exports of crude oil blends such as Vasconia through the Company’s Guaduas facilities.
Purchases of light crude oils serve as a substitute diluent for imported naphtha or natural gasoline, significantly reducing the Company’s dilution costs as compared with the use of natural gasoline.
The Moriche field produces light oil. In 2009 the Company farmed-out a 49.5% working interest in the field to Petrodorado, a Canadian E&P company. This farm-out reduced the Company’s exploratory commitments over the next two years, and makes the Company’s resources available to advance other assets. In 2010 gross average daily production was 167 bbl/d (76 bbl/d net before royalties).
UPPER MAGDALENA VALLEY BASIN
The Abanico field produces medium oil (19° API) and natural gas. The Company acquired a 25% working interest in Abanico in 2008. Ecopetrol (50%) has a working interest in Abanico, as well as a collection of other companies, which comprise the remaining 25%. In 2010, the Company produced 896 boe/d (net), an increase of almost 10% compared to 2009.
The Company has a 91% working interest in the Guaduas field, along with Cimarrona (9%); this field is operated by Pacific Stratus Energy. Part of the Rubiales heavy crude is diluted at Guaduas with light crude to make a blend of 18° API.
The Puli field produces light (32° API) and medium oil. The Company has a 50% stake in the field, along with Interoil (50%). The Company produced 82 bbl/d (gross) in 2010 (40 bbl/d net before royalties).
The Rio Ceibas field is part of the Caguan Block. The Company has a 27% stake in the field, with Ecopetrol (50%) and Petrobras (23%). The Company had an average daily production of 1,871 bbl/d in 2010 (506 bbl/d net before royalties).
NATURAL GAS
Increased Production, Long-Term Potential
The Company owns 100% of the La Creciente natural gas asset. La Creciente is among the biggest Colombian natural gas discoveries in recent years. It is located in the Lower Magdalena Valley Basin, in the department of Sucre, in the municipalities of Buenavista, Los Palmitos, Ovejas, San Pedro, and Sincelejo.
In 2010, production at La Creciente averaged 60.3 million cubic feet per day (“mmcfd”) of natural gas (10,055 boe/d), an increase of 36% compared to 2009’s production of 7,382 boe/d.
The sale of gas produced at La Creciente to the domestic market averaged 60 mmcfd at an average price of $4.82/mmbtu.
The Company completed numerous upgrades at La Creciente in 2010:
• Upgraded facilities for handling and treating gas in La Creciente, which now allows delivery to the transporter at the quality required by Colombian regulations. This allowed for a new production record in the field of 70.2 mmcfd on December 22, 2010.
• Additionally, the Company acquired pipe and part of the right-of-way required to build a new gas pipeline for gas export. The Company has five producing wells at La Creciente with the capability to produce 120 mmcfd, but due to production constraints cannot produce to their capacity. The Company expects that this new gas pipeline will solve the downstream constraints that currently limit La Creciente’s production.
The Company’s gross 2P reserves at La Creciente are 489.97 billion cubic feet (“bcf”) based on Original Gas in Place of nearly 600 bcf.
Rubiales: The Heart of the Llanos
