Location and background
The Rubiales Oil Field is the name given to the Rubiales and Piriri producing concessions. Located in the Llanos Basin,465 km from Bogotá in the Meta Department, the blocks have a combined area of 569 km square. The nearest town is Puerto Gaitán Meta located 167 km from the field. The Piriri and Rubiales concessions are surrounded by the Quifa Association Contract, which is an exploration block with an area of 1,529 km square.
The Rubiales Oil Field was originally a Petro Rubiales property. It is the company’s main oil asset and the one which promises the greatest growth for the future. The location, weather conditions and complexities of the geology make it a challenging but rewarding field from which to produce.
History
The Rubiales Oil Field was discovered in 1982, but was abandoned because the economics of producing heavy oil at that time could not justify the cost of extraction. In July 2002, Meta Petroleum became the field operator of the Rubiales and Piriri concessions and in that same year, drilled 6 wells achieving production of 940 bbl/d. In 2003 Meta invested in field development and drilled 14 new vertical wells, allowing it to reach an average production of 3,817 bbl/d.
When Meta Petroleum was acquired by Petro Rubiales Energy (the predecessor of Pacific Rubiales) in mid-2007, the goal for the year was to increase production to 17,000 bbl/d. However, the new management team believed greater production was possible and new growth objectives were set. Management’s belief and our employees’ skill were rewarded when production levels rose to an average of 24,529 bbl/d for the month of December. By mid-March 2008, average production had reached 30,253 bbl/d.
Geology
Oil is produced from the basal sands of the Carbonera Formation. Throughout the Colombian plains, fluvial depositional systems contain prolific hydrocarbon reservoirs. The Tertiary deposits of the Llanos Basin in Colombia correspond to this specific depositional system, which form where braided-meander rivers prograde into lacustrine or marine Basins.
Reserves
In March 2008, the company received the Reserve Report and the Statement of Reserve Data and Other Oil and Gas Activities Information for the Rubiales Oil Field, which was prepared by Petrotech Engineering Ltd. with an effective date of December 31, 2007. The reserve report was prepared in accordance with the guidelines of NI 51-101 policy and the Canadian Oil and Gas (COGE) Handbook. The Petrotech Report estimates the company's net share of the working interest proved reserve (1P) at 50.2 MMbbl of heavy oil, proved + probable reserve (2P) at 96.7 MMbbl of heavy oil, and proved + probable + possible reserve (3P) at 113.8 MMbbl of heavy oil. Previously in May 2007, Petrotech had estimated the 1P net reserve at 5.9 MMbbl of heavy oil (8.51 times increase), 2P reserve at 47.3 MMbbl of heavy oil (2.04 times increase), and 3P reserve at 85.0 MMbbl of heavy oil (1.34 times increase).
Seismic Activities
In 2007 the company started a new seismic acquisition program (249 km square of 3D seismic) in order to improve static modelling of the reservoir. It is expected that the field work will be completed by April 2008.
Also, during 2007 the company started an aggressive appraisal campaign, completing two wells. By March 2008, another seven wells were completed. As a result of this campaign the geological model has been confirmed and the amount, as well as the level of confidence of the reserves, has been increased.
The following table summarizes selected reserves information from the Petrotech report:
Production Milestones
Since the acquisition of Meta in July 2007, the company invested $35.5 millon (net) and disbursed operational expenditures of $33.0 million (net), which included drilling 15 new horizontal producing wells and one new horizontal water disposal well. At the same time, facilities were expanded to deal with the expanded production, consisting mainly of building new well clusters facilities, one new 32,000 bbl storage tank, two Dissolved Air Flotation (DAF) units with capacities of 40,000 and 60,000 bbl, respectively, improvements to our truck loading capacity and a reengineering of the water treatment system.
As a result, the year witnessed a succession of production records. After its acquisition by Petro Rubiales, production steadily increased, reaching an average of 23,614 (gross) bbl/d in November and an all-time record of 24,549 bbl/d (on average) in December. By mid-March 2008, average production had reached another record of 30,253 (gross) bbl/d.
From July 16, 2007, when Meta was acquired, to December 31, 2007 the gross oil production at the Rubiales Oil Field was 3.72 MMbbl of oil, of which 1.34 Mmbbl were net to Meta . The remainder of the production corresponded to royalties, internal oil consumption and Ecopetrol’s share.
Rubiales Master Plan
Since Pacific Rubiales acquired the interests in the Rubiales Oil Field in mid-2007, the company has embarked on an ambitious "master plan" to develop the available reserves and increase the production to levels consistent with optimal economic returns.
Key elements of the master plan (2007 – 2016) are:
- Drill over 348 wells to increase volumes,initially to 40,000 bbl/d in the second quarter of 2008; to 126,000 bbl/d when a pipeline is constructed in the third quarter of 2009; and then to 170,000 bbl/d by 2010;
- Construct additional central processing facilities to handle increased fluids (oil and water) and a central power generation facility; and
- Build a 260 km 24 inch diameter pipeline from the Rubiales Oil Field to the Cusiana station with a capacity of 170,000 bbl/d, with the possibility of expansion to 260,000 bbl/d by installing booster by pumping stations. The pipeline will enable the company to substantially increase production and lowertransportation costs (currently oil is trucked). This will result in a higher net back, as oil will be sold for higher prices in the international market.
The cornerstone of the plan is without a doubt the pipeline and, as shown on the accompanying map, it will connect the Rubiales Oil Field to the existing Oleoducto Central (OCENSA) pipeline that transports oil to the Covenas export terminal on the Caribbean coast. The OCENSA pipeline was built to transport crude from the giant Cusiana field and currently has over 250,000 bbl/d of spare capacity.
The cost of the pipeline is estimated at $437 million. In December 2007 Pacific Rubiales and Ecopetrol signed a memorandum of understanding to establish a special purpose company to be jointly owned by the companies and which will operate the pipeline to Cusiana.
The company is making good progress in implementing the pipeline project; in January 2008, the partners awarded procurement contracts to suppliers. Front end engineering and negotiations for the pipeline right of ways have already been completed; as well, the environmental license and necessary regulatory approvals for the pipeline have been received. As a result, the company and Ecopetrol are targeting the start of construction of the pipeline facilities in the third quarter of 2008.
Capital expenditures for Pacific Rubiales’ master plan are expected to be $1.1 billion gross, of which the company’s share will be approximately $500 million.
