Exploration and production

Venezuela

Venezuela contains some of the largest oil and natural gas proven reserves in the world.
Venezuela was the worlds 9th largest exporter and 12th largest producer of petroleum and
other liquids in 2013.
Estimates of Venezuelan production vary from source to source, partly because of the
measurement methodology. For instance, some analysts directly count the extra-heavy oil
produced in Venezuelas Orinoco Belt as part of Venezuelas crude oil production. Others
(including EIA) count it as upgraded syncrude, whose volume is about 10% lower than that of
the original extra-heavy feedstock.

Venezuelas conventional crude oil is heavy and sour by international standards. As a result,
much of Venezuelas oil production must go to specialized domestic and international
refineries. The countrys most prolific production area is the Maracaibo basin, which contains
slightly less than half of Venezuelas oil production. Many of Venezuela's fields are mature,
requiring large investments to maintain current capacity.

Orinoco heavy oil belt

Faja, Venezuela's heavy oil belt that runs east to west, half way across the country along the
lush Orinoco River valley holds more than one trillion barrels of oil. Developing the resource is
making the region a focus for new technology and turning Venezuela into the world's largest
producer of heavy oil.

Outside the Faja, Venezuela has 80 billion barrels of proven crude reserves, and currently
estimates that producers in the Faja can extract at least 237 billion barrels of the extra heavy
crude with existing technology. With nearly 320 billion barrels of recoverable oil, Venezuela will
become the world's largest holder of petroleum reserves.
The Faja's crude is what producers call extra-heavy. Oil from this tar belt averages about 8.5 API
gravity, which means that it is heavier than water and oozes rather than flows. This type of oil is
difficult to produce and transport, and few refineries in the world will take it. But producers in
Venezuela have plenty of experience with heavy oil, and their success so far has been worldclass.
In the 1990s, the Faja was divided into four major regions, each being developed through joint
ventures with major international oil companies and PDVSA. A fifth major project includes
Chinas national oil company, CNPC, in a joint venture that converts some of Venezuela's heavy
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crude into a patented oil-water emulsion that can be used as burner fuel for power generation.
The fuel, called Orimulsion, is produced from a recently expanded plant in eastern Venezuela.

Most of the crude from the Faja is upgraded in Venezuela to anywhere from 16 to 32 API
gravity. PDVSA owns enough capacity to refine 1 million barrels of oil a day in the United States,
and 3.2 million barrels worldwide.

Performance of cold production

Until now, nearly all of the Faja production has been through "cold heavy oil production with
sand" (CHOPS). None of the major development projects use heat, although some inject a
readily available diluent to thin the high viscosity oil.
Using CHOPS alone, Venezuela now produces about 625,000 barrels a day from the Faja, and
the economics are good. The lifting costs of heavy oil production have dropped 70 percent since
1991, to just under one dollar per barrel today. The average well produces about 850 barrels a
day on cold production, which is remarkable considering that at room temperature, the oil is as
thick as peanut butter.
While economical, cold production alone recovers less than 10 percent of the oil in place. The
government of Venezuela has now set recovery targets of more than 20 percent for all new
heavy oil projects, which means that producers will be moving quickly to deploy current and
emerging technology in a region rich in extra heavy oil.

The first step is to determine just how much oil is there, and where it is concentrated. In
November 2005, Venezuela divided its original four major oil regions of the Faja into 27 blocks
and began Magna Reserva, a project to quantify and certify its reserves to the international
community. Geologic studies are underway now to identify the best places for new
development.
Changes in the Faja development plan have opened the door for new players. Many of these
new faces belong to other National Oil Companies. These include ONGC from India, The Iranian
PetroPars,Gazprom and Lukoil from Russia. There is also increased presence from current
energy partners; Petrobras, Repsol and CNPC.

Testing new technology

PDVSA's goal is to boost its Faja production to 1.2 million barrels a day, and the country's total
production to 5.8 million barrels a day by 2012. To reach that goal, producers are focusing on a
range of new technologies, particularly in the Faja.

Since most cold production wells cannot handle thermal production, most of the advanced
technology will be deployed in new development projects, after the current quantification and
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certification process is complete. The Faja may possibly overshadow Canada to become the
world's center of excellence for heavy oil production.

Technology will be developed specifically for the Faja that is not available today. Improved
seismic interpretation of the Faja sands, more efficient well placement techniques through
better thermal simulation and increased reliability of artificial lift methodologies are just a few
of the future areas of focus for Faja technology development One of the most anticipated new
techniques is a process to upgrade the heavy oil downhole. In-situ processing would be much
less expensive than transporting the heavy crude itself to upgraders or refineries.

Many observers believe that, given the excellent results from the Faja using cold production
alone, the addition of thermal recovery and a host of new technologies will create the next big
leap in Venezuelas bright energy future.

Natural gas

Venezuela has the second-largest natural gas reserves in the Americas, behind the United
States. Much of the natural gas is used to bolster production in its mature oil fields. About 90%
of Venezuelas natural gas is found associated with oil but the country is looking to locate and
produce more natural gas from non associated fields.

Currently, Venezuela is working to increase the production of non associated gas, largely
through the development of its offshore reserves. Onshore, PDVSA is working toward raising
production and capacity at existing sites, including the Anaco field, the Barrancas field, and
Yucal Placer. Offshore, PDVSA has awarded exploration blocks to international oil companies,
including Total, Statoil, and Chevron, in the Plataforma Deltana, Marsical Sucre, and BlanquillaTortuga areas off Venezuelas northeast coast. Venezuela has also awarded exploratory blocks
to Gazprom and Chevron to develop the potential 26 Tcf gas blocks in the Gulf of Venezuela in
the northwestern part of the country.
Offshore exploration has yielded many successful finds, including Repsol-YPF
discovery of 6-8 Tcf of recoverable natural gas in the Cardon IV block in the Gulf of
one of the largest natural gas discoveries in the history of the country. In early
announced gas production would begin in 2015 at their Perla field project with
reserves of 15 Tcf of natural gas.

and ENIs
Venezuela
2014, ENI
estimated

PDVSA had also found a field with a potential 7.7 Tcf gas reserve at Tia Juana Lago in the Sur
area. For Venezuelas offshore gas development to move forward, international partners will
need to play a central role in production. PDVSA does not have experience in producing non
associated gasthe companys most recent attempt at operating an offshore natural gas
project resulted in the sinking of the Aban Pearl semi-submersible drilling rig in May 2010.
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Tenzig Sour Gas Injection Project (SGI), Kazakhstan

The Tengiz oilfield is a giant, carbonate reservoir located in the Pricaspian Basin of the Republic
of Kazakhstan. The SGI (Sour Gas Injection) Project is based on newly introduced technology
that use the re-injection of gas into its 7,000 m deep oil reservoir to boost pressure and
maintain a long-term increase in oil recovery. This new process helps eliminate the negative
impact of production on the environment. By re-injecting gas into the reservoir, the necessary
processing of associated poisonous sour gases is greatly diminished.
Gas Injection at the Tengiz field began in January 2007 with sweet gas injection as Phase 1 of
the Sour Gas Injection (SGI) pilot project followed by sour gas injection as Phase 2. Phase 2
injection began in October 2007, but was interrupted due to initial start up problems.
Continuous sour gas injection was achieved three months later in January 2008.
The SGI project has four signposts for success: compressor reliability, injectivity, wellbore
durability, and reservoir performance. The sour gas compressor at Tengiz was the first of its
kind and has had greater than 90% availability when the Second Generation Plant (SGP) has
been operational (SGI injection gas is produced through SGP). Injectivity has exceeded
expectations and wellbore durability has also been excellent. Reservoir performance is a longer
term signpost which is monitored though an extensive surveillance program. The Tengiz
Reservoir appears to be performing as expected to the sour gas injection.
The SGI project is a first-contact miscible gas injection process consisting of seven inverted fivespot patterns. To expedite data acquisition, the SGI well patterns were designed to include one
super-spot pattern (twin injectors 100 m apart providing dedicated injection support to
different geologic layers) and three short-spaced producers (producer-injector spacing
approximately 1/3 of the standard spacing). Tracers, pulse tests, multiphase meters, gas
saturation logs, and production and injection logs are used to monitor and understand reservoir
performance. A specialized simulation model (the SGI Monitoring Model) was constructed
which uses local grid refinement in the SGI pattern area. This model is used to determine how
well the reservoir characterization is able to capture the dynamic reservoir response to the
miscible SGI process.