Heavy oil production in Venezuela now growing faster than conventional oil

Venezuela’s increasing exploitation of its extra heavy oil resources in the Orinoco oil belt could boost Trinidad and Tobago’s own ambitions for extensive heavy oil recovery from land and offshore in the Gulf of Paria.

This is the view of energy analysts who point out that the Orinoco extra heavy oil region, known as the Faja in Spanish, is now yielding 1.3 million barrels a day (b/d) of crude, which state company Petróleos de Venezuela S.A. (PdVSA) believes could be increased to 1.44 million b/d by the end of 2015.

The medium-term goal is around 2.49 million b/d from the various joint ventures PdVSA has with international companies to do work in the Faja, among them China’s state-owned CNPC and Russia’s state-controlled Rosneft.

The crude passes through upgraders in the Faja before it can be processed in Venezuela’s conventional refineries or, in some cases, diluted with imported naphtha.

Energy consultant Pedro van Meurs, who has been an adviser on fiscal reform to Trinidad and Tobago’s Ministry of Energy and Energy Affairs (MEEA) in the past, has pointed out the vast strides Trinidad and Tobago’s Spanish-speaking neighbour has made with heavy oil development.

“In the Orinoco oil belt,” he says, “even without injecting steam, a recovery factor of over 20 percent of heavy oil with a gravity as low as 8-10 degrees API is now possible.

And this is without using any enhanced oil recovery (EOR) methods but employing such techniques as multilateral wells, horizontal wells, submerged pumps, etc.”

Heavy oil production in Venezuela is now growing faster than conventional oil and will contribute the greater portion of overall crude output of 3 million b/d by year’s end, up from 2.85 million b/d at the close of 2014, says PdVSA chief executive Eulogio del Pino.

Why is all this good news for Trinidad and Tobago?

Because, as one of the four elements in his “new energy economy,” Minister Kevin Ramnarine is putting greater emphasis on heavy oil retrieval. (Such oil is defined as that with an API gravity of 18 degrees or lower, in other words, a “lighter” version of the Venezuelan equivalent.)

van Meurs has urged MEEA in the past to try to attract “massive new technology for the development of the very large heavy oil resources that Trinidad and Tobago has left almost untouched so far.”

He has made reference to Alaska, which a few years ago introduced “a whole new fiscal system, never before seen anywhere in the United States, for one purpose only – Alaska has 5 billion barrels of heavy oil in the North Slope, the pipeline was going empty and they wanted to make an all-out effort to keep the line filled and to replace light oil production with heavy oil production.”

According to Minister Ramnarine, Trinidad and Tobago has roughly the same amount of heavy oil going to waste – 1.5 billion barrels on land and another 3.6 billion offshore.

“This is a significant resource,” he says, “which can't be ignored.” Almost all of it lies in leases held by state firm Petrotrin, and the good news is that the minister says the onshore 3-D seismic acquired by the company three years ago “will be very valuable in planning future investment in heavy oil.”

Though van Meurs says Venezuela is managing to recover much of its heavy crude “without injecting steam,” in Trinidad and Tobago's case, the minister envisages EOR methods such as steam will have to be employed.

“The potential of EOR to produce heavy oil in this country has never been fully realised and we believe that this has significant potential to increase oil production on land and in the Gulf.”

The minister has engaged the University of Trinidad and Tobago (UTT) for a research project that will “quantify the country's heavy oil resources.”

He goes along with van Meurs in accepting that fiscal incentives will have to be dangled before companies to persuade them to fund heavy oil recovery, especially in a lower oil-price environment.