Petróleo de Venezuela SA’s natural gas-for-diesel fuel shift could net the state oil company an estimated savings of $4.4 billion over the next five years.
That’s how much the company expects to save during 2015-2019 by substituting natural gas to be sourced from Venezuelan projects offshore to generate electricity instead of using diesel, much of which is imported, PDVSA Gas President Anton Castillo revealed on June 19 during a hydrocarbon congress in Maracaibo, Venezuela.
“We’re expecting initial Cardon IV block gas production of 150 million cubic feet per day on July 15,” said Castillo.
Future use of natural gas sourced from gas projects offshore Venezuela will allow PDVSA, as the state oil company is known, to reduce its diesel consumption by NEARLY 187,000 barrels per day, Castillo said.
“The problem is that any of these kinds of solutions in the oil sector are more medium-term solutions. When you have cash flow constraints it's hard to think about a five-year horizon,” said Jefferies' Head of Latin American Fixed Income Siobhan Morden in a phone call from New York City.
Initial gas production in Venezuela from the country’s massive non-associated natural gas deposits offshore in the Rafael Urdaneta, Mariscal Sucre and Deltana Platform projects will be destined to cover demand in the country’s highly subsidised domestic market, while excess volumes could be destined for export and could help augment Venezuela’s supply of U.S. dollars.
“Under the plans we are promoting, onshore and offshore in two years we could easily cover the national gas deficit and then convert Venezuela into a potential exporter,” said PDVSA official Douglas Sosa on June 21 during the hydrocarbon congress in Maracaibo. “This is our vision, but before we can export gas, we need to fulfill the national deficit.”
Venezuela, with proven natural gas resources of 196.8 trillion cubic feet as of year end 2014, is home to the world’s eighth-largest gas reserves and world’s largest oil reserves, according to BP’s Statistical Review of Energy.
About 90 percent of Venezuela’s gas reserves are associated with crude oil. Of this, the bulk is contained in gas caps above the country’s major oil fields.
About 70 percent of the associated natural gas that is produced is used to maximise oil production through re-injections, gas lift, in-field power generation and crude upgrades.
Offshore Venezuela, PDVSA estimates there are another 147 trillion cubic feet of natural gas that could be proved up.
“In three Venezuelan regions — east, central and west — we have potential to add 147 Tcf of gas,” said the PDVSA’s Sosa during the hydrocarbon congress. “Summing this with the 197 Tcf of proved reserves, we’ll have more reserves than the United States if we can prove up or convert these prospective reserves offshore into proved reserves.”
Initial Gas Production
Spain’s Repsol SA and Italy’s Eni S.p.A. discovered the Cardon IV block on the western side of Venezuela in 2009. The Perla field is located offshore in the Cardon IV block, in shallow waters in the Gulf of Venezuela, 50 kilometres offshore, and will feed four producing platforms that use underwater connections to transport the gas onshore for processing.
Repsol holds a 50 percent interest in Cardon IV S.A. joint venture. Eni holds the remaining 50 percent interest. PDVSA has the option to back-in.
Combined exploration and development investments in Cardon IV, part of the Rafael Urdaneta project, could reach $6 billion, according to Repsol.
Production from the block is expected to reach 450 million cubic feet per day by year end 2015, 800 million cubic feet per day by September 2017 and 1.2 billion cubic feet per day by September 2020, according to a July 8 PDVSA statement.
Additionally, PDVSA expects the offshore Mariscal Sucre project, located on the eastern side of Venezuela, to come online in late 2015. The project is composed of three gas fields, Dragon, Patao and Mejillones, and one condensate field, Rio Caribe.
Production from the Dragon field — wells Dragon 5, Dragon 8, Dragon 9 and Dragon 11— could be producing 300 million cubic feet per day by year end 2015, said Sosa.
DEVELOPMENT OF Venezuela’s third offshore natural gas project Deltana Platform is not expected over the short-term one- to two-year horizon.
Early indications are that Venezuela plans to send future production from the project to the Gran Mariscal de Ayacucho Industrial Complex or to the Cigma gas processing plant in Guiria, Venezuela, according to the PDVSA executive.
“How will we export our gas: directly, or will WE liquefy it for export? We have to study these options,” Sosa told the audience. “We plan and are in negotiations with possible partners for the possible construction and transportation of the gas from Deltana Platform to Cigma.”
With regard to Deltana, after covering Venezuela’s national gas deficit, PDVSA will ponder the development and export of this natural gas.
To this end, meetings with officials from Trinidad are expected to commence soon to evaluate the options, said Sosa.