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COLOMBIA’S OIL & GAS INDUSTRY, 2012
Emerging Opportunities
Mid-tier and junior players have found an E&P haven in Colombia.
Oil and gas companies are conducting an aggressive exploration
campaign throughout Colombia. The ANH divides
the country into 23 potential hydrocarbon basins, of which
16 are located in areas onshore and seven offshore. Colombia’s geology
has been compared to western Canada: a mountain range,
foothills and plains that have the potential for significant hydrocarbon
deposits. Colombia’s violent past has meant that vast stretches
of the country were considered no-go areas until quite recently. The
operational hazards of the past have created significant opportunities
going forward as acreage is relatively unexplored.
Ecopetrol estimates Colombia’s potential reserves at 47 billion
barrels of oil equivalent. In 2011, Colombian exploration projects
were being conducted by 34 different operators and the country’s
production is contributed to by 51 different companies.
Some observers have spoken of a natural ceiling on Colombian
oil and gas production, at around its current 1 million barrels per
day of production. However, Tomás Correa, a geologist by training
who works as a petroleum and mineral analyst at exchange commission
Bolsa y Renta, disputes this theory: “The industry’s natural
ceiling will not be reached in the short term because of the huge geological
potential of the country. The only constraints on growth
and production have to do with the bottleneck in infrastructure,
but that will be solved with time.”
Llanos Basin: Leading production
The Llanos Basin is situated in east-central Colombia and is one
of the country’s most prospective areas for oil and gas E&P activities.
More than 1.5 billion barrels of recoverable oil has been officially
documented in this basin. It accounts for roughly 70% of the
nation’s oil production volumes.
One company with a significant Llanos portfolio is Canacol Energy.
Although young and relatively small, Canacol has turned a lot
of heads with its rise to strategic player in the Colombian E&P sector.
Since its establishment in 2008, Canacol has made two significant
conventional oil discoveries in Colombia to date: the Capella
heavy oil discovery in 2008, and the Rancho Hermoso new-pool
discovery in 2009. Rancho Hermoso is now the cornerstone production
asset for the company.
In November 2011, Canacol announced the acquisition of fellow
Colombian explorer, Carrao Energy. Rozo explained that the
acquisition of Carrao was a natural fit for Canacol, especially because
of Carrao’s blocks in the Llanos basin that are contiguous to
Rancho Hermoso. “We expect to apply to these new blocks our expertise
in developing fields, as can testify the case of Rancho Hermoso,
which we bought with a production of 3,000 barrels per day
and is now 35,000 barrels per day,” says Rafael Rozo, general manager
of Canacol.
June 2012 ▪ OilandGasInvestor.com C-11