Gas delivery: Chevron and Ecopetrol set to invest to meet demand in Colombia

Chevron and its partner Ecopetrol are investing more than $249 million in order to modernise and optimise their natural gasfields in La Guajira. In order to ensure that unscheduled maintenance shutdowns do not affect natural gas delivery, Chevron is adding monitoring technology on all of its rotating equipment.

With the new monitoring equipment and reciprocating compressors, Chevron expects its fields to operate with more than a 98-percent reliability factor. However, the investments are not only related to improved reliability. By drilling additional horizontal wells, production will be increased by 1.4 mcm (49.4 mcf), while the fields’ recovery factors will be increased from 50 percent to a world record 93 percent. This increase in the field’s reserves is critical for Colombia, given that its natural gas reserves-to-production ratio is only 12.8 years, according to the 2014 BP Statistical Review.

NEVER IN NEED: Amylkar Acosta Medida, Colombia’s minister of mines and energy, recently said Chevron and Ecopetrol’s investments would have the same impact as if a new natural gasfield were discovered.

Chevron is investing in its Colombian natural gas operations to increase production and reserves, but also in order to ensure that it is accounting for the unique challenges of the country’s market.

Colombia’s geographic location near the equator means that its temperatures remain constant throughout the year. In developed countries farther from the equator, where seasonal weather changes are dramatic, natural gas demand spikes in winter months when households heat their homes and in the summer when air conditioning is used. Without seasonal spikes in demand, Colombia has not had a reason to build large of natural gas storage capacity.

The limited storage capacity creates a challenge for everyone involved in the natural gas industry, from producers to owners of thermal power plants. “The limited storage capacity drives you to look at the reliability models of natural gas as well as the interconnecting of fields to link systems together. A more in-depth study of the reliability model is needed because it is more dependent on field delivery. We need people who are potentially thinking about building an electrical plant to know that there is sufficient natural gas to be delivered, in a reliable fashion,” Stephen Conner, the Colombia president of Chevron, told TOGY.

RELIANCE: While temperatures remain stable in Colombia, the droughts that accompany the El Niño weather pattern create problems for the power generation matrix, given the country’s reliance on hydroelectricity.

Natural gas is used to power thermal power plants when the droughts hit. For this reason, Chevron is watching various LNG developments in Colombia closely. There are plans for the construction of both LNG export and import terminals in the country, and Conner views the developments as positive due to their effects on the reliability of natural gas deliveries.

“LNG imports can greatly improve the reliability of the gas market, which is especially important with reference to drought, because of the El Niño phenomenon. The world now has a lot of spot cargoes available, making LNG a more viable alternative. LNG has been used in other countries with a good domestic supply. Most countries have several sources of gas, but not an infinite number. For this reason, an import terminal can be a good idea, because it builds confidence that there is a way to get supplies into the country if needed,” Conner said.

In a separate interview with TOGY, Minister Acosta revealed that Ecopetrol and Chevron are contemplating the construction of a dual liquefaction and regasification terminal near their fields in the department of La Guajira. Pacific Rubiales expects to inaugurate its Caribbean LNG plant in 2015, making it the first floating LNG facility in the world. Meanwhile, the Colombian government has signalled its intent to construct a regasification terminal that would be capable of processing enough gas for powering all of Colombia’s thermal power plants.