Parex builds on a commanding presence in Colombia

Colombia

Daniel Ferreiro, president for Colombia and country manager of Parex Resources, talks to The Energy Year about how the company has become a major oil producer in Colombia and the obstacles it overcame in operating in Arauca and Capachos. Parex is among the largest independent oil and gas producers in Colombia.

How has Parex become a critical producer of oil in Colombia?
Parex Resources has been in Colombia for the last 15 years. In this timeframe we have managed to become the largest producer in the country in terms of net barrels of production per day. We are currently the largest independent producer simply because we actually own the barrels we produce. We have an output of 55,000 bopd, and our annual target is to hit between 54,000 and 60,000 bopd. Q4 of 2023 saw our best performance, with 57,000 bopd.
Our production is made up of 98% crude oil and a minimal percentage of gas. Regarding gas, we have two projects. In the first one, we provide power to our operations, and in the second one, we sell gas to the market for power generation. Despite not being a large gas player, we want to become one in the near future.
We have done projects in areas that are challenging, ventures that other operators decided not to take on. We have some success stories, such as in the Casanare region. That’s now our largest production and business region.
In terms of cashflow, we reinvest two-thirds of it in our operations.

What obstacles has Parex overcome to successfully operate in Arauca and Capachos?
Our operations in the Arauca and Capachos blocks in the north of Llanos represent true benchmarks due to their initial complexities. The Capachos block located in Tame, Arauca, is a production area of 25,930 hectares [259.3 square kilometres] managed through an association agreement contract with Ecopetrol, where we each have a 50% stake. This area was reactivated following various issues causing delays.
Firstly, the security situation in the area is difficult due to the presence of armed groups such as the ELN [National Liberation Army], which has permeated the communities. The threats of these factions have made us stop our operations on many occasions.
Apart from this there are also pressures, blockades and social protests that make operations more difficult. Community dynamics in these regions are very strong. For this reason, we decided to operate in a different way.
Instead of going with a strategy based on setting up a protective wall to keep the community out of our operations and entering by tunnel or helicopter, we decided to carry out open-door activities.
To do so, we incorporated local labour and goods and services that benefit the communities, as our aim was to make them a part of the project, thereby reducing insurgent influence on these communities and subsequent attacks. At the end of the day, the community sees the greater benefit of having a neighbouring company.
Another complexity was the nature of the subsoil, which requires the drilling of deep wells and thus higher investments. This is an area of opportunity for us because we have a competitive advantage. We have the technical expertise to drill deep and complicated wells much more efficiently than other operators. We are very capable of redesigning wells and tackling technically complex terrains.

What other important assets are you developing at key E&P plays in Colombia?
The south of Los Llanos is a key area for us. We are the sole operator of Cabestreros, which, in net volumes, is the most important producing asset we have, generating between 13,000 and 15,000 bopd. In this area we have focused on pressure management to minimise production decreases, as well as nearfield exploration.
Our success story in Cabestreros has led us to replicate these techniques in the prolific Llanos 34 block, where we are non-operating partners with a 55% stake, with the other partner being Geopark. This block is the highest-producing one in the nation, with an output of around 75,000 bopd. We also have operations in the Magdalena River Valley, where we operate VIM-1. At this asset we are increasing long-term liquids recovery through gas reinjection.

Tell us about the potential to develop gas in Piedemonte and your agreements with Ecopetrol.
We are currently present in the Piedemonte Llanero, a very important asset for us given the potential it has. Our assets in Capachos and Arauca, operated with Ecopetrol, are 100 kilometres away from Piedemonte.
In that intermediate extension of land, there has been very little exploration done, but the area is very rich in gas reserves, and there are prolific gasfields relatively close, such as Cupiagua and Cusiana. Moreover, both Ecopetrol and us acquired blocks in Piedemonte, and we saw that there was an opportunity to create a synergy and explore this stretch of land together.
The great advantage in this region is that the infrastructure is already developed and in place. The OBC [Bicentenario Pipeline of Colombia] passes through this region, and it is underutilised. It only has to be renovated.
Cenit is now considering equipping this pipeline to not only carry crude but also natural gas, a solution backed by the ministry. Thus, the gas reserves are there. We have the expertise to explore and produce in collaboration with Ecopetrol. The infrastructure is also in place, and there is increasing demand for more natural gas in-country. It is a perfect equation.
In April 2024, we signed an agreement with Ecopetrol to develop exploration activities in search of hydrocarbons, especially natural gas in this area. Operations will be carried out in the Llanos 4-1, Llanos 16-1, Llanos 121 and Sirirí blocks, and each company will have a 50% stake in the agreement. We seek to reduce costs by optimising existing infrastructure and synergies for the construction of new facilities with Ecopetrol.
In the short term, we plan to expand the gas supply in Gibraltar, as Ecopetrol wants us to drill a well in this field. Apart from this, we are already drilling a few wells in this new area. Fields have been developed in the area with an estimated historical production of nearly 2 billion barrels of crude oil and more than 7 tcf [198.1 bcm] of natural gas. The potential is definitely there.

Tell us about the first-ever geothermal licence in Colombia, which was awarded to Parex.
A few years ago, we started on a path to develop a cleaner energy matrix. The first step was to convert our oil operations. Instead of generating energy by burning liquid fuels, we now burn gas to generate electricity. That evolved over time. We ended up connecting our larger fields to the grid, which mainly uses hydroelectric power.
However, we have taken a step further. We saw that in the Eastern Plains, in Casanare, fields have significant hydraulic thrust. Oil moves because there is a lot of water in the reservoir. We also observed that this water, since it comes from very deep – about 12,000 feet [3,657.6 metres] – reaches the surface almost boiling, with temperatures reaching 95-98 degrees Celsius.
What opportunity is there? We take the water, separate the oil and reinject the water. However, the opportunity lies in harnessing the heat from that water and using it to generate clean electricity.

How important are Parex’s Water for All and Energy for All programmes for communities?
Water for All was a programme launched in 2018 that revolves around the concept of water management, which includes improving infrastructure and services that enable access to clean and safe water sources. However, we have two scopes of action.
The first one is focused on where we will have new operations, for example, in villages where we did not have operations before. With it, we improve the community’s access to water, and they get to know us. This can include the installation of pipes, the construction of an elevated tank or new water treatment and purification plants.
Secondly, when we have operations underway, we try to make certain investments to do projects that improve water quality. We have done that in Capachos, for instance. We also improved the aqueduct in Corocito, which was a historical debt the oil industry had with the region.
Another of our programmes is Energy for All, which is also a voluntary social investment programme we created. This initiative was launched in 2021 to provide access to solar energy to neighbouring communities that lack energy sources.
To date, we have implemented around five projects of this nature. One of the projects completed in 2022 comprised the installation of solar panels to illuminate and improve the nighttime safety of community roads and public spaces in Santa Elena de Upía and Puerto Miriam in the municipality of Villanueva, Casanare.

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