Colombia’s state-owned Ecopetrol SA continues to view its position in the Permian Basin with partner Occidental Petroleum as a crucial fit within its portfolio.
“We recognize that we will have to suspend any activity in terms of unconventionals in Colombia, but [the] Permian is quite important and continues to be a strategic asset. It is one of the most profitable assets that we have in our portfolio,” Ecopetrol’s COO Alberto Consuegra said May 10 during the company’s first-quarter 2023 webcast.
Across the board, Ecopetrol’s Permian assets continue to exhibit strong growth in production and EBITDA.
Permian production averaged 51,400 boe/d (56% oil) in the first quarter, up 92.5% compared to 26,700 boe/d (65% oil) in first-quarter 2022, Ecopetrol said in its first-quarter 2023 earnings.
Ecopetrol’s Permian production represented 7% of the company’s 719,400 boe/d produced in the first quarter, up from 4% from the 692,100 boe/d produced in first-quarter 2022.
Ecopetrol and Occidental drilled 37 new wells in the first quarter for a total of 257 cumulative wells. The partners also announced the start-up of the first "tankless" facility, a new concept involving the elimination of tanks to reduce fugitive emissions, the company said in the release.
Financially, the Permian assets generated EBITDA of $142 million in the first quarter, Consuegra said, as well as an EBITDA margin that exceeded 80%. In 2022, the assets generated an EBITDA margin of 87.1%.
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“So, [the Permian is] very strategic, very fundamental in terms of what it represents in importance for the strategy in Ecopetrol,” Consuegra said.
Consuegra added that the Permian assets were favorable from an environmental standpoint.
“It exceeds the environmental standards that we have and we continue to increase our presence there. As you might remember, last year we acquired a position in the Delaware Basin and we increased our position in the Midland Basin,” he said.
Drilling plans offshore Colombia
Ecopetrol is Colombia’s largest oil and gas company and majority owned by the government. The company is a crucial component of the government’s push to lower its carbon emissions in future decades.
Offshore Colombia holds the most potential for Colombia to not only boost production, but to grow natural gas volumes, which are seen as environmentally friendlier than oil — especially considering the heavy oil that Colombia produces.
Offshore exploration activities continue to move forward. Ecopetrol plans to conduct the evaluation and appraisal of the Uchuva-1 (with partner Petrobras) and Gorgón-2 (with partner Shell Colombia) discoveries offshore Colombia’s Caribbean coast. Additionally, contracting is underway to start drilling the Orca Norte-1 appraisal well, estimated for the end of this year.
Ecopetrol’s exploration inventory continues to represent about 8 year to 10 years of activity, but offshore has taken on a special emphasis. Under the company’s 2023-2025 business plan, seven offshore wells are envisioned starting at the end of 2023.
“Activities will start with the commitment well at Orca and follow with activity in both Uchuva and Gorgón, and provided we are successful in these three fronts, we expect to see resources coming into reserves beyond 2026 because we will have to mature, progress [and] sanction these projects in order to become reserves,” Consuegra said.
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The local gas prices, or the wellhead sales, under the current regulations in Colombia are freely set and not tied to any international references or benchmarks, Ecopetrol’s Yeimy Báez, low emissions solutions vice president, said during the webcast.
“Our view is that our resources in the offshore Caribbean Basin are competitive versus other domestic sources, as well as imported gas. They are also quite material and we consider them a potential game-changer for Ecopetrol and the country.”