Vinncler Oil & Gas is the contract operator of the block, and delivers the present 500b/d production to state oil company PDVSA's Paraguana refinery for a per barrel fee. The refinery will receive the extra 200b/d crude, and cement company Cementos Caribe will receive the 6mcf/d gas, Gumma said. Vinccler is also considering further development of the East Falcon block, specifically the previously tested La Vela anticline, which could lead to the production of a further 50-100mcf/d gas.
The company has contracted Mustang Engineering to carry out a feasibility study for the project, which Mustang's Charles Clark said would take 3-4 months. The US' Trade & Development Agency (TDA) put US $375,000 towards the study costs, and estimates that in the event of the project going through, there would be an export potential of US $22mn for US companies. Assuming a favorable feasibility study, project development depends on talks between Vinccler, PDVSA and the Paraguana refinery, Gumma said.
The idea is to sell the gas production under a long-term take-or-pay contract to Paraguana, which would use it to displace the approximate 24,000b/d oil it uses for power generation at the refinery, thus making more liquids available for export and cutting power generation emissions. PDVSA's construction of a 275km, 30-inch diameter pipeline is also key to the expansion project.
The pipeline, the east-west interconnection (ICO), would link up the presently separate gas pipeline distribution systems serving Anaco and the Eastern Venezuelan industrial complex with the western system, which connects Lake Maracaibo, the Paraguana Refinery Complex and other petrochemical plants near the lake. The pipeline, which would run close by the East Falcon block, is scheduled to be in operations by 2005, but the strike in Venezuela and the consequent funding knock-on effects on PDVSA cast doubt on this date; the government, however, maintains that it will meet the deadline.
Vinccler Oil & Gas will look for project financing once it has the feasibility study, Gumma said, adding that because of the many different aspects under consideration, it is not possible to estimate what investment and financing needs will be. The expansion project consists of gas gathering and treatment equipment in the East Falcon block, a compressor station, a 100km underground 12-inch diameter pipeline and control and metering devices, according to the TDA.
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