Barrett Resources to Develop Heavy Oil Fields in Peru

Barrett Resources (Peru) LLC, an independent upstream energy company based in Delaware (USA), recently advised state regulatory agency Perupetro that it plans to declare commercial Block 67, its 250,000-acre contract area located in the Maranon Basin of northeastern Peru.

Through its branch, Barrett Resources (Peru) LLC, Sucursal del Peru, the company has been active in the area for over 10 years. In 1998, the company drilled the initial exploration wells that resulted in the discovery of the Paiche, Pirana and Dorado fields. The discoveries in Block 67 proved up large potential reserves of heavy oil (12 - 21° API) that were deemed uneconomic to develop at the time.

In 2006, in response to improving economic conditions, the company drilled and tested the successful delineation wells Paiche Sur X-2 and Dorado Norte X-2, bringing the total investment in Peru to date to almost $100 million. The Paiche Sur well tested oil on ESP pump at rates in excess of 2,500 barrels of oil per day (bopd). The Dorado Norte well also tested oil to surface; however, the rates were hampered by technical problems but are expected to be similar to Paiche Sur when put on production. At its peak, Block 67 is expected to produce up to 100,000 bopd, doubling the current production from the basin.

The recent discoveries in the adjacent Block 39, extended the string of discoveries in the heavy oil belt of the northeastern Maranon Basin. The Block 67 and Block 39 fields form part of a multibillion-barrel trend of heavy and moderately heavy oil that extends across the border into Ecuador. There, the trend encompasses the giant Ishpingo-Tambococha-Tiputini (ITT) field complex, the discoveries in Block 31, and the heavy oil production in Block 16.

The first phase of development of Block 67 will consist of an extensive 3D seismic campaign in order to advantageously locate the drilling platforms. To minimize impact in the rainforest, up to five wells, one vertical and four directional, will be drilled from each platform. The seismic program will run concurrent with a comprehensive environmental impact study (EIS) covering all aspects of the development of the fields. It is noteworthy that all produced water from the fields will be reinjected from the first day of production. The EIS will also cover the construction of remote heavy oil upgrading facilities and the construction of a 400 km 16” pipeline required to transport the upgraded crude to the existing North Peruvian Pipeline System.

Oil production from Block 67 is projected to begin in 2010.