Petroecuador plans to drill 5 wells on block 15

- Wednesday, August 23, 2006

Petroecuador plans to drill 5 wells on block 15

The Petroproducción subsidiary of Ecuador's state oil company Petroecuador plans to contract two drilling rigs by October to drill five wells on block 15's Limoncocha and Edén Yuturi fields, according to Block 15 documents obtained from Petroecuador by BNamericas.

As of August 15, production on the block was 100,113 barrels of crude a day (b/d) compared to the 100,000b/d level when Petroecuador expropriated the block from US oil company Occidental (NYSE: OXY) in mid-May.

Since then, Petroecuador has brought two new fields into production, Paka Norte and Paka Sur, which along with the Yanaquincha Oeste and Yanaquincha Este fields held 48.6 million barrels of proved oil reserves as of December 2005.

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Block 15's overall proved reserves are estimated at 522 million barrels and the area features 117 producing wells along with 15 reinjection wells.

Some 480,000 barrels of fluids are extracted per day, 380,000 of which are water, newspaper La Hora reported, citing the CEO of block 15's temporary administration unit, Carlos Blum.

Petroproducción has a US$221mn budget for the block from mid-May until year-end, including US$149mn for operating costs and US$72mn for production, BNamericas previously reported.

Petroecuador expropriated the block from Oxy, alleging the US company transferred a 40% stake in block 15 to Canadian oil firm EnCana (NYSE: ENC) in 2000 without government permission, overproduced some wells and did not comply with the block's investment plan.

Oxy responded by filing an arbitration claim with the International Center for Settlement of Investment Disputes (ICSID) and is currently working with Ecuador to develop a tribunal to preside over the case.


Meanwhile, Ecuador's constitutional court, the Tribunal Constitucional, unanimously rejected a claim that the nation's new hydrocarbons law that stipulates a 50% state take on oil production is unconstitutional, according to a statement from Ecuador's government.

The tribunal's decision should be published in the country's official register within the next three days, the statement said.