Colombia's heavy crude transport prospects under the microscope

Thursday, April 20, 2017

The overhaul of Colombia's oil pipelines to transport a greater volume of heavy crude, which represents close to 50% of the country's production and half of its oil reserves, would allow development – if exploration is successful – of this type of hydrocarbon and help sustain future oil output.

That's according to local oil association ACP which estimates that the revamp of pipelines to receive crude with viscosity of 600 centistokes (cSt) could cut operating costs for the producer by US$1.2-1.4/b, principally due to lower dilution costs and by replacing tanker trunks.

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The industry group highlights that in the last two years, US$40mn has been invested to overhaul the Ocensa, ODC and Apiay-Porvenir pipelines to handle higher viscosity crude.

ACP, however, has identified challenges that transporting crude with viscosity of 600cSt may face.

The first is that light crude production in the Llanos Orientales area, used to dilute heavy crude, restricts the use of 600cSt oil in fields with such a possibility – although light crude output is declining and new reserves are needed.

Another hurdle would be the need to reach new international markets with the higher viscous crude, which could be diluted at the port of export but this would raise the cost.

The need to maintain competitiveness in the face of other logistical alternatives such as transport along the Magdalena river could be another barrier.

ACP points out that some producers have said that under certain exchange rate conditions the river option could compete with piped transport, as the latter is priced in dollars.