Peruvian operators are happy with their activities, and new rules from the government try to assure future operators that the nation offers the best terms and operating conditions in South America.

Among Latin American countries, Peru, with a score of 124, ranks second only to Mexico’s 96 among producing countries for risk in a J.P. Morgan list. For comparison, Colombia scored 159 and Argentina 185.

Petroperu offers extensive well control information for potential bidders for its licensing round. An isochron of the Pozo Sand to the base Cretaceous interval in Block 67 in the Marañon Basin of northern Peru shows wells in Barrett’s heavy oil play. (Map courtesy of Perupetro)
During a presentation in Houston for 10 onshore and eight offshore blocks, Mario del Pino with Petrobras Energy explained why his company likes operating in Peru with Perupetro. The royalty on 5,000 b/d or less is only 5% at minimum, climbing on a graduated scale to 20% on the way up to 100,000 b/d, and 20% is the maximum for any production level. Before the law change of May 2003, production of 3,000 b/d of oil took a 16% royalty, and 39,000 b/d required a 44.6% royalty.

The Marañon Basin has seen only 103 wildcats and claims a 27% success rate. The Ucayali Basin hosted 41 wildcats with a 10% success rate, and only 13 wildcats have tested the Madre de Dios Basin for a 38.5% success rate.

Carlos Vives outlined the licensing round timetable. Perupetro will accept letters of intention to bid until May 25. The national oil company will deliver technical data until June 15 and answer questions by June 22. Companies will submit bids with work programs and financial and technical qualifying support materials by June 9. Perupetro will open envelopes on July 12.

Operators in addition to Petrobras reported their experience in Peru. Simon Lunn with Serpet Consulting S.A. said his company has a license in Area XIII in the Marañon Basin. It has identified prospects with 50-million-bbl traps on the Iquitos Arch. The prospects contain heavy oil, but temperatures are high and the potential for commerciality is high as well.
Manolo Zuniga with BPZ Energy Inc. described his company’s project in shallow water offshore in area Z-1. The company is drilling and preparing platforms and pipelines, and it plans to bring natural gas ashore from Corvina field with a possible 4 Tcf in reserves to feed a power plant expansion onshore in northern Peru. That 160 MW power plant will use 40 MMcf/d of gas.

Petro-Tech Peruana S.A. has five offshore blocks farther south, including one producing block that puts out 12,500 b/d of oil and 70 MMcf/d of gas. The company’s San Pedro 1X tapped 1,200 b/d of oil with a 100-ft (30.5-m) gas cap and a 1,100-ft (335.3-m) oil column. The gas potential is 24 MMcf/d. The exploratory blocks have seeps indicating active petroleum systems, according to Pedro Alarcón.

Argentina’s Pluspetrol Corp. is the operator of the giant Camisea gas field. With neighboring Pagoreni, which will provide gas for a new LNG plant, the company and its partners hold 13.6 Tcf of gas and 800 million bbl of liquids, said Norberto Benito. Roads are a major problem in this area of the Ucayali Basin, but an extensive river system provides sufficient transportation.

Barrett Resources (Peru) LLC has a commercial heavy oil discovery on Block 67 where Colombia, Ecuador and Peru meet. It’s part of the trend that starts with Venezuela’s Orinoco heavy oil belt. James Dean said the company believes the block holds 3 billion bbl of recoverable reserves on a prospect with a potential 11,000 acres of closure.

The company can make the oil flow with high-temperature water and diesel now. It plans 114 wells and could recover more than 15% of the oil in place. High production presents a problem. There isn’t enough diesel in Peru to handle 100,000 b/d of production. The company will have to find another diluent or upgrade the oil in the field to convert the 12Þ-gravity oil to 28Þ-gravity syncrude. Once it gets the oil to flow, the company will build a 279-mile (450-km) pipeline to get it to market.

Carl Gustavson of the consulting firm of Gustavson Associates said he talked with major oil companies, and Peru was the only South American country that met their standards for entry.

All of the companies said they paid particular attention to environmental concerns and were working with local communities in developing their projects.