Ann: Block 9 Alameda 2 Appraisal Update, page-471

Oil tech is always advancing ...Venezuela has a glut of very heavy crude oil sub 10-APi

Venezuela very good friends with Cuba

While economical, cold production alone recovers less than 10 percent of the oil in place. The government of Venezuela has now set recovery targets of more than 20 percent for all new heavy oil projects, which means that producers will be moving quickly to deploy current and emerging technology in a region rich in extra heavy oil.

The first step is to determine just how much oil is there, and where it is concentrated. In November 2005, Venezuela divided its original four major oil regions of the Faja into 27 blocks and began Magna Reserva, a project to quantify and certify its reserves to the international community. Geologic studies are underway now to identify the best places for new development.

Many oil companies worldwide are participating in this quantification and certification process, most with the understanding that they will be given a opportunity to share in the development from the regions they evaluate.

Changes in the Faja development plan have opened the door for new players. Many of these new faces belong to other National Oil Companies. These include ONGC from India, The Iranian PetroPars,Gazprom and Lukoil from Russia. There is also increased presence from current energy partners; Petrobras, Repsol and CNPC.

Testing new technology
PDVSA's goal is to boost its Faja production to 1.2 million barrels a day, and the country's total production to 5.8 million barrels a day by 2012. To reach that goal, producers are focusing on a range of new technologies, particularly in the Faja.

Since most cold production wells cannot handle thermal production, most of the advanced technology will be deployed in new development projects, after the current quantification and certification process is complete. The Faja may possibly overshadow Canada to become the world's center of excellence for heavy oil production.

Technology will be developed specifically for the Faja that is not available today. Improved seismic interpretation of the Faja sands, more efficient well placement techniques through better thermal simulation and increased reliability of artificial lift methodologies are just a few of the future areas of focus for Faja technology development One of the most anticipated new techniques is a process to upgrade the heavy oil downhole. In-situ processing would be much less expensive than transporting the heavy crude itself to upgraders or refineries.

Many observers believe that, given the excellent results from the Faja using cold production alone, the addition of thermal recovery and a host of new technologies will create the next big leap in Venezuela’s bright energy future.