Pigap II Gas Compression Terminal, Venezuela

The PIGAP II project is designed to re-inject between 1.2 billion and 1.4 billion cubic feet of natural gas per day at 9,000 pounds per square inch for PDVSA's eastern Venezuela gas-lift operations. WilPro Energy Services was awarded (by Petroleos de Venezuela S.A., or PDVSA,) the $320 million PIGAP II high-pressure gas compression project.

MARKET RATIONALE

PIGAP II is part of a large-scale project which aims to launch a secondary recovery process of oil deposits in the Santa Barbara Field (Monagas State), through the injection of gas at pressures high enough that condensation in the underground formations will not take place, and thus help improve extraction, while also extending the life of the field.

PROJECT TIMESCALE

The initial project commenced back in 1998 when the first terminal began construction. Construction of the second phase named PIGAP II is under way and is scheduled to be completed by July 2001.

PLANT PRODUCTION AND COST

The Jose Terminal was the first phase of the project and was outsourced in 1998. This is a deep-water crude oil terminal. The facility was built by PDVSA at the Jose area in the State of Anzoátegui, Venezuela. The terminal has an initial capacity of about 800 million barrels/day of crude oil and is able to load vessels of up to 250,000 DWT. The terminal was sold to Williams International, Enbridge International and Northville Industries (Wilpro) for $385 million. It will provide storage and ship loading services to PDVSA and to the Strategic Associations of Cerro Negro (Mobil, Veba and PDVSA), Sincor (Total, Statoil and PDVSA) and Hamaca (Texaco, Phillip, Arco and PDVSA).

PIGAP II

The project calls for injecting 1.2 billion cubic feet of natural gas per day through the use of 20 gas-injection wells. The plant to treat and compress the gas for injection will consist of eight pressurising units (trains), each with a capacity for handling 18 million cubic feet per day at pressures of 9,000 pounds per square inch. The start of operations arrived in the third quarter of 2000. Pigap II will extend the life and yield of the field through the recovery of 32% of the oil it contains over a period that will extend to the year 2035. Santa Barbara-Pirital's original crude reserves of 6.9 billion barrels make it one of the largest deposits of hydrocarbons in the whole country.

The injection of gas at high pressure into those deposits, a secondary recovery process aimed at preserving the reservoir's energy, will allow the recovery - over a 40 year period - of 300 million barrels of condensates and light crudes of high commercial value in international markets.

The project, which will require a capital investment of some $400 million, was assigned under a Build-Own-Operate (BBO) agreement to Wilpro. The company will design, build, operate and maintain the project's gas-compression installations for an initial period of 20 years.

OTHER PROJECTS

Pigap II is being undertaken in conjunction with the following projects:

• Pigap III is currently being structured. This is a "Build, Own and Operate" (BOO) project for a new gas compression facility. Overall capacity is in the order of 1,000 million cubic feet per day.
• Sercogas is a multipackage gas compression deal, currently being structured. It involves the sale of existing assets and construction, ownership, operation and maintenance of new assets. Total overall cost is estimated at about $4,000 million.
• Eastern pipeline is a joint venture deal being structured by Mobil, Veba Oel, Cerro Negro (Cerro Negro Association) and PDVSA for the construction, ownership, operation and maintenance of a shared pipeline system in Eastern Venezuela.
• Deep water terminal is a joint venture deal being structured between BP Amoco and PDVSA for the construction, ownership, operation and maintenance of a shared pipeline and terminal system to enhance crude oil transportation, storage and ship loading capabilities for further development of proven reserves in Eastern Venezuela.