Colombia oil output hits turbulence

Colombia oil, gas 2007 to 2012

Colombia’s oil output (the blue line on the chart above) was rising steadily for years. Maybe too steadily. There were rumours that the pressure was on to make the mark of 1 million barrels a day, and that some companies were extracting oil too quickly, reducing the overall recoverability of oil in some fields. I don’t know if those rumours were true. I know what this chart shows. One is a very smooth, exponential rise in output that suddenly stopped last June. Did something happen last June?

There is also a strange lack of synchrony between oil & gas. The most obvious thing is that gas sales have been volatile, while oil output has risen steadily. Gas sales peaked at the beginning of 2010, while oil production kept rising. And in the past year, gas sales rose for several months without any corresponding increase in oil.

And then there’s the really obvious point: The blue line has yet to broach that million-barrels-a-day mark. I suppose this should have been predictable when Jim Cramer and everyone else started talking up Colombia a little over a year ago.

UPDATE: I knew I had seen someone else comment on Colombia’s failure to make 1 million barrels a day, and it turns out it was regular reader, commenter, linker, and all-around site pal Otto. A month ago. And my memory is failing me in my old age. Actually I can’t blame age. His page had a handy chart of the derivative, too, which is pretty cool, so go check it out.

3 thoughts on “Colombia oil output hits turbulence

  1. Phl

    Not sure how this will fit in with the analysis but generally if you “pull” to hard on a well to produce oil, yo will initially produce more oil however what you do is drop the reservoir pressure. Once this pressure drops below a certain point called the bubble point gas dissolved I. The oil starts to be liberated. . So you start to have increasing gas production. The annoying thing about this though, is that gas has a higher relative permability than oil has. As a result it is easier to produce, forcing you to pull hard of the well, to get the same amount of oil. Which in turn produces more gas as the pressure drops even more. So this could be what you see. Even by drilling more well inthe same reservoir, you are more likely to produce at a higher gas oil ratio as not all the gas goes up the current wells and go to the top of the reservoir. So you have more free gas which is more likely to be produced by the new wells.

    Alternatively it would be interesting to see what the produced water figures look like for the reservoirs.

    Anyways keep up the good work setty, always enjoy the posts

    1. sapitosetty Post author

      Hi Phl, I knew that overproduction could cause declining pressure, but I did not know about the oil-gas ratio. The overall national numbers we see here certainly look like that may be happening, but of course it’s hard to know without seeing individual field data. Very interesting, anyway.

  2. Peter

    Maybe this drop in production in June has nothing to do with overproduction?

    Many Oil Exploration and Production Companies in Colombia are Canadian using the highest technology.They do not overproduce as quite frankly it is bad business for them and everyone else. They are in the business to make money and not trying to reach some hypothetical goal set by some government.

    It is bad for business to Overproduce as it is difficult enough to find new oil discoveries in the world now, let alone wasting these resource once they do.They are all very careful about not doing that now.

    Colombia is not Saudi Arabia, where their the Oil Fields hold 2.5 Billion Barrels of Oil. Colombian Oil Fields are small in comparison with many holding only 2.5 Million Barrels of Oil. The Oil Field Depletion Rate is quite high. But this is not to say that these fields are not very profitable, as Canadian Producer Petrominerales (PMG) has proven.You just need to drill more Oil Wells. So yes, Colombia will quite easily reach this million-barrels-a-day-mark, and quite soon.

    As has been pointed out on this chart, the Colombian Oil Output Increase is quite new starting at around 575,000 Barrels of Oil per day and increasing to 970,000 Barrels a day in just the past 5 years. Although Piplines are making there way to Colombia slowly, Colombia still lacks infrastructure to move all this increased oil easily.

    I suggest that this drop in Oil Production in June has nothing to do with overproduction at all. But it has everything to do with the weather. There are 2 Seasons in Colombia. The Rainy Season and the Dry Season. June is in the middle of the Rainy Season in Colombia.

    In June that year, and at this time in Colombia, they were experiencing heavy rainfall. That can be Googled. As a result, many of the roads were flooded. Since most of the oil leaving the Oil Fiields for the Oil Terminal is delivered by truck, they could not deliver this oil as the roads were washed out. Thus a drop in Oil Production starting in May and ending in July, and when the roads dryed up.

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