Margarita and Huacaya oil fields unveiled, no need for further conflict between Chuquisaca and Tarija

Hilton Heredia reports for El Deber about the connectivity between two oil fields and fortunately there is no need to continue with the conflict between brethren departments:

Official. The American firm Gaffney Cline & Associates last night unveiled that a (H1b) reservoir of the Margarita field in Tarija (the largest gas deposit) field has connectivity with the field Huacaya of Chuquisaca. However, two reservoirs belong exclusively to Tarija. The news were joyfully received by the civic Committee of Chuquisaca and the Legislative Assembly of the Department, who gathered yesterday at YPFB facilities in Santa Cruz.

However, Tarija rejected the report and calls for a meeting on April 15 in Tarija’s capital. Last night the civic authorities of the region declared departmental mourning. The study was delivered to the President of YPFB, Carlos Villegas; the Minister of hydrocarbons, Juan José Sosa, and the delegation of Chuquisaca.

From this situation, the company gets ready to continue with the study to calculate and define the factors of distribution of the royalties that correspond to each of the regions by April 19th.

It should be recalled that previous reports of the operator of block Caipipendi, Repsol, delivered to YPFB pointed out the link at a level of the Huamampampa formation, that connects the wells Margarita X3 and Huacaya X1.

It is thus fully confirmed Tarija should distribute Margarita field royalties with Chuquisaca, but Tarija should also benefit from the royalties of Huacaya.

April will not only be the month of the civic anniversary of Tarija, but also of the increase in the production of hydrocarbons of the Margarita field and the beginning of the second stage of the development of the mega field.

Currently, Margarita produces 3 million cubic meters of natural gas per day (MMm3/d) and since the middle of the next month, it will double this volume up to six million, to then gradually increase up to nine million, which is the top of the first phase. It is expected to increase up to 15 million.

In this regard, Villegas and Sosa avoided comment and left over-hasty the YPFB facilities located in the third outer ring of the double track to La Guardia.

Meanwhile Chuquisaca’s civic rep, Milton Baron, approved the report and indicated that they expect the results of calculations of the royalties. “We received with moderation the report. We ask Tarija to reflect”, he said.

The other side of the coin was in Tarija. The legal adviser of the civic Committee, Oscar Lazcano, described as an montage and a show the study and accused the YPFB State company for staying committed to the alleged false data issued by the American consulting firm.

“Tarija is going to take decisions as appropriate when the time comes. We could care less of the report. On the other hand, it has been reported a survey that are nothing more than lies. We can be overwhelmed, they can do whatever they want, but at some point, they will have to listen to us when we begin the radical measures of pressure. It should not be forgotten that Santa Cruz fought at the time by the royalty [11% ‘regalia’], now it is our turn,” Lazcano said.

Among the measures to be taken on April 15 is the Declaration of departmental mourning, in the anniversary date of that region. That day the ‘chapacos’ [Tarija’s people nickname] will celebrate nothing and will be ordered to put a black ribbon on the flags.

It is also expected to convene a Consultative Council on April 15th to analyze pressure measures.

It should be recalled that in mid-February, YPFB and the Gaffney company signed the agreement that the American consultant would take charge of the study of connectivity between Margarita and Huacaya fields. The analysis was done despite the rejection of the representatives of Tarija. The study was made at a cost of $125,714 and was governed under Ministerial resolution 292/2011.

The geological model applied by Gaffney ensured the expected results, on the connectivity of the fields; the technical study also found recommended alternatives in the area of exploitation and production.

According to YPFB and Gaffney, the study was conducted through guidelines and international standards of the world society of oil engineers (SMIP), the World Association of Geologists (AMG) and the society of engineers that evaluate oil assets.

The issue will continue to be politicized

Alvaro Rios / energy consultant:

It was extremely important to have a specific consultancy in this regard. In our view it has taken too long to do so, but it is better late than never.

The results showing the consultancy work, which must be made public for the respective analysis, indicate that there is connectivity and therefore royalties must be share in some proportion. We expected that the consultant made an opinion on the proportionality to share the royalties but we see that this has not been done and therefore remains in uncertainty.

We [A. Rios] do not understand why the consulting firm that was hired still does not define this percentage, it is the best call to do so by the knowledge gained during the study. A technical number that is well supported by the geology must establish clearly.

However, we [A. Rios] believe that the issue will continue to be politicized and whatever the outcome of the technical consulting is, one of the parties will go on strike and roadblocks. Because that is the hermeneutics of our beloved country. We are the country of conflict, the country where everything is resolved and is achieved with blockades, strikes and pressure. This the way to resolve all claims and obtain resources, legal or illegal, and it even goes as far as to rule [the country, to govern]. This situation is really regrettable.

Conclusions and evidence

1 Support. There is enough support that demonstrates the hydraulic connection of the reservoir Huamampampa H1b between Margarita and Huacaya.

2. Extension. The reservoir Huamampampa H1b is penetrated by the Huacaya X-1 well in the northern extension, it is therefore a unit of flow.

3. Other reservoirs. The other two reservoirs H1a and H2, there is no evidence to indicate that the hydraulic continuity between the two camps.

I fully agree with Alvaro Rios, unfortunately this is the ‘Bolivian way’… regardless of scientific evidence, people tend to do as they please. Whereas it is a claim on behalf of the department or for personal and/or group’s political reasons. In the meantime, Bolivia needs more gas not only to continue to export at lower prices to Brazil and Argentina, but what is more important to provide gas to El Mutun’s mine and for the processing of lithium in Potosi. Blockades and pressure will only serve to push us back into the hole of the poorest country, less developed nation in the region. Tarija people should come to their senses and move forward!

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