PACIFIC LNG PROJECT: A NEW PERSPECTIVE FOR DEVELOPMENT OF THE MARGARITA GAS FIELD IN BOLIVIA

THE

Hugo Araujo, Repsol-YPF, Buenos Aires, Argentina, Pedro Vaticon, Repsol-YPF, Buenos Aires, Argentina, Toms Zapata, Repsol-YPF, Buenos Aires, Argentina, Erland Dvila, Repsol-YPF-Maxus, Santa Cruz, Bolivia Pacific LNG Project: A New Perspective For The Development Of The Margarita Gas Field In Bolivia
This paper presents an overview of the Pacific LNG project chain that the consortium composed by Repsol-YPF, British Gas and BPAmoco, is implementing. The main gas source for the project is the Margarita Field in Bolivia, South America and the final gas delivery target is the Californian market on the Pacific coast of United States of America. The Margarita Field, located in the southern Bolivian SubAndean region, was discovered in 1998. Exploration operations involve deep, naturally fractured gas condensate reservoirs. Three wells have penetrated a large, complex structure and have tested extensive sand bodies which contain massive reserves. Due to the lack of a substantial internal demand in Bolivia and the limited additional market in Argentina and Brazil, the consortium is seeking to export LNG to the North American continent. Two trains, each delivering 3.3 million tons/year of LNG, are the base target for an aggressive development plan for the Margarita Field. The installation of facilities and pipelines to transport gas to the Pacific coast of South America, followed by shipment to the west coast in Mexico and lastly connection to the US gas pipeline system to send gas to the California market make this project an impressive technical effort and significant investment. This paper emphasizes upstream activities by pointing out strategies for the development of the field as well as on-site plant and facilities. Phase 1 feasibility studies have indicated positive results.

Margarita Field Location and Characteristics

The Margarita structure is located in the southern Bolivia Subandean, on the structural trend of the Suaruro Range 35 km to the West of Villamontes town. Figure 1 illustrates the Margarita Field location, in the north part of an elongated anticline oriented NNE-SSW and estimated to have over 30 km long. The Margarita Field was discovered in 1998 and two more wells were drilled after this well. The structural study was performed by using surface geological data, several 2D seismic lines, logs and core data from the three wells. The structural complexity is illustrated by Fig. 2 which presents one of the 2D balanced geological cross sections used to construct the final 3D structural model. The Margarita Field structural model established the limit to the East with the regional Mandiyuti Fault while to the West the structure forms the western flank. A low angle secondary reverse fault crosses along the field parallel to the structural axis separating the structure in two blocks, the hanging wall to the west (marked with A in Fig 2) and the footwall to the east (marked with B in Fig 2). The discovery well MGR-X1 that is located in the hanging wall block found gas and condensate in the Huamampampa and Icla reservoirs at depths in the order of 4500 m measured from surface. The well MGR-X3 is located in the footwall block and confirmed the existence of gas and condensate in the Huamampampa reservoir and discovered the gas and condensate Santa Rosa reservoir at depth in the order of 5100 m.

Figure 1.- Margarita Field location in the southern part of Bolivia.

Figure 2.- Geological balanced cross section showing the hangingwall block (A) and the footwall block (B). (LM=Los Monos formation, Hua= Huamampampa formation)

The Huamampampa. Icla and Santa Rosa formations are complex naturally fractured quartzite sandstones of low porosity and thickness over than 150 m each formation. Fig.4a details the complexity of the rock that can be observed in a thin section which reveals little or none primary porosity that was destroyed due to diagenetic process but leaving a predominant secondary porosity system, and large amount of fractures of different sizes. Figure 4b shows an image log of an intercalated thin sand beds section revealing larger characteristics of the rock fractures or macro fractures crossing thin beds. The massive sandstone sections have in general little shale content and normally have more abundance of fractures than the intercalated sections.

(a) (b)
Figure 3.- Left (a) thin section showing rock secondary porosity and fractures and right (b) image log showing thin sand beds and fractures crossing the thin beds.

Tests performed in these formations have shown typical dynamic expression consistent with the dual porosity systems characteristics. The dual porosity systems represent the naturally fractured reservoirs by two independent but interconnected systems, the matrix rock and the fracture network. The matrix rock, usually of low permeability, stores normally 90% or more of the fluids in place. The fracture network system has little impact in the storage capacity but high impact in the productivity since the fractures are the transportation roads for the fluids towards the wells. Test results indicate that the fractures in this field are connected in an effective network system, a necessary condition to have commercial productivity for this type of accumulations. As shown by the tests of the wells production can be in this field as high as 1.9 million Nm3/d summarized in Table 1. Productivity of the wells are highly dependable on the macro fractured conditions at the well locations and the difference in productivity of the wells MGR-X1 and

MGR-X3 is due to the fracture characteristics crossed by the well when crossing the formation, mainly fracture opening that is related to permeability of the fractures. In cases of limited or poor productivity in vertical wells the production can be improved by horizontalization perpendicular to the fracture planes since this type of horizontal well will have more chances of crossing important fracture sets than a vertical well.

Table 1 Margarita Field - Test Results Well Units MGR-X1 choke mm 19 Gas Rate NMm3/d 0.83 (BHP-FBHP) bars 178 WHP bars 178 Interpretation Results K md 0.3 0.036 3E-05 Avg. Fract. density Fractures/m 3
Note: M= Million, N= Normal conditions (standard conditions)

MGR-X3 19 1.91 33 419 9 0.35 2.1E-07 10

Brief Overview of Reserves

The gas reserves in Bolivia have been increasing at a very high rate during the last years from 161.1x109m3 (5.69 TCF) P1+P2 beginning 1995 to 1326.1 x109m3 (46.83 TCF) P1+P2 beginning 2001 as can be seen in the Table 1, without counting the new discoveries verified during the year 2001.

Table 2
Year Proven P1 Probable P2 P1+P2 Possible P3 P1+P2+P3 Bolivia Gas Reserves (TCF) @ January 1st / Year 1997 1998 1999 2000 3.75 4.16 5.28 18.31 1.94 2.46 3.3 13.9 5.69 6.62 8.58 32.21 4.13 3.17 5.47 17.61 9.82 9.79 14.05 49.82 2001 23.84 22.99 46.83 23.18 70.01

Source:Camara Boliviana de Hidrocarburos www.cbh.org.bo

The reason for such large increase of reserves is due to the field discoveries in deep formations in the southern part of Bolivia which in general are large and thick structures most of them containing the Huamampampa, Icla and Santa Rosa formations. Among the most important discoveries during the last five years is the Margarita field, operated by Maxus-Repsol-YPF and with British Gas (BG) and British Petroleum (BP) as partners. The Margarita Field is one of the largest new gas-condensate fields in Bolivia according to the classification presented by Bolivia in the Table 2.

Table 3
MOST IMPORTANT FIELDS OF BOLIVIA NATURAL GAS RESERVES (TCF) @01/JAN/2001 - BOLIVIA FIELD RESERVOIRS PROVEN PROBABLE Total (P1+P2) MARGARITA H+I+SR 6.44 6.98 13.42 SAN ALBERTO H1+H2+H3+I+SR 7.33 3.72 11.05 SAN ANTONIO/SABALO H+I 2.08 3.17 5.25 ITAU H1+H2+H3+I+SR 3.09 6.18 9.27 18.94 20.05 38.99 23.84 79.45% 22.99 87.21% SR= Santa Rosa "MARGARITA" 41% Naxus Bolivia Repsol YPF 34% BG 25% Union Texas de Bolivia 46.83 83.26%

1 2 3 4

OPERATOR MAXUS PETROBRAS PETROBRAS TOTAL EPB SUBTOTAL

BOLIVIA TOTAL NACIONAL (TCF) % FROM THE BOLIVIA TOTAL RESERVES Notes: H= Huamampampa I= Icla PARTNERS "SAN ALBERTO" "SAN ANTONIO" "ITAU" Petrobras Bolivia S.A. 35% Total EPB Total EPB 15% Exxon-Mobil B. De P. Andina S.A. 50% BG (exTesoro Bol.)
Source:Camara Boliviana de Hidrocarburos www.cbh.org.bo

37.50% 37.50% 25%

Looking for New Gas Markets

One interesting alternative market for the Bolivian gas could be the gas to liquids conversion process, GTL. The GTL generates clean diesel consistent with today environmental concerns. The Bolivian internal market for diesel is in the order of 1600 m3/d and much larger in Brazil. This diesel demand may require large volumes of gas for the conversion to liquids. Another option for the Bolivian gas is to look for large gas growth market potential places in the world. The two largest energy importers in the world are USA and Japan, both very far away from Bolivia. Figure 4 shows approximate distance for the gas to travel to Japan and USA. As can be seen, those are transoceanic distances, and California, USA, is a much shorter distance for shipping any product from south of South America than to Japan. Transporting the gas to far distances, by means other than using pipelines, can be done through the Liquefied Natural Gas process, LNG. The LNG consists in cooling the gas at cryogenic temperatures and liquefying the gas at atmospheric pressure. When the gas is liquefied, its volume is reduced several hundred times, then can be stored in tanks and be loaded aboard ships for transportation, Fig.5. The LNG at the terminal point is regasified for distribution to final destination in normal pipelines network.

Figure 4 .- Transoceanic distances from south of South America to North America and to Japan. With the possibility to send gas from Bolivia through the Andes until de Pacific coast, liquefy the gas and transport in ships through the Pacific Ocean to California, USA, was born the Pacific LNG project alternative.

Figure 5 .- Ship transportation of gas in the form of LNG

The Pacific LNG Concept

The Pacific LNG concept consists on a chain of several large projects. The starting point is at the Margarita Field location in Bolivia where the gas is extracted from the deep reservoirs. The produced gas should be treated on site for which facilities are needed. After treatment the gas has to be transported to the Pacific coast by pipelines. At the Pacific coast the gas should be liquefied in a LNG Plant. This liquefied gas has to be shipped on special vessels to the North America continent. At the final terminal the liquefied gas has to be regasified on a regas plant, and the gas feed the market through the gas pipeline network. Figure 6 is an schematic illustration of the project chain.

Figure 6 .- Ship transportation of gas in the form of LNG The feasibility of this project have to be carefully studied in several fronts. The project main components are: Upstream operations, midstream operations, downstream operations, shipping operations, regasification operations, marketing and finally selling operations. Each one of them is a challenge on this project. The Margarita field has the capacity to supply the gas for this project, and its development can be a reality by means of succeeding in this project. The individual parts of the chain are illustrated in Figure 7.

Figure 7.- Pacific LNG components chain

Following we describe briefly the components of the project pointing out the upstream operations. In order to minimize the large amounts of money that will be necessary for the development of the field, great efforts are currently being done. Among the efforts is the 3D seismic acquisition for the large area that covers the field. Processing and interpretation of the 3D seismic is currently in progress and it is expected that the results will improve the current structural modeling of the field which will help to place the new wells. New wells will be vertical until reaching the formations and well tests should be performed, log and core data information can be acquired, and before completing the wells a horizontal section should be drilled to improve well productivity. A numerical simulation model in dual porosity formulation was constructed using the current structural model, rock properties from log interpretation of the three wells, fracture analysis form core data and log images, productivity information from the well tests. The representation of the fractures network for the numerical simulation model has been constructed based with structural study of the cumulative dilational strain which is an indicator of the zones in the reservoir with more susceptibility to be fractured. Combination of this information with fractures interpretation from log images provided the fracture properties to populate the model. Figure 8 shows the gas and water saturations in the fracture system at an specific time during the analysis session of the gas and water field behavior.

Figure 8.- Partial view of the field in the numerical simulation model showing the water and gas saturation distribution in cross sections during the post processing analysis. The numerical simulator allows the analysis of the dynamics and changes occurring in the gas and water saturation, pressure decline at each cell in each one of the reservoirs, well behavior, etc. Each cell has been selected to have 350x400 m size and each one of the eleven layers an average of 50m. As mentioned before, the fractures have important impact in the productivity of the wells so the study of fractures continues with borehole stability and in situ stress analyses, and outcrops study near the field which and inclusion of this new information will improve our current knowledge on the fractures properties distribution. The current numerical simulation model provides a base scenario to run several sensitivity cases. Among them is for example the comparison of the vertical wells field performance and horizontal wells field performance. Results have shown that the horizontal wells have better performance because

they have more exposure to productive fractures than the vertical wells. The number of wells, to guarantee the 34 Mm3/d of gas deliverability for the two LNG trains, will be a function of the maximum allowable gas production according the well type, completion program, well productivity, fractures distribution. The numerical simulation model is being used currently to simulate the field development and deliverability forecasts under several different scenarios of productivity. The drilling plan for an aggressive three years field development plan is considering the number of rigs needed per year, the mud, log, etc. services that will be required, roads and accessibility to the well locations, environmental studies that are already in progress. Another important task in the upstream operations is the conditioning of the well effluents at well site which consist in a gas Treatment Plant and there are two main alternatives to process the gas on site: a) Install a cryogenic gas plant, which products will be: one stream of a Residual Gas, one stream of LPG (C3 & C4) and one stream of a Stabilized Condensate-Natural Gasoline (C5+) blend. b) Install a Dew Point Plant, which products will be: one stream of a Residual Gas, and one stream of a Stabilized Condensate-Natural Gasoline blend. Figures 9and 10illustrate the two type of the mentioned plants.

Wells

Prod. Separator
Slug Catcher

CO2 to Disposal System

AMINE UNIT For CO2 removal Cap: 1.4 BCFD

Test Separator
Water to disposal system

Low Pressure Compressor STABILIZER

DEW POINT PLANT Cap: 1.4 BCFD

OIL PIPELINE

GAS PIPELINE

Figure 9- Dew point plant schematic components, flow path and process

In both cases the carbon dioxide (CO2) and the water shall be extracted from the inlet gas stream. Also a disposal system for the produced water and CO2 shall be implemented for both cases. A technical and commercial analysis will define which one is the best alternative for the whole project. Only one gas inlet facilities is being considering for this plant, however the plant itself may be divided in two trains, because of the access roads to the field are not able to support big load, then the size of the plants equipment might have to be reduced. If this is the case each train will handle half of the total feed .

Wells

Prod. Separator
Slug Catcher

CO2 to Disposal System

AMINE UNIT For CO2 removal Cap: 1.4 BCFD

Water to Disposal System

Test Separator

Low Pressure Compressor

STABILIZER STORAGE

CRYO PLANT Cap; 1.4 BCFD

C5 +

OIL PIPELINE GAS PIPELINE LPG PIPELINE C3&C4

Figure 10.- Cryogenic gas plant alternative components, flow path and process A gas pipeline from Margarita field to the Pacific Coast has to be lay down, and depending of the type of gas process plant installed, one or two liquid pipeline will be needed. Because of the Andeans Range crossing (over 4,000 m above sea level) of the pipeline, very low ambient temperature are expected, therefore the gas to be transported should be as dry as possible to prevent condensation/freezing problems at the pipeline. Figure 11 shows the pipeline profile from the Margarita field to the Pacific coast. An important criteria for the sizing of the pipeline is to consider a minimum of remote station compression, because of the not existing access road to the pipeline route and the hard living conditions at 4,000 m over sea level, where the pipeline is located.

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Figure 11.- Pipe line profile showing the length (x axis) and altitude (y axis) Considering just one intermediate compression station and 31.1 Mm3/d of gas, the diameter of the gas pipeline run around 42 and 60,000 hp installed at the compression station. The condensate pipeline for the recovered condensates may need two to three pump stations of 15,000 hp total installed and a diameter of 16 until the highest altitude and three pressure reducing stations of 24,000 hp total installed and a diameter of 12 to run down deep the Andeans Range to the Pacific Coast (From 4,000 m altitude to the sea level). The pipelines section that will cross the Andes with the fluids to be exported has several optional places to arrive north of Chile south of Per. Currently a team of specialists is visiting the potential places to select the best conditions for implementing the terminal to receive fluids and at the same time to install the LNG plant and optionally the LPG plant and shipment terminal. The blue mark and red spot in Figure 2 that indicates the pipeline section and the LNG plant at the Pacific coast shows an illustrative way and terminal indication of only relative representation since the LNG plant place has not been yet selected. At the Pacific coast, the LNG plant should be installed, then an LNG processes selection shall be done and a commercial-technical study of the two available LNG processes alternatives will define the best option for this project, those processes are: The Phillips process utilizes two pure refrigerants (ethylene and propane), both of which are contained in a closed system and are not lost when the plant shuts down. The third Phillips refrigerant is methane, which is obtained from the LNG in an open cycle. Thus, the Phillips process tends to be easier to operate and forgiving when errors are made. The APCI process uses propane plus a mixed refrigerant that must be closely controlled in composition and that must be recombined after any shutdown due to the fact that it is lost when the plant shuts down. Technically, both processes are proven, long-term reliable, and efficient. The LNG plant to be constructed will process around 32 Mm3/d and will be selected based on the technical and economic analysis. The Fig. 12 illustrates the PLNG plant project.

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Fuel Gas Gas Pipeline Rec. & metering Facilities Hg & Water removal And Dehydratio n

Vapor Return LNG Storage & loading Pumps LNG Ship Loading

LNG

Propane Storage LPG PLANT Depropanizer & Debutanizer

Vapor Return

LPG Loading Pumps Butane Storage Vapor Return Cond. Storage & Loading Pumps

LPG Ship Loadin

Cond. Receiv. & Metering Facilities

C5 +

Cond. Ship Loadin

Figure 12.- Schematic LNG plant components, flow path, process and coastal facilities including LPG fraccionation plant

Shipment as mentioned before is planned to be done through the use of specialized vessels as shown in Figure 5 carrying tanks at atmospheric pressure and cryogenic temperature. The ships will arrive to the Pacific coast of Mexico near California, where a re-gasification plant has to be constructed in order to be able to put the gas under conditions to deliver by a pipeline connected to the California gas network.

The Challenge
The Pacific LNG requires not only high investment but also proper synergy on several tasks of the several components. The construction phase is planned to start in 2003 and the first gas and LNG plant commissioning is panned for the year 2005/2006. The development of the field has to be done within 2003 and 2006 to have the capability of exporting the gas in late 2005/2006. Field development, plants, pipelines, compressors, vessels, everything should be ready to start together otherwise the large investments have to pay the standby until the whole project is finished. All the teams have been working at a very high speed and the preliminary tasks of the project concluded within the expect timeframe, providing to managers and decision makers with valuable information to

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decide about the continuation of the project. The preliminary project feasibility study has shown, under conservative conditions, to be economically attractive and the three companies Repsol-YPF, BG and BP approved the continuation of the project which currently is in more detailed study phase. Bechtel has been incorporated to the group team for the detailed pre-feed phase of the project. Conclusions The gas market option, California, USA, to develop the Margarita Field has been identified. Preliminary study indicates that provision of two trains of 3.3 ton/y of gas from the Margarita field is feasible, and its development can be a reality by means of succeeding in this project. The long way for the gas transportation will require at the intermediate point of the Pacific coast the construction of an LNG Plant to liquefy the gas. This process will allow that the gas transported from the margarita Field by a trans Andean pipeline continue its travel through the Pacific Ocean until reaching the North America Continent. Team efforts preliminary study of the project has indicated that the project is economically feasible. The continuation of the project is at the Pre feed stage and construction of the plants and pipelines as well as development of the field is planned to start by 2003. Successful implementation should allow to start the gas delivery by 2006. The key components of the upstream development alternatives (drilling and completion plan, on site surface facilities and gas treatment plant) were identified and the study of the best options to be implemented is in progress. The pipeline size alternatives, compression requirements and pumping units for recovered liquids were also identified. Pre feed detailed study for each component of the Pacific LNG project is in progress and optimization at this phase should improve economics. Acknowledgment. The authors would like to thank Repsol-YPF Maxus, operator, and BG and BP partners, for the permission to publish this paper. The authors would like to acknowledge to the Repsol-YPF, BG and BP study team members of the PLNG project that participated actively in several tasks of the project. References Lpez Pin Carlos, Natural Gas Liquefaction Plant in Trinidad: Study, Design and Construction, BIP Boletin de Informaciones Petroleras, Repsol YPF, N 67, September 2001. Hubert Garcia Claude, The Force Coming from the Gas, Petrobras Magazine, Vol 7 N 32, October 2001.

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