The discovery and untimely loss of the Jusepin Deep Field in Venezuela is a story of creativity, perseverance, technical excellence and emotion - which are qualities we as geoscientists like to feel we bring to our jobs every day.
As with any such story, a technical description of the process of how this discovery was made would involve details like how the seismic data was eventually processed to reveal a previously unseen structure, or how structural geologic analysis was utilized to build a seamless, risk-reducing model.
If the story focused only on the technical work, though, the personal aspects would be left out; specifically, the sense of accomplishment and satisfaction that comes from getting the geology right and of validating one’s technical capabilities in real time.
With that in mind here’s an acount of how the dedication of the Total Venezuela and Amoco Venezuela technical teams paid off, and how they got the geology and geophysics right to find a major oil field when no one else believed it existed.
The groundbreaking discovery of the super-giant El Furrial Field in 1986 prompted the entire oil industry to vie for the chance to become involved in this new play. Many companies tried to position themselves with Petroleos de Venezuela (PDVSA) to become the “partner of choice,” and offered to work with the PDVSA affiliates on various technical service agreements.
Joint PDVSA-IOC projects focused on various problems considered critical by PDVSA’s technical leadership, such as depth processing of seismic data, sequence stratigraphy and biostratigraphy.
Amoco was no exception, and through personal and business contacts gradually began to develop a relationship with El Furrial operator Lagoven in the field of seismic depth imaging and processing.
At the same time, Total had established a similar relationship with Lagoven, and was already working on joint projects in the El Furrial play area (figure 1).
In that highly competitive atmosphere prior to “La Apertura” (“The Opening” of the Venezuelan oil industry to private investment), I became a charter member of the new Amoco Venezuela and in early 1989 took part in some of the first meetings and work sessions with Lagoven in Caracas. That initial team included Bob Marksteiner and the late Nelson Briceño, who presented Amoco’s depth seismic interpretation of the Furrial-1 drill line, Wendy Hale-Erlich, Steve Barrett and myself.
We all saw that meeting as a test of Amoco’s technical capabilities and knowledge base.
The primary focus of that first project was to see how well Amoco could model lateral velocity variations within the Carapita Formation, and by all accounts the work was well received. Steve and I also presented some work we had done on regional tectonics and stratigraphic correlations between Venezuela and Trinidad.
All of our efforts were focused on technical problems that had direct relevance to the Furrial play. Following the meeting our Lagoven counterparts led a joint field program in eastern Venezuela, during which the “Lagovitos” made a point of wearing their Total baseball caps in the field (figure 2). It was their way of sending a clear and not too subtle message that we were not the only company trying to make an impression.
By 1990 our efforts had begun to pay off. Amoco Venezuela had positioned itself well with senior PDVSA management to take part in an expanded set of technical cooperation agreements with the various affiliate companies (Lagoven, Corpoven and Maraven).
At that point, Amoco Venezuela formally consisted of me (geoscience), Jon Blickwede (geoscience), Roger Neal (engineering) and Alex Weisselberg (negotiations). Our expanded set of projects very quickly led to a staff increase that included several permanent and consulting members, including Antenor Aleman, Ralph Baker, Ron Nelson, Bob Marksteiner, the late George Kronman, and the late Aldo Boccardo, who was a very well respected Venezuelan geologist and longtime PDVSA employee.
We began joint field studies with Lagoven and Maraven in eastern and western Venezuela, respectively, and by 1991 we believed we were ready for the first licensing round.
The first marginal fields bid round was announced in 1992 (figure 3) and several of us spent two weeks at the Hotel Tamanaco in Caracas going through the PDVSA data rooms. Unfortunately, the blocks appeared to have little upside and were commercially unattractive, so we did not recommend bidding at the time.
All our efforts and work seemed to fizzle out in an instant, and at first it looked like Amoco would fail in Venezuela.
The “Risk Police” and an Anchor Point
Fortunately for us, and for the international industry in general, the first marginal fields bid round was widely considered to have been a failure, as only two contracts were signed. The lack of prospectivity in the assets being offered by PDVSA and restriction of the contractors to currently producing horizons was insufficient incentive for foreign operators to take the financial risk.
PDVSA then decided to immediately launch the second marginal fields bid round, which took place in March 1993 (see figure 3). Again, Amoco Venezuela did not bid, even though this time the technical team recommended bids on several blocks.
Despite of our no-bid status, Amoco Venezuela underwent another growth spurt. During that period from late 1991 to early 1994 Amoco re-opened an office in Caracas and the Houston/Caracas-based teams expanded to include 21 professionals.
By the time we began preparations for the Second Marginal Fields bid round we finally had the organizational capability to handle the demands of the bid rounds and our multiple technical cooperation agreements. Although our staff and activities in the country increased, there were no guarantees we would find a successful “anchor project,” and my future in eastern Venezuela was also about to change.
For some time I had been trying to convince Hans Krause (Intevep’s E&P manager) to approve joint study proposals on various geologic problems of mutual interest. His response, regardless of the proposal, was that the work already had been done during the BP-PDVSA countrywide sequence stratigraphic study.
After nearly two years of having my proposals turned down, I decided that Amoco should move forward on its own, so I left my position in eastern Venezuela to work on those projects in exclusively western Venezuela.
My exit from eastern Venezuela meant that I would not directly participate in what would become the most important event for Amoco in Venezuela. One of the three blocks we really liked in the second bid round was the Jusepin Block (figure 1) - not for the old shallow field production, but for the deep potential. The existing 2-D seismic suggested that a large, Furrial-type thrust anticline might be present under the existing shallow field (figure 4).
When Total captured the block we were very disappointed but not completely surprised, knowing Total had been working on the play with Lagoven since at least 1989.
Jean-Paul Barbot, at that time lead exploration geologist for Total in Venezuela, had seen the potential for a new undrilled structure at depth and pushed his management to bid on the block. Jean-Paul recently described to me how this happened:
“The Jusepin block attracted my attention because I had worked previously on the blocks to the south with the famous El Furrial discoveries. Looking at the data provided by PDVSA I had the impression that another fold could be present north of El Furrial within (the) Jusepin block. Of course it was not very easy to see and was more interpretative than being able to spot it on the poor seismic dataset. Especially since the seismic lines had been acquired in different vintages with different orientations and crossings in the southern part of the block where I suspected the undrilled fold could be.”
“Total took (the) Jusepin block in this round with a two-fold commitment: first, a small redevelopment project for the Nodosaria turbiditic sands (we did not want to touch the old La Pica Field, which has too many wells and looked rather dangerous), and second, an exploration program with reprocessing, new 2-D acquisition and two wells. So, far as I remember our proposal was not the highest in economical terms but was judged more adequate and technically better by PDVSA so that we finally won the block.”
“Total decided then to farm out part of its interest and I was asked to organize that too. We contacted at the beginning only three companies and Amoco was one of them. I remember that I went to Houston to present the block to Amoco, to Roger Sels and a woman geophysicist (Ann Nevero). They seemed to like it and Amoco made a very quick offer to Total. I had a big fight with my management because I wanted to retain at least 60 percent to keep the majority but I lost this fight and Amoco took 45-50 percent.”
As I told Jean-Paul after the fact, I was elated that he’d lost that fight with his management!
I recall that Roger Sels, Ann Nevero and Ron Nelson led the recommendation to the Prospect Quality Team (PQT), which was headed at the time by Tony Benson and known affectionately as the “Risk Police.”
Being cognizant that Total, BP and Triton had only just discovered the super-giant Cusiana field in a similar geologic setting (albeit in Colombia), the PQT approved the recommendation to enter the block and Amoco finally had its “anchor point” in Venezuela.
The two companies worked together on the technical program, which consisted of reprocessing the existing 2-D seismic and the acquisition of new 2-D. By early 1995 the deeper target was adequately imaged and it was time to recommend a well.
A “Leap of Faith”
Roger Sels led the technical team back to the PQT, now run by Peter Carragher with Gary Citron contributing, for the final review. As Roger tells it:
“Probably the two key indicators of a prospective structure between El Furrial and Orocual were: a dry hole in the Carapita above Jusepin Deep where our stratigraphic correlations indicated a possible structural high (this well had a Naricual objective but never got there due to drilling problems); completion of dip oriented, balanced cross sections and a tie of strike-oriented sections showing a viable structural geometry between the two mega-structures.”
Jean-Paul was asked to return to Houston to participate in the PQT review; having an “outsider” participate in Amoco’s internal risk process was not something I had ever seen before, but it paid off. Peter Carragher later told me that he and Gary felt that trap definition/structural closure in a strike direction was the key risk, as could be imagined in such a complex area.
That first well, J-476X as it was known (figure 4), was then approved by Worldwide Exploration Vice President Scott Urban, and a spud date of September 1995 was finalized.
We didn’t have long to wait for an answer as to whether or not our “leap of faith” was successful. In early February 1996 the J-476X reached a total depth of 5,620 meters (18,437 feet) and tested 14,200 bopd of 33-35 degree API oil from two zones in the Naricual.
It was a resounding success and everyone associated with the project and the team felt great. Management again began to staff up and Amoco filled out the Houston and Caracas technical teams as we awaited yet another marginal fields bid round (number three).
Later that September the appraisal well, J-479X, successfully appraised the Jusepin Deep structure and tested 8,050 bopd. For the remaining initial members of the team - Alex Weisselberg, Roger Neal and I - it was a vindication of our belief in the original mission and our faith in the process.
The celebration was brief, since much work still needed to be done before the field could be considered a commercial success.
By May 1997, the field was producing 10,000 bopd and 25 mmcfpd but ramped up to 18,000 bopd by October.
The expectation was to increase production to 30,000 bopd by the second quarter of 1998 as new wells were tied into the facilities but by September the field had exceeded that milestone and was producing 35,000 bopd.
Unfortunately, by then Amoco had suffered a setback to its aspirations in the country when the company failed to win a single block in the third marginal fields bid round (late 1997). This failure had far-reaching implications, as large staff increases in Houston and Caracas had been based on the false notion that “Of course we would win at least one block!”
Unless we achieved success in our new exploration blocks (Guarapiche and Punta Pescador), we knew that our future in Venezuela was at risk.
An Ignominious End
Although the news outside of Jusepin was not encouraging for Amoco, success in the Jusepin Block continued in 1998 as a new structure, Cotoperi (figure 4), was confirmed productive. The Cotoperi-2X tested 34-degree API oil at a rate of 7,650 bopd and everything seemed to be working as planned.
Unfortunately, in August 1998 and after a string of successes and spectacular growth, the Venezuela team was stunned by the announcement that BP would acquire Amoco in a then unimaginable all-stock deal worth $48.2 billion. We quickly realized that the “merger” would decimate the Amoco Venezuela team, as BP already had its own teams working in Caracas.
The announcement was preceded by the news that the Guarapiche-1X well would be plugged and abandoned, and was followed in short order by the failure of the Morocoto-1X well to find commercial hydrocarbons (it found gas), thus condemning our exploration blocks.
The rest, as they say, is history.
By the end of January 1999, most of the Amoco Venezuela team had left the company and those who remained were absorbed into BP Venezuela’s operations. The election of Hugo Chavez as Venezuela’s next president and his subsequent purge of existing senior management within PDVSA following the strikes in 2002 made it clear that the country would take a big step backward, and away from its former goals of boosting production and increasing foreign investment in the hydrocarbons sector.
Foreign operators scaled back their investments accordingly as talk of delinquent tax payments, royalty increases and compulsory strategic associations were communicated from Caracas. The foreign operators were soon told that they would either accept the new strategic associations, in which PDVSA had majority ownership and control of the assets, or be expropriated.
Total and other operators resisted as long as possible, but in April 2006, Jusepin Deep was seized by the government, effectively ending independent operations for the partners. A year later Total and BP agreed to split proportionally a $250 million “compensation payment” from the government, a sum that was far below the estimated $1 billion asset value the reserves were worth at the time.
This ignominious end to the Jusepin Deep story only represented an end as far as Total and BP (Amoco) were concerned. At the time of the “sale” the field was producing 35,000 bopd and is still producing 6,000 bopd from nine wells as best I can determine. It likely will continue producing for some years to come.
However, regardless of how the story ended, the achievements of the people who conceived of and led the discovery of this major oil field in eastern Venezuela cannot be diminished. To them I say bravo team; you did well.