Newspaper article THE JOURNAL RECORD

Phillips Increases Interest in Hamaca Project to 40%

Newspaper article THE JOURNAL RECORD

Phillips Increases Interest in Hamaca Project to 40%

Article excerpt

BARTLESVILLE (JR) -- Phillips Petroleum has agreed to exchange its 18 percent working interest in the LL-652 oil field in Lake Maracaibo, Venezuela, for two-thirds of Arco's 30 percent working interest in the Hamaca heavy oil project in Venezuela's Orinoco Oil Belt.

The exchange boosts Phillips' share in the Hamaca project from 20 percent to 40 percent. Texaco has agreed to acquire the remaining one-third of Arco's Hamaca interest.

"This exchange reflects our commitment to Hamaca's success," said Kirby Hedrick, executive vice president of upstream. "It will enable us to focus our efforts in Venezuela on a large project with significant growth potential. The additional working interest will double Phillips' reserves in Hamaca to about 700 million barrels-of- oil-equivalent and increase Phillips' total worldwide reserves by 32 percent, to nearly 3 billion barrels-of-oil-equivalent. This strongly supports our strategy of adding low-cost, long-life reserves to our global portfolio."

Phillips expects the Hamaca heavy oil project to begin producing 36,000 barrels per day in mid-2001, then reach peak production of 190,000 barrels of crude oil per day in 2004 and continue that level of production for 35 years. The Orinoco Oil Belt is believed to contain some 1.2 trillion barrels of extra-heavy crude (9-degree API gravity), the largest known hydrocarbon deposit in the world. The Hamaca project encompasses more than 400 square miles of the Orinoco and is believed to contain more than 31 billion barrels of oil, of which about 2 billion are recoverable using conventional production methods.

The cost for the project to reach peak production is $3 billion.

"Hamaca is a strong project with an unusually flat, long-term production profile," Hedrick said.

"Modern horizontal well technology, with which Phillips has considerable experience, will enable us to produce at low cost and high efficiency for a number of years. …

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