Colombia's Pursuit of Offshore Gas Faces Hurdles and Uncertainties
Posted 29/09/2023 13:50
Colombia is facing significant challenges in its quest for offshore gas development as it seeks to secure its long-term energy security. While the development of recent offshore gas discoveries at Gorgon, Uchuva, and Orca has been identified as crucial, several uncertainties and hurdles need to be addressed, according to energy industry intelligence group Wood Mackenzie.
One of the main challenges lies in achieving a breakeven point range from $6 to $7 per million cubic feet (mcf) for these offshore gas projects. This breakeven point is based on various scenarios that consider potential recoverable resources and ultimate well productivities. Meeting this cost threshold is essential to avoid a future gas supply gap.
Colombia is projected to face a gas supply shortage, including import capacity, of 560 million cubic feet per day (mmcfd) by 2030. The uncertainty surrounding offshore projects, including production volumes, timelines, and costs, makes addressing this challenge more complex.
Infrastructure is another significant obstacle. The current pipeline infrastructure is insufficient and must be extended to accommodate offshore gas production and transport. Furthermore, obtaining approval from local communities in public consultations for both offshore developments and onshore infrastructure expansion poses additional challenges.
Wood Mackenzie's research indicates that offshore gas projects typically have an average lead time of 11 years from discovery to first gas. Even in an optimistic scenario where Colombian offshore discoveries near the coast could begin production by 2027, they would face competition from an oversupplied LNG market with prices around $6. This competitiveness could affect Colombia's potential in the export market by 2030.
In summary, while offshore gas development is crucial for Colombia's energy security, addressing cost, infrastructure, and community approval challenges will be vital to realizing its offshore gas potential.