Original
Message -----
From: Oliver L. Campbell
To: andresoppenheimer@blogspot.com
Sent: Wednesday, June 28, 2006 10:42 AM
Subject: Venezuelan production
Mr Oppenheimer,
I read your article on Venezuelan production with interest
and would just like to comment on the statement by Jorge Piñon,
"They are manipulating the figures by adding the Orinoco
basin production of synthetic crude, which is not usually
recognized or accounted for by international agencies"
In
fact, Venezuela has included production from the Orinoco Belt
for a long time. The crude is not synthetic when it is in
the reservoirs. It has a temperature of 50º C and only
becomes viscous when it reaches the surface and cools down.
The term "synthetic" applies only when the oil has
been upgraded from about 9º API to over 16º API
. This is a costly process but Sincor, the most successful
consortium, upgrades crudes from 9º API to 32º API
which is something quite remarkable.
The
production process is entirely conventional--it is not a mining
operation as in the Athabasca tar sands with which the production
is erroneously compared. Future increases in production will
come mainly from the Orinoco Belt and OPEC now recognises
this production against Venezuela's quota.
My
following article explains how the production is conventional--the
only difference is the cost incurred in upgrading which is
akin to a refinery process. I calculate total production and
upgrading cost is around $12 a barrel. With the present $60
sale price this leaves a large margin,.and the margin would
still be attractive if the price fell to $40 a barrel.
What
is unconventional about crudes in the Orinoco Oil Belt?
By
the way, in Venezuela we prefer the term "upgraded crude"
to synthetic crude. Personally, I dont like the latter because
it confuses many people who think "synthetic" is
something artificial or man-made like nylon or rayon. Although
you will realise it is used here in the chemical sense of
something that has been synthesized, i.e. parts made into
a whole, not everybody does.
Regards,
Oliver L Campbell
