Ecopetrol’s Operation
New businesses
The New Business process establishes a general framework to manage new investment and divestment opportunities of Ecopetrol Group. The Corporate Strategy and New Ventures Vice Presidency leads and works hand in hand with the different business units to ensure the processing of new business opportunities and their alignment with the Company’s Business Plan. This is achieved by completing quality transfers to materialize the value proposition of each opportunity, rotating Ecopetrol’s portfolio, as well as that of its affiliates and subsidiaries.
New Businesses are operations aimed at creating value and aligned with Ecopetrol Group’s Strategic Plan in accordance with the parameters for new corporate businesses and new upstream businesses.
Ecopetrol – Parex agreement under
the Arauca Production Agreement
and the E&P Llanos 38 contract
Agreements were signed with Parex Resources in July 2021 for this Canadian company to take over operations in the Arauca and Llanos 38 blocks. These consisted of 50% shares in production and reserves for Ecopetrol and 50% for Parex. The process of transferring Ecopetrol’s stake in the Llanos 38 block is in its final phase. On the other hand, reactivation activities in the area have been advancing since July. Initial activities in the Llanos 38 block will focus on the Califa 1 exploration prospect, which is expected to be drilled in 2022. Additional 3D seismic surveys will also be acquired to further evaluate the potential of the area.
Meanwhile, drilling activities will continue in two (2) additional development wells in the Arauca block, as well as the reactivation of production.
Round 17 Brazil
Ecopetrol S.A., through its subsidiary, Ecopetrol Óleo e Gás do Brasil, agreed to a 30% stake, together with operator Shell, which will have a 70% stake, in the SM-1709 block, spanning across a surface area of 685 Km2 in the Santos basin in Brazil. This allocation occurred during Round 17 conducted by the ANP (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis) on October 7th, 2021, with a bonus proposal of BRL 6,560,000 (equivalent to about USD 1.26 million) and a Minimum Exploration Program of 107 units.
The allocation of this block in the Brazilian offshore, together with a world-class company such as Shell, is aligned with Ecopetrol’s growth strategy focused on high-potential basins such as Santos in Brazil.
2021 ANH Round
Ecopetrol submitted offers for five (5) blocks during the 2021 Colombia Round organized by the National Hydrocarbons Agency (ANH), which included blocks proposed by the entity and other areas nominated by industry companies. Of the five (5) offers submitted, four (4) correspond to Ecopetrol S.A. and one (1) to its fully owned subsidiary, Hocol. The five (5) blocks offered were:
Table 10.
Bloques ofertados
| Company | Block | Agreement modality offered |
|---|---|---|
| Ecopetrol | LLA 141 | E&P |
| VMM 14 – 1 | TEA | |
| VMM 4-1 | TEA | |
| VMM 65 | TEA | |
| Hocol | SSJS 1-1 | E&P |
Source: Strategy and New Ventures Vice Presidency
Ecopetrol and its subsidiary Hocol were allocated the five (5) blocks offered on December 16th, 2021, in the Hearing Minutes.
With this award, Ecopetrol will work to quickly execute the exploratory activity included in the offers submitted to the ANH.
Exploration and
Production (Upstream)
Exploration
This is the first link in Ecopetrol’s value chain. Its purpose is to discover and delimit commercially viable hydrocarbon accumulations to ensure the necessary replacement of reserves for the sustainability of the Group.
To achieve this, the exploratory strategy and process were updated in 2021 to ensure the competitiveness of Ecopetrol in light of the challenges posed by the social and macroeconomic environment.
In line with global trends and expectations, the exploration business has agreed to coexist with the challenges of the energy transition. For this reason, CO2 emissions are incorporated in business case valuations, as well the required plans to mitigate the impact of such emissions on exploration opportunities.
Ecopetrol Group’s
exploratory process
In order to manage its exploration opportunities, the Exploration Process provides a framework for action to leverage the progression of opportunities, from the identification or confirmation of areas of exploratory interest to the materialization thereof into reserves.
The process constitutes the main support for effective and efficient decision-making on exploration assets. It focuses on maintaining high technical assurance standards, optimizing the management of the prospect and discovery portfolio, guiding efforts towards compliance with the exploration strategy, and speeding up the maturation process of opportunities and their conversion into discovered, contingent resources and reserves.
This process applies to all exploratory assets in which Ecopetrol S.A., or its subsidiaries (under the full control of the company), must reach a decision, regardless of the stake interest or the role exercised (operator or non-operator).
Exploratory Strategy
The new exploratory taxonomy focuses preferentially on the areas and opportunities of highest potential (materiality, efficiency, and profitability), lower risk (executability and shared activity with partners), fast marketing (short cycle), and with hydrocarbons that are favorable to the energy transition (low emissions).
To this end, four (4) strategic criteria have been established to prioritize opportunities:
(i)
High competitiveness and resilience:
focus on material opportunities with competitive break- even prices. The surrendering of non-profitable opportunities of difficult optimizations is also proposed as a complementary option.
(ii)
Fast time-to-market:
focus efforts on short cycle opportunities with an optimal incorporation start of reserves and production.
(iii)
Hydrocarbons favorable to the Energy Transition:
the exploration strategy prioritizes light crude oil and gas projects to ensure reduced emissions from new opportunities.
(iv)
Low Execution Risk:
focus on opportunities with a high probability of being executed, as well as ensure risk mitigation actions in opportunities with high strategic value but low executability.
Contracts and
Exploratory Areas
By the end of 2021, Ecopetrol had 98 exploration assets, distributed as follows:
Exploration and Production Contracts: Ecopetrol S.A.,19; Hocol S.A., 21; Ecopetrol América, 54; Ecopetrol Brasil, 2; and Ecopetrol Hidrocarburos México,2. Also, exploratory opportunities that are part of the maturation project portfolio (Ecopetrol S.A. 21, Brazil 2, and Hocol 4) have been identified in 27 assets in production areas.
The types of contracts can be identified in Graph 03.
Graph 03.
Exploratory assets by type of contract
Fuente: Exploration Vice Presidency
Note: *PSC: Production Sharing Contract**CRC: Shared Risk Agreement EAL: Ecopetrol America (Gulf of Mexico)
The 98 exploration assets amount to a total of 4,777 billion hectares distributed in the different subsidiaries and areas of exploratory interest: Colombia, Brazil, USA, and Mexico.
Graph 04.
Distribution of Ecopetrol and Subsidiary exploratory areas (millions of ha)
Distribution of Ecopetrol and Subsidiary exploratory areas (millions of ha)
EAL:
Ecopetrol América (Gulf of Mexico)
Exploratory activity
During the development of the exploration strategy in 2021, the exploratory activity focused on areas of high value generation and with high potential for incorporating resources.
Piedemonte
The discovery of the Liria YW12 well in the new Recetor West field in 2021 confirms the enormous potential of Piedemonte Llanero as a reservoir of gas and light crude oil. This success represents the resumption of 100% Ecopetrol exploration operations in this area in Colombia.
Preparation is currently underway to move the drilling equipment to the well. Similarly, the Environmental Impact Assessment (EIA, by its Spanish acronym) for the Farallones opportunity in the former Cóndor block was also filed with the National Environmental Licensing Authority (ANLA, by its Spanish acronym).
Llanos
Progress has been made on two (2) forefronts in the Eastern Plains (Llanos Orientales):
(i)
Maturation and the establishment of operating partnerships to continue drilling exploratory opportunities in the northern area of Arauca, in search for light crude oil and associated gas in high-productivity fields.
(ii)
Exploration and delineation of heavy crude opportunities in the vicinity of the Castilla and Chichimene- Akacías production trains, by leveraging on the existing infrastructure and Ecopetrol’s experience in this type of field.
The operations conducted in 2021 correspond to the completion of the Lorito Este-1 exploratory well and the Lorito A1 well, which is the delineation well of the Lorito discovery in the CPO-09 block (Ecopetrol 55% – operator, Repsol 45%), south of the Llanos basin on the Chichimene-Akacías train. In 2022, extensive production tests will be conducted on the Lorito A1 delineation well and the Lorito Este-1 exploratory well will be definitively abandoned.
Middle and Upper Magdalena Valley
In 2021, Ecopetrol focused on the evolution of three (3) types of projects in these areas.
Migration of discoveries to commercial fields.
Three (3) commercial units were managed, two (2) of them in the basin of the Middle Magdalena Valley and one (1) in the basin of the Upper Magdalena Valley. In the Middle Valley, the Flamencos-1 commercial unit in the La Paz formation was established under the Middle Magdalena contract, and the Boranda commercial unit in the Esmeraldas formation under the Boranda contract. In the Upper Valley, the Tobo commercial unit was established under the Matambo contract. All these commercial units are part of the exploration strategy close to fields in order to accelerate the incorporation of reserves and production.
Migration of prospective to uncovered resources
Where the exploration campaign was primarily executed in the basin of the Middle Magdalena Valley, and where exploratory wells and delineation wells associated with the Flamencos campaigns under the Middle Magdalena contract, Boranda under the Boranda contract, Chimuelo under the Tisquirama contract, Cira 3540 under the La Cira Infantas contract, and Los Niños under the Boquerón contract have been drilled and tested.
Planning and growth execution
Planning was conducted for the execution of several 3D seismic projects in Middle Magdalena. These projects will begin execution in 2022, and they mark a new seismic acquisition milestone for Ecopetrol in onshore basins. In addition, Ecopetrol S.A. placed bids and was awarded three new contracts by the ANH in Middle Magdalena: VMM-14-1, VMM-4-1, and VMM-65.
Finally, Ecopetrol S.A. submitted the winning bid for block LLA-141, under the Exploration and Production contractual modality.
Hocol
Hocol’s exploration strategy is focused on the basins of the Eastern Plans (Llanos Orientales) – Central Sector, the Upper Magdalena Valley, and to the north of Colombia in the Lower Magdalena Valley, Sinú- San Jacinto, and La Guajira.
In the northern region of Colombia, drilling operations were conducted in the Basari-1 well (RC-7 block) and the Carnaval-1 well (Perdices block), both of which are under evaluation.
The drilling of the Est- 1_SN-15 (block SN-15) stratigraphic well was also conducted, which will provide technical information to mature additional gas opportunities. The maturation and pre-drilling activities for the wells of the 2022 campaign also continued: Chinchorro (GUA-2), Pilonera (SSJN-1), Coralino and Arrecife-2 (VIM-8), Sinuano (SN-8), and Yoda A and B (YDSN-1). On the other hand, Hocol actively participated in the evaluation of more than 10 blocks in the basins to the north of Colombia, under the framework of the ANH 2021 PPAA round, with the best offer in block SSJS-1-1.
In the areas of Llanos and the Upper Magdalena Valley, the Ibamaca-1 well (Tolima Agreement) was drilled, determining the presence of oil in the Monserrate formation. The prior consultation process was also advanced with six (6) ethnic communities in block COR-9 to facilitate the acquisition of a 144 Km2 3D seismic program, which is expected to start in the last quarter of 2022, thereby guaranteeing the right to participation of the communities. In the Central Plains (Llanos Central) area, feasibility activities for the drilling of four (4) exploratory wells in the Llanos-87 block (Tororoi-1, Picabuey-1, Koala-1, and Banasta-1 wells) were conducted with Operating Partner Geopark.
On the other hand, the environmental management measures (MMA, by its Spanish acronym) were filed in mid-2021 for the acquisition of 68 Km2 of 3D seismic in Block LLA-100, which is expected to be acquired in the first quarter of 2022.
Offshore Colombia
In 2021, the company continued to mature the projects that leverage Ecopetrol’s gas strategy to incorporate gas into the Colombian market as of 2025-2026. To achieve this goal, a work plan was defined to speed up projects by optimizing internal processes for faster licensing, permitting, and evaluation of the subsoil.
In the Tayrona block, the Uchuva opportunity was matured together with Petrobras (operator) for drilling in 2022. Similarly, the evaluation of the different development options for the Orca discovery continued, as well as the assessment of the remaining exploratory potential.
The technical evaluation and maturation of the identified opportunities continue in the Gua Off-1 and Gua Off-10 blocks, where Ecopetrol has a 100% stake. The last block has the added value of being close to the production facilities of the Chuchupa-Ballena field, with the possibility of reducing the times for incorporating reserves and producing potentially new discoveries.
In 2021, Shell took over the operation of the Fuerte Sur, Purple Angel, and COL-5 blocks, thus consolidating the strategic partnership between the two companies to delineate the Kronos and Gorgon discoveries. In this sense, progress was made in the maturation of the Gorgon-2 delineation well, which is planned to be drilled in the first half of 2022. This well is key to defining a possible development of this discovery and enabling other exploratory opportunities identified in the area.
International Portfolio
United States
The deep-water exploration strategy in the US Gulf of Mexico (USGOM) is mainly focused on the search and development of opportunities in the Miocene and Jurassic plays, prioritizing low exploratory risk opportunities close to the existing infrastructure.
In 2021, Ecopetrol América LLC (EAL) began to execute the strategic partnership entered into in 2020 with Chevron USA Inc (CVX). The commitment of the partnership was the drilling of the Silverback well, which was successfully executed in 2021. Although technically it was a “dry well”, there are positive results that will be studied throughout 2022; it is also worth mentioning that Shell and Murphy & Petronas joined Chevron and Ecopetrol America in the Silverback well.
Within the framework of the strategic partnership mentioned above, progress was also made in the maturation of exploration opportunities in the areas of interest together with the well-reputed strategic partner. In the evolution of these opportunities, prospective resources have been incorporated into the portfolio, in addition to maturing opportunities that are strong candidates for drilling in 2022. Similarly, the latest technologies have been applied to mitigate exploration risks, such as those associated with the source rock and seal integrity analysis.
Additionally, a state-of-the-art seismic was acquired on the prospects of the Jurassic area, which will allow technical maturation to continue throughout 2022 in the context of the Chevron-Ecopetrol strategic partnership, for a probable first drilling in this area in 2023.
Mexico
The Regional Study of the Salinas Basin was completed in 2021, which allowed the company to prioritize the areas of technical interest.
Drilling was completed in the Moyote Well in block 6, operated by Petronas. The area is currently being reassessed by integrating the results of the well, and the evaluation of other potential prospects in the block is expected to be completed in the first quarter of 2022.
The evaluation of the potential of the prospects in block 8 showed, from a technical and economic standpoint, that the opportunities are not competitive in the Group’s portfolio.
Brazil
For Ecopetrol Óleo e Gás do Brasil Ltda, 2021 represented one more year (1) of consolidation of the strategy focused on the Pre-salt and Post-salt plays of the Santos and Campos basins. This subsidiary has two (2) exploration assets in the Santos pre-salt, represented by the Pau-Brasil and Saturno blocks, and one (1) asset in the Ceará Basin, for which the decision to exit the area has already been made since the exploration potential was not verified, and the process to return it to the Brazilian National Petroleum Agency (ANP) will take place in 2022.
The Gato do Mato discovery located in blocks BM-S-54 and Sul de Gato do Mato, which was part of the exploration portfolio, was transferred to the subsidiary’s Development and Production Management with the expectation of securing the first production of this project between the fourth quarter of 2025 and the first quarter of 2026.
In Pau-Brazil, considerable progress was made in the execution of the exploration program, with the efforts of the BP (operator, 50%), CNOOC (30%), and Ecopetrol (20%) consortium, to define the location of the Pau Brasil-1 obligatory well, which is estimated for drilling in the second half of 2023. Efforts in Saturno were concentrated on evaluating the remaining prospectivity of the block, with the purpose of redefining the exploration strategy after the drilling of the Saturno-1 well.
As part of round 17 offered by the ANP (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis), Ecopetrol agreed to a 30% stake in block SM-1709, in Brazil’s Santos basin, in consortium with operator Shell, as mentioned above.
Exploration Partners
As part of the implementation of the exploration strategy, Ecopetrol Group has been developing strategic partnerships to jointly contribute to the sustainability of the business and the proper management of the environment.
By the end of 2021, Ecopetrol S.A. had 11 exploration assets in Colombia standing under partnerships, of which three (3) are operated by Ecopetrol and the other eight (8) are operated by the following partners: Parex, Shell, SierraCol, Petrobras, and Repsol.
Partner relationships are governed by Joint Operating Agreements (JOA) and Partnership Contracts, which focus on the execution of profitable and sustainable operations for the company and its partners.
Hocol has eight (8) active exploration blocks with a partner, of which it operates two (2) and the other six (6) are operated by Geopark and Lewis Energy. In addition, Total and Repsol are also the company’s non-operating partners.
Internationally, Ecopetrol Brasil has two (2) exploration assets with partners in the Santos Basin, in association with Shell, Chevron, CNOOC, and BP.
For its part, Ecopetrol America has a stake in 54 blocks under exploration with the following partners: Chevron, Shell, Repsol, Murphy, Hess, Oxy, Talos, Progress Res, Fieldwood, Ridgewood, Venari, Marubeni, W&T, and BHP.
Ecopetrol hydrocarbons Mexico has two (2) standing exploration blocks operated by Petronas and Pemex.
Seismic Business Results
In 2021, Ecopetrol Group acquired 128,835.437 equivalent Km of seismic to evaluate the prospectivity of the areas in Colombia and Brazil.
At the national level, Ecopetrol Group acquired 83,98 equivalent Km of 2D seismic in block SN18 and the viability of several seismic programs was assessed in the basins of the Middle Magdalena Valley, the North of Colombia, and the Central Plains (Llanos Central). In the international arena, Ecopetrol Óleo e Gás do Brasil Ltda purchased 124,730 equivalent Km of seismic, which corresponds to 73,371 Km² of 3D seismic (Nébula 870 Km² + Picanha 53,102 Km² + Santos 19,399 Km²) to assess the prospectivity of the Campos and Santos basins. Furthermore, Ecopetrol-America LLC purchased 4,020 equivalent Km of seismic corresponding to 2,365 Km² of seismic data in the Gulf of Mexico to enhance the maturation efforts of eight (8) prospects under Chevron’s Strategic partnership. (See Graph 05).
Graph 05.
Ecopetrol Group Seismic (equivalent Km)
Ecopetrol Group Seismic (equivalent Km)
Source: Vice Presidency of Exploration
Exploratory Drilling
The Ecopetrol Group and its partners completed the drilling of
13 wells,
of which
11 were in Colombia,
1 in the United States,
1 in Mexico.
Additionally, in the activity operated at the sole risk of the partner, four (4) more wells were drilled in Colombia.
At the end of the year,
3 were declared successful,
1 was a study well,
5 were declared dry, and
4 are under evaluation.
It is worth noting that at the end of the term, four (4) wells were being drilled (El Niño-2, Estratigráfico SN-15, Boranda Sur-3, and Bololó-1), which will reach their final goal in 2022.
Of the wells drilled in 2020 and under evaluation in 2021, the following results are obtained: three (3) were declared successful (Flamencos-2, Lorito A-1, and El Niño-1), two (2) continue under evaluation (Chacha-3 and Arrecife-3), and five (5) were declared dry (Chacha-2, Aguas Blancas 24, Santa Bárbara- 1 ST2, Antillas 1ST1, and Lorito Este-1).
Table 11.
2021 Exploratory wells
2021 Exploratory wells
| Well | LaheeClassification | Operator/partner | Contract/ Block | Status |
|---|---|---|---|---|
| Boranda Sur-2 | A1 | Parex 50% (Operator) ECP 50% | Boranda | Successful |
| Liria YW-12 | A2 | ECP 100% | Recetor A | Successful |
| Flamencos-3 | A1 | ECP 100% | Magdalena medio | Successful |
| Est SN-8 | Est | Hocol 100% | SN8 | Under study |
| Basari-1 | A3 | Hocol 100% | RC7 | Under evaluation |
| Carnaval-1 | A3 | Lewys Energy 50% (Operator) Hocol 50% | Perdices | Under evaluation |
| Prof Cira 3540 | A2b | Sierracol 52% (Operator) ECP 48% | La Cira Infantas | Under evaluation |
| Ibamaca-1 | A3 | Hocol 100% | Tolima | Under evaluation |
| Boranda Sur-1 | A1 | PAREX 50% (Operator) ECP 50% | Boranda | Dry |
| Boranda Centro-1 | A1 | PAREX 50% (Operator) ECP 50% | Boranda | Dry |
| Chimuelo-1 | A2 | ECP 100% | Tisquirama | Dry |
| Moyote-1 | A3 | Petronas 50% (Operator) ECP 50% | Block 6 | Dry |
| Silverback-2 | A3 | CVX 90% (Operator) EAI 10% | Silverback | Dry Wells drilled in activity at the sole risk of the partner |
| Perla Negra-1 | A3 | Parex 95% (Operator) ECP 5% Sólo Riesgo | Fortuna | Dry |
| Perla Negra-1 ML1 | A3 | Parex 95% (Operator) ECP 5% Risk Only | Fortuna | Under evaluation |
| Cayena 1 ST1 ML1 | A1 | Parex 95% (Operator) ECP 5% Risk Only | Fortuna | Under evaluation |
| Cayena 1 ST 1 ML2 | A1 | Parex 95% (Operator) ECP 5% Risk Only | Fortuna | Under evaluation |
Fuente: Vice Presidency of Exploration
Exploratory Investments
Exploratory investments in 2021 were mainly concentrated in the Colombian Onshore, most of them focused on drilling activities. A significant part was targeted to the execution of exploratory activities in Brazil, the US, and Mexico.
Graph 06.
Exploratory Investments made by the Ecopetrol Group (USD millions)
Exploratory Investments made by the Ecopetrol Group (USD millions)
Fuente: Vice Presidency of Exploration
The exploration investments made by Ecopetrol Group amounted to USD 208 millions in 2021. Of the investments, 33% corresponded to partner activities. The largest investments were made in the Silverback, Recetor, VMM, RC7, and Boranda blocks, among others.
The largest drilling investments in 2021 were mainly associated with the execution of the Liria YW-12, Basari, Flamencos-3, and Silverback wells in the United States. Seismic and feasibility investments were also executed, as well as significant subsidiary investments, such as the Picanha seismic in Brazil and activities in block 6 in Mexico.
Development
and Production
The second link in the value chain is the production of crude oil and gas, which takes place directly or in association with other companies.
Development and
Production Strategy
The Development and Production strategy is to grow with the energy transition, decarbonizing our operations, and diversifying towards low emission businesses, focused on TESG value creation for stakeholders, while preserving competitive returns for the company.
For the materialization of the new strategy, which seeks to maintain production between 700-800 kboed until 2040, with a peak between 800-850 kboed in 2030, there are several work fronts that include activities in existing conventional and non-conventional assets in Colombia and other geographies, exploration in the Caribbean Offshore and Colombian Onshore, and international and new business opportunities.
The 2022-2024 plan is the short-term plan that drives the materialization of the new strategy, which is why the company will invest between 10 and 11 USD trillion, drill more than 1,800 development wells, and keep the objective of maintaining 100% reserve replacement, thereby strengthening the following work fronts:
Development of the Green Field, Caño Sur, and Akacías fields.
Value maximization of the recovery program mainly in Heavy Crudes and in Middle Magdalena.
Increase market share in gas and in the commodities basket, with the exploration and development of Piedemonte as a lever.
Protection of the basic curve by improving the natural decline of the fields and continuing with primary recovery, mainly in Rubiales.
Facilitating current opportunities and capturing new ones.
In 2021, Ecopetrol was able to consolidate its portfolio by increasing the viable volume by
12 %
to 50 USD/bl, the Original Oil in Place by 3 trillion barrels (BBLS), for an HCIIP of 72 BBLS as a Group.
In 2021, the Ecopetrol Group’s output was
679
thousand barrels
of oil equivalent per day (kboed), of which Ecopetrol S.A. contributed 611.1 kboed and the subsidiaries 67.9 kboed.
The contribution of Natural Gas (Gas + White Products) was
22.4 %
22.4 %(151.9 kboed), growing 6.8% compared to 2020.
In the last quarter of the year, Ecopetrol S.A. received the operation of the six (6) fields of the Nare asset, upon termination of the Partnership Contract with Mansarovar Energy Colombia Ltda.
There was a reduction compared to the 2020 validity period, mainly due to risks arising from public order issues, the strong winter wave in Colombia, the hurricane season in the Gulf of Mexico, and the temporary production restrictions due to water management issues in the Castilla field.
Graph 07.
2021 Production by company in the Ecopetrol Group (kboep)
Fuente: Vice Presidency of Development and Production
Graph 08.
2021 equivalent crude oil and gas production in the Ecopetrol Group
2021 equivalent crude oil and gas production in the Ecopetrol Group
Geographic diversification is part of the Company’s strategy, as well as risk management. However, to be consistent with its commitment to TESG, Ecopetrol does not have, nor does it contemplate exploration and exploitation operations in the Arctic region.
Graph 09.
Ecopetrol S.A.’s 2021 equivalent crude oil and gas production
Ecopetrol S.A.’s 2021 equivalent crude oil and gas production
Source: Vice Presidency of Development and Production
The Ecopetrol Group reaffirms its commitment to its operations in the Gulf of Mexico and the comprehensive development of unconventionals in the United States.
Well drilling
In 2021, 395 development wells were drilled and completed. Of the total number of wells drilled and completed,
193 are 100% operated by Ecopetrol,
95 were executed together with partners,
22 by Hocol, and
85 by Permian.
Table 12.
Development wells drilled and completed
| Company | 2020 | 2021 |
|---|---|---|
| Ecopetrol S.A. Direct Operation | 157 | 193 |
| Ecopetrol S.A. Operation with partners | 45 | 95 |
| Hocol | 24 | 22 |
| Permian | 18 | 85 |
| Total development wells Ecopetrol Group | 244 | 395 |
Source: Vice Presidency of Development and Production
Graph 10.
Ecopetrol Development Investments (USD millions)
Ecopetrol Development Investments (USD millions)
Source: Vice Presidency of Development and Production
Production partners
The current production partners are legal entities involved in businesses and/or joint projects with Ecopetrol in businesses in the exploitation phase (development and production), in order to generate value to achieve common objectives. This relationship is regulated by formal agreements and the stakes are represented by the contributions of the parties. The Vice Presidency of Assets with Partners, which is part of the Vice Presidency of Development and Production, is the area responsible for the comprehensive management of said assets, from the role of the partner.
Relationship management between Ecopetrol and its partners is a key element of the corporate strategy, which seeks to ensure sustainable joint ventures under a framework of transparent, reliable, efficient, and mutually beneficial relations.
In By the end of 2021, Ecopetrol managed 48 collaboration contracts in the exploitation phase with the following 22 partner companies:
Table 13.
Partner companies
Partner companies
| Sierracol Energy | Petróleos Colombianos S.A. (PETROLCO) |
| Frontera Energy | Texican Oil & Gas Ltda. |
| Hocol S.A. | Nexen Petroleum Colombia Ltda. |
| Unión Temporal Ismocol – Joshi – Parko (UT IJP) | Lewis Energy |
| Parex Resources | Lagosur Petroleum Colombia Inc. Colombia Branch |
| Repsol | Petrosouth Energy Corporation |
| Perenco Oil & Gas y | Saint Aubin International |
| Perenco Colombia Limited | Nikoil Energy Corp. |
| Emerald Energy PLC Sucursal Colombia | Valle Energy (Las Quinchas Resources Corp.) |
| Petrosantander Colombia Inc. | Colombia Energy Development Co. (CEDCO) |
| Cepsa Colombia S.A. | Cinco Ranch Petroleum Colombia Inc. Colombia Branch |
| Gran Tierra Energy Colombia Ltda. |
Source: Vice Presidency of Development and Production
Table 14.
Production Contracts in force as of December 31, 2021
Production Contracts in force as of December 31, 2021
| Type of contract | Total |
|---|---|
| Partnership Contract (risk only and ORRI) | 37* |
| Incremental Production Contract (Palagua, Suroriente, Neiva, and Orito) | 4 |
| JOA (CPO-09, Capachos, Aguas Blancas) | 3 |
| Business Collaboration Contract (La Cira Infantas and Teca) | 2 |
| Shared Risk Agreement (CRC 2004) | 1 |
| Business Collaboration Agreement (Arauca) | 1 |
Source: Vice Presidency of Development and Production
* Includes five (5) Partnership Contracts transferred to Hocol as of July 1, 2018, where Ecopetrol has been assigned the area.
In 2021, through its Vice Presidency of Assets with Partners, Ecopetrol continued with the strategy of strengthening its principles in matters of ethics and compliance, sharing reflections and ethical information with its partners. Similarly, spaces for strategic alignment and strengthening of skills were created between the teams, in order to implement joint initiatives that benefit the companies and their areas of influence.
An annual survey on the perception and expectations of associates or partners is conducted during the last quarter of every year, regarding a set of key attributes in the comprehensive management of Ecopetrol’s relationship with its employees. The main aspects consulted were:
Corporate Responsibility – material issues related to Social, Environmental, and/or Governance components;
Ethics and Transparency;
Fulfillment of the value proposition;
Focal points, and opportunities for improvement.
According to the results of the survey, and in compliance with the planning, doing, verifying, and acting (PHVA, for its Spanish acronym) cycle, these strengths and opportunities for improvement are taken into consideration by Ecopetrol in the process of defining the partner relationship management strategy for the following year.
En 2021, la inversión ejecutada en los contratos de asociación en Colombia fue de USD 103.2 million.
Table 15.
2017- 2021 Investments with Partners
2017- 2021 Investments with Partners
Source: Vice Presidency of Assets with Partners
Unconventional Reservoirs
(YNC, by its Spanish acronym)
The assignment of cross-shareholding stakes with ExxonMobil was approved in 2021 in the PPIIs6 in the unconventional Reservoirs of Kalé and Platero in the municipality of Puerto Wilches (Santander), leaving Ecopetrol as operator, with a
62.5 %
stake in Kalé and
37.5 %
in Platero.
The Kalé and Platero projects are in the previous activities stage. Progress was made in 2021 in the preparation of the EIAs, as well as in the licensing process, by strengthening participation mechanisms and establishing participation and dialogue programs. Throughout the year, Ecopetrol has promoted the right to participation, implementing different spaces to establish relationships with communities and stakeholders by means of:
(i)
EIA participation guidelines and meetings defined for such purpose;
(ii)
Mechanisms established in the social regulations of the pilots (Territorial Dialogues);
(iii)
Set up and commissioning of the Citizen Participation Office in Puerto Wilches;
(iv)
Permanent spaces for dialogue and pedagogy with the inhabitants of the municipality and their area of influence.
In compliance with regulations, the first Territorial Dialogue was conducted for Platero during the first semester of the year, together with the National Government and ExxonMobil, and, towards the second half of the year, PPII Kalé’s EIA was filed with the ANLA.
6. According to the Independent Interdisciplinary Commission, the PPIIs are a “scientific and technical experiment subject to the strictest design, surveillance, monitoring, and control conditions, and therefore temporary in nature” built on trust and social legitimization, which includes the drilling, completion, fracturing, stimulation, and production testing operations conducted in the YNC using the hydraulic fracturing technique in horizontal drilling – FH-PH in source rock.
The objective of the pilots is to estimate the eventual operational, environmental, and social risks inherent to the activity, in addition to determining the petrophysical characteristics and the possible completions and stimulation technologies in the wells of unconventional Reservoirs. With the information generated and by conducting a cost- benefit evaluation, the company expects to determine the viability of continuing to the commercial exploration and production phase of the YNCs.
Reserves Balance
(OG-1)
At the end of 2021, Ecopetrol’s net proven reserves were
2,002 mbpe
representing an increase of
13 %compared to 2020 (1,770 MBPE).
correspond to fields in Colombia and the remaining 11% corresponds to the operation of Ecopetrol Permian and America in the United States.
The graphs show the evolution and average lifespan of the proven reserves in recent years.
Graph 11.
Proven reserves Ecopetrol Group (mpbe)
Proven reserves Ecopetrol Group (mpbe)
Source: Vice Presidency of Development and Production
Graph 12.
Average lifespan of the reserves
Average lifespan of the reserves
Average lifespan of the reserves (years)
Time covered by the reserves under the current production rate if no new activitie s are undertaken
Source: Vice Presidency of Development and Production
Reserves were estimated based on the standards and methodology of the United States Securities and Exchange Commission (SEC), with 99.5% certified by four renowned independent specialized firms (Ryder Scott Company, DeGolyer and MacNaughton, Gaffney, Cline & Associates, and Sproule International Limited).
The Reserve Replenishment Index (IRR, by its Spanish acronym) was 200%, which means that, for each barrel produced in the year, two (2) barrels were added to the reserves.
The average lifespan of the reserves increased to 8.7 years, exceeding that reached in 2014, when the average Brent was at USD 102 per barrel (compared to USD 69.2 per barrel in 2021). Of the total balance, 72% are liquid, with an average lifespan of 8.2 years, while the remaining 28% correspond to gas, with an average lifespan of 10.4 years.
The proven reserves incorporated were 462 MBPE, of which 282 MBPE were enabled due to:
The outstanding management in the development fields in Colombia,
The operation of Ecopetrol Permian and America in the United States,
The maturation of new projects, and
The implementation of expansion projects for improved recovery in fields such as Chichimene, Castilla, and Akacías mainly. The remaining volumes correspond to the favorable effect of the recovery of international oil prices in 2021.
In terms of Company sales, Savia’s reserves in Peru were divested in the amount of 3.5 MBPE, whose effective sale took place in January 2021.
Gas and LPG
The Ecopetrol Group’s Gas and LPG Strategy is part of the Pillar of Growing with the Energy Transition defined in the 2040 strategy. This ensures the consolidation of a comprehensive business for the Group, based on low-emission energy solutions and flexible models that integrate with other alternatives, such as hydrogen, biogas, and renewable energies, to maximize value, which is also self-financing and creates sustainable growth.
To this end, the following value levers have been defined:
Diversify the Group’s production so that Gas and LPG attain up to 30% of the share in production between 2030 and 2035.
Achieve ebitda growth by strengthening and accelerating the organic portfolio (resources and reserves).
Grow by diversifying the value chain with inorganic opportunities and international business expansion.
Develop commercial schemes to encourage new demand to accomplish additional sales levels with industrial and thermal consumption, as well as vehicular natural gas (VNG) and comprehensive solutions.
Contribute to the decarbonization goals of the Group and the country by eliminating routine burning, leaks, and venting in the operation, which affect scope 1 and 2 greenhouse gas (GHG) emissions, and by selling lower emission products, thereby reducing scope 3 emissions.
Hydrogen
In 2021, Ecopetrol designed the low-carbon hydrogen strategic plan aligned with the Hydrogen Roadmap of the National Government of Colombia. This contributes to the Group’s vision by promoting growth towards the energy transition, enabling the TESG and the decarbonization plan, with a contribution of
9-11 %
to the Group’s scope 1, 2, and 3 emission reduction goals by 2050.
The plan is focused on the development of four (4) applications:
1
Sustainable growth and decarbonization of own operations
2
Sustainable mobility
3
Mixture of hydrogen with gas for thermal applications
4
Development of new low emission products.
The execution is planned in three (3) time horizons for the consolidation of a robust hydrogen portfolio over the next few years, with actions focused on the creation of ecosystems for the development of the hydrogen industry intended for domestic use and for export purposes. Ecopetrol Group’s 2022 investment plan includes investments in the amount of
USD 6
millones
to start-up industrial-scale projects and advance green and blue hydrogen studies.
Industrial-scale projects will enable increased output of valuable products at the Cartagena and Barrancabermeja refineries, with a low-carbon hydrogen yield of 8,700 kt/year.
The following will also be conducted:
A proof of concept for the production of electrolytic hydrogen with a capacity of 50 kW, which will be executed in the first half of 2022 at the Cartagena refinery;
The design of the proof of concept for hydrogen production from biogas;
The execution of land mobility pilots with a Hydrogen fuel cell; and
The White Hydrogen availability study7 in Colombia and start of the study of mixing Hydrogen with natural gas.
7. Hydrogen of geological origin.
Gas and LPG business performance
In 2021, the gas and LPG business delivered solid financial results with an ebitda close to USD 790 million.
These represent an approximate growth of
18 %
compared to 2020 and an ebitda margin of over
50 %
resulting from the increased production of both products and the execution of commercial gas strategies focused on protecting the customer base and expanding to new markets in Colombia.
In 2021, the gas portfolio was strengthened with the discovery of a new field in the department of Casanare. This arose from the drilling of the LRYW12 well, the successful delineation of the Arrecife discovery in the department of Córdoba, and the volumes proven by the reconditioning works executed in the Guajira and Gibraltar fields.
In volumetric terms, gas sales grew by close to
3 %,
and LPG sales by
~8%
compared to 2020. From the gas market supply standpoint:
The supply to the Colombian market has strengthened with an additional potential of ~84 Giga BTU per unit day – Gbtud (9% of demand) thanks to the following main events: the exploratory success of the Liria YW12 well in Piedemonte (9 Gbtud), the success of the delineation and development wells in the northern Caribbean region (22 Gbtud), the execution of Workovers in Chuchupa (26 Gbtud) and Gibraltar (19 Gbtud), as well as the gas release due to the optimization of own consumption in 2021 (6 Gbtud) and the new supply of the Floreña field (2 Gbtud).
The Operating Agreements with the ANH were approved for Piedemonte. This allowed the start of activities with three (3) drills in the area and a fourth one starting February 2022, which initiate the drilling campaign of 22 exploration and development wells between 2022- 2024.
Release of up to 61 Gbtud to the long-term market reserved for the Teca Field.
Consolidation of a portfolio of 17 initiatives that reduce internal gas consumption by ~14.2 Gbtud to be released to the market, in alignment with refining decarbonization plans.
By updating the long-term portfolio projections, volumes increased in all the scenarios of the Strategic Plan defined in 2020 (between 25% and 40%).
50% reduction of routine burning in flare stacks compared to 2017, and in terms of fugitive emissions, 760 have been closed since 2019 with a GHG reduction of 60 Kton CO2 equivalent.
The volume from Guajira, thanks to Hocol’s acquisition of Chevron’s stakes and the maximization of volumes in Piedemonte, allowed an approximate increase of 15% in revenue vs. 2019.
With regard to the demand served by Ecopetrol, an increase of 40 Gbtud was achieved (10% of the goal by 2030). Similarly, market share grew from 74% to 79%. Natural gas has been promoted as a low-emission fuel for the heavy load and passenger transport segment, today with 640,000 vehicles converted and approximately 3,500 vehicles dedicated to natural gas from the factory, and an 80% particulate matter and soot reduction thanks to the renewal of 741 buses in the Transmilenio fleet, the public transport system of Bogotá.
Furthermore, under CREG Resolution 108 2021, Ecopetrol offered the market an alternative to mitigate LPF price increases known as Tariff Option, which seeks to finance a portion of the regulated price, thus transferring this benefit to the end user.
In addition, Ecopetrol Group
approved a 30%
LPG price reduction
in December 2021, applicable as of January 1st, 2022, for a period of six (6) months, whose benefits are expected to be transferred to
3.3 million
households
using this fuel throughout Colombia.
Total investments in 2021 compared
to the last four (4) years
In previous years, real Gas and LPG investments were included as part of the Production and Exploration investment data. Detailed monitoring of these investments began in 2021, which closed the year with a value of USD 250 million, corresponding to about 7% of the Ecopetrol Group’s investments in 2021, of which 63% corresponds to growth projects, with activities in the development and exploration wells in Piedemonte and subsidiaries such as Hocol and Permian.
LNG liquefaction capacity
Ecopetrol Group has no stake in liquefaction terminals.
Transport (midstream)
This link, the third in the value chain of Ecopetrol’s activity, includes the transportation of crude oil, fuels, and other refined products such as diesel and biofuels. These activities are covered by Cenit and its subsidiary companies.
The volume of crude oil transported through Cenit’s systems, and its subsidiaries decreased by 10% compared to the previous year, as a result of reduced production, mainly in the Eastern Plains. Of the total volume of crude oil transported through the pipelines, approximately 85.3% was owned by Ecopetrol Group.
The volume of refined products transported by Cenit increased by 19.9% compared to the previous year, mainly due to the recovery of economic activities. Of the total volume of refined products transported through multipurpose pipelines, 29.5% was owned by Ecopetrol.
Table 16.
Total crude and refined oil transported
Total crude and refined oil transported
| Evacuation | Total |
|---|---|
| Transportation of crude oil (GSV) | 733.42 kbpd |
| Transportation of refined oil (NSV | 277.19 kbpd |
| Total | 1,010.61 kbpd |
Source: Cenit
Figures in kbbd and NSV.
* The volumes of crude oil transported correspond to the following systems (country evacuation): Ocensa Segment 3, ODC, Vasconia-Galán, Ayacucho-Galán, Ayacucho-Coveñas, and the Trasandino Pipeline.
* The volumes of crude oil transported correspond to the following systems (country evacuation): Ocensa Segment 3, ODC, Vasconia-Galán, Ayacucho-Galán, Ayacucho-Coveñas, and the Trasandino Pipeline.
** Crude oil evacuation by Cenit: 268.19 KBDP in GSV and 267.49 KBDP in NSV.
*** The volumes of refined products transported correspond to the following systems (refinery evacuation + other entry points): Galán – Salgar 16”, Galán – Salgar 12”, Galán – Bucaramanga, Buenaventura – Yumbo, and Cartagena – Baranoa.
Consolidated income of the segment in excess of USD 3.279 billion, and an ebitda generation exceeding USD 2.691 billion.
Cenit Recognitions and
achievements in 2021
Carbon Neutrality Certification granted by ICONTEC. First company in Colombia’s Oil and Gas sector with this certification.
Equipares Silver Seal awarded by the Ministry of Labor of Colombia and the UNDP.
Inauguration of the San Fernando Solar Park in the department of Meta, which is expected to help reduce CO2 emissions by roughly 508,000 tons in the next 15 years, together with AES Colombia.
Women in Energy Awards (WIN) from the Society of Petroleum Engineers (SPE) in two (2) categories: i) Energy Transition and i) Sustainability
Inauguration of six (6) smaller solar plants in Baranoa, Miraflores, Mansilla, Yumbo, Tocancipá, and Pereira, which are expected to help reduce CO2 equivalent emissions by around 7,695 tons in the next 15 years.
PAR Ranking (2020 and 2021) as the company with greatest gender equality in the energy mining sector in Colombia and Latin America.
- Position number 10 in the 2021 Ranking of Inclusive Companies from the LGBT Chamber of Commerce and the National Consulting Center.
- Top 10 Companies Committed to Youth from
- the International Organization of Human
- Capital Managers.
- Fourth place in the Merco ranking of companies with best Social Responsibility and Corporate Governance in the category of oil and hydrocarbon distribution companies.
Refining and Petrochemical
Activities (Downstream)
The fourth link in the value chain is the refining and petrochemical activity, which includes the Barrancabermeja and Cartagena refineries, as well as Esenttia. This is where the crude oils coming in from the fields are transformed into value-added products.
Refining and Petrochemical Strategy
In 2021, as part of the Group’s updated strategy, Ecopetrol’s downstream strategy was also updated for the 2022-2040 period. As a result, new strategic lines were generated to complement, refocus, and prioritize aspects of the 2017 strategy update (which included the 2020-2030 period), and to add new and diverse options that generate business from the challenges in the industry.
To contribute to Ecopetrol’s diversification in low-emission businesses, the configuration of the assets will be transformed to meet the demand for emerging products in the medium and long term. This includes green and blue hydrogen, reconverting part of the refineries to produce biofuels, and increasing the sale of lubricant bases. Similarly, the segment has begun developing new mechanical and chemical plastics recycling initiatives, the production of biodegradable polyethylene, the recovery of spent catalysts, among other Circular Economy initiatives, and environmental management efforts continue with specific comprehensive water management goals and a portfolio of decarbonization initiatives by 2030.
01
Adapting the facilities to the new fuel quality challenges and expanding the petrochemical and other new businesses
(2022-2030)
Commissioning of the original crude oil unit with the new refinery in Cartagena. With this project, the Cartagena refinery will reach a crude oil loading capacity of 200 KBD.
Implementation of decarbonization portfolio initiatives with a potential reduction of up to 0.57 Mt CO2e by 2030.
Implementation of circular economy initiatives with benefits of up to COP 11,000 million by 2023.
Execution of the internal fuel quality path and the first phases long-term adjustment projects according to Conpes 3943 guidelines8 and Resolution 40103 of 20219 at both refineries.
Maturation and commissioning of green and blue hydrogen initiatives.
Execution of pilots for the production of biofuels.
Development of infrastructure and personnel skills for the loading and processing of crude oil from unconventional Reservoirs.
Maturation of the revamp project in the Coker unit in Cartagena and the fuel oil reduction project in the Barrancabermeja refinery.
50% reduction of the fresh water purchased for the Cartagena refinery and 50% reduction of the water used/charged ratio for the Barrancabermeja refinery.
Improvement of diesel and gasoline fuels and inclusion of renewable fuels (Diesel and Renewable Jet).
Refining
New demands for quality fuel have been identified, as well as greater restrictions on emissions and environmental regulations, which lead to significant changes in the supply and demand for fuels, in addition to the effects of the Covid-19 pandemic, with a sharp decrease in demand, drop in margins, reduction of loads in processing units, and the cancellation, slowdown, and/or postponement of projects.
Thus, the refining strategy focuses and unfolds in two different stages:
02
Development of new businesses and consolidation to respond to the strategy, including Growing with the Energy Transition and Generating Value with TESG.
(2030-2040).
Continuous production of biofuels (biocetane, biojet, among others) with co-processing or with dedicated plants.
Transformation of current gray hydrogen plants into blue or green hydrogen plants.
Elimination of fuel oil as a significant product of the segment.
Wide diversification of the refined product portfolio.
Development of synthetic fuels.
Development of the hydrogen for transportation business.
Diversification of refinery loads towards lower emission loads.
Biodiesel production with second/third generation loads.
Suspension of sensitive water sources for the two (2) refineries.
8. National Council for Economic and Social Policy, Policy to improve air quality (2018).
9. Resolution of the MME and the Ministry of the Environment and Sustainable Development establishing quality parameters and requirements for diesel fuel, biofuels, and gasoline.
Performance
and an integrated gross margin of
353.6 kbd
y un margen bruto integrado de
10.24 USD/bl,
compared to a load of 319.8 kbd and an integrated gross margin of 8.0 USD /Bl in 2020. This mainly arises from:
The good operating performance of the Barrancabermeja refinery with operational availability above planned levels,
The strengthening of product prices, offsetting higher crude oil prices, in line with the general increase in demand thanks to the reactivation of the productive sector (COVID-19 vaccination progress around the around) and supply restriction (cold wave in the US in the first quarter, cyberattack on the US Colonial Pipeline in the second quarter, Hurricane Ida in the third quarter, inventories at a minimum in five (5) years, and high gas costs for refineries in the fourth quarter),
Higher load volumes compared to 2020, realization of inventories thanks to a favorable price environment,
The adoption of commercial strategies in Esenttia to mitigate the high price volatility of raw materials, and
Stability in Invercolsa as a result of higher natural gas sales and installations.
These results were achieved in an environment of operational challenges related to:
Scheduled shutdowns at the Refineries,
Corrective maintenance at the Cartagena refinery,
A market with challenging international prices for the Cartagena refinery (RVO),
Restrictions that affected the Caño Limón – Coveñas oil pipeline, and
Public order situations in the country.
Investments in 2021
The Barrancabermeja
refinery
Investments at the Barrancabermeja refinery in 2021 amounted to
USD 220
million,
related to: reliability initiatives and projects (USD 150 million), environmental legal compliance (USD 58 million), HSE (USD 7 million) and fuel quality (USD 5 million).
The main projects below executed throughout the year guarantee the following:
Reliability: major maintenance works in Orthoflow, industrial services, Etileno II, Topping U200, paraffin, alkylation, tanks, Turboexpander SG2961. FGC System projects and UOPI funds circuit, sour water, Module 2 tank car filler, B-2880 system and R2702 internal replacements, 35 kV ring cables, Orthoflow converter, lighting systems, U200 static equipment, stage I rotating equipment, Etileno II pressurized containers, paraffins, DAP, Turboexpander.
Legal compliance: new Wastewater Treatment Plant (WWTP), rehabilitation and renovation of refinery collector systems, control of SOX emissions from sulphur plants, and Domestic Wastewater (ARD, by its Spanish acronym).
Health, safety, and environment (HSE): fire-fighting system, riverbank containment, and new Refinery laboratory.
Fuel quality: first analyzes to ensure regulatory compliance with fuel quality, diesel and regular 10 ppm sulphur motor gasoline, expansion of processing capacity of the HCM U2650 Moderate Hydrocracking Unit, purchase of laboratory equipment, technological improvement of the HCM- Phase I plant, and regular 50 ppm motor gasoline.
The Cartagena refinery
The Cartagena refinery invested around
USD 164
million,
in 2021 in reliability initiatives (USD 87 million), regulatory legal compliance (USD 2 million), HSE (USD 17 million) and growth and profitability projects (USD 58 million).
The project for the Interconnection of the Cartagena Crude Oil Plants (IPCC, by its Spanish acronym) remains one of the most relevant investments in the segment and is underway with a scheduled start- up date in the second quarter of 2022.
The main projects below executed throughout 2021 guarantee the following:
Reliability: major Maintenance (MM) of the U-002 Cracking, MM alkylation U-044, MM hydrogen U-115, MM HDT U-108, MM Coker U-111, cargo lifting facilities, MM of compressors, Cartagena terminal integrity plan, MM HDT U-109, MM of boilers, MM of civil works, MM of turbines, and MM of tanks.
Legal compliance: PRTLGV (Plan for reconversion to clean technologies and discharge management) Cartagena refinery, U-108/U-109 rich amine interconnection, and removal of amine from streams to slop.
Health, safety, and environment (HSE): boiler feed water system, comprehensive LPG management, Cartagena terminal SCI, FL-T-602 tower replacement, and U-044 liquid KOH storage system.
Growth and profitability: interconnection of crude oil plants, integration of U-101 and U-110, and delivery of HCO to U-110.
Graph 13.
Investment’s refineries Barrancabermeja and Cartagena (USD millions)
Investment’s refineries Barrancabermeja and Cartagena (USD millions)
Source: Vice Presidency of Refining and Petrochemicals
In decarbonization, Downstream contributed
88 % de of the Group’s verified GHG emission reductions10
between 2010 and 2019.
The decarbonization portfolio was updated in 2021, with 28 high and medium execution probability initiatives with a reduction potential of 0.57 Mt CO2e and with investments amounting to USD 389 million. The accumulated reduction of GHG emissions in 2021 was 106,163 tons of CO2e, with the execution of 10 initiatives.
10. 1,498,070 tons of CO2e verified by Ruby Canyon Environmental, Inc as of May 6, 2020.
Petrochemical activities
As part of the definition of the Ecopetrol Group’s Corporate Strategy, the Group’s petrochemical strategy was also reviewed and updated. Relevant topics were included, such as the potential integration between refining and petrochemicals given the energy transition scenarios that affect the demand for gasoline and growth opportunities on a regional and global scale, among others.
Esenttia continues contributing to the corporate strategy with the development of circular economy businesses, by promoting success stories related to circularity in plastics. The current petrochemical company in the Group is a profitable business leveraged on access to raw material at competitive costs from Ecopetrol’s refineries.
The petrochemical business contemplates developments in the following areas:
Petrochemicals at scale to grow according to the expected growth in the sector at a regional and global level.
Expanded marketing of solvents, lubricant bases, paraffins, and asphalt.
Assessment of options associated with the real potential of unconventional Reservoirs (YNC, by its Spanish acronym) as raw materials suppliers for petrochemicals.
Implementation of mechanical and chemical recycling projects for petrochemical production.
Development of specific petrochemicals derived from the current ones.
Capacity increase in Esenttia to an additional 70,000 tons per year, scheduled for 2022.
Start-up of the Recircular project to produce resin from recycled plastic (Circular Economy).
Biofuels
(OG-14)
Volume of biofuels
produced and purchased
Includes diesel purchases and production in its blends with biodiesel (B100 – 100% biodiesel blend). The blends are delivered with a 2% volume (B2 – 2% biodiesel blend). Below is a representation of biodiesel (B100) purchases and B2 diesel sales:
Graph 14.
Volume of biofuels11
Volume of biofuels11
Source: Commercial and Marketing Vice Presidency
11. This information was updated with information as of December 31st, 2021, regarding the document published for the right of inspection.
Technical Abandonment of Wells
(OG-11)
402
wells were technically abandoned in 2021
362
facilities associated with wells were dismantled, and
206
environmental recoveries were conducted.
The activity of technical abandonment or plugging of wells corresponds to the final phase of their life cycle and it consists of establishing permanent barriers so as to preserve their integrity. This is conducted due to low productivity or due to mechanical integrity problems in the wells, in accordance with current applicable standards, under the Ecopetrol Well Integrity Management Guide (WIMS), which is part of the Interventions and Divestiture of Production Assets.
It consists of ensuring the final closure of the well by definitively plugging the formations or producing zones once the productive stage has finished. This is addressed in order to:
(i)
Prevent the flow of possible fluids to the surface, cross flow between formations, and contamination of surface aquifers;
(ii)
Isolate radioactive or other hazardous materials left in the well at the time of abandonment, and
(iii)
Comply with regulations.
As complementary activities, the abandonment of the well includes the dismantling of facilities and environmental recovery.
Dismantling
of facilities:
this consists of dismantling or removing the facilities and equipment that are part of the asset, such as flow lines, electrical systems, electromechanical equipment, and civil works associated with the production wells to be abandoned. This activity is the last intervention of an asset in its operational life, and it is conducted in accordance with applicable regulations.
Environmental
recovery
Environmental recovery: these are activities that guarantee the protection of the environment in accordance with the environmental guidelines of the areas and with the established legal norms. These activities include :
Erosion control and slope management.
Maintenance of recovered areas.
Waste management.
Land revegetation or reforestation, and
The management and control of runoff waters.
Asset Divestiture
(OG-11)
Table 17 illustrates the variations in Ecopetrol’s asset divestiture in 2021 compared to 2020. This variation is mainly due to the operational dynamics received by the business areas, the sale of functional assets, and the handover of fixed assets to Cenit.
Table 17.
Asset divestiture
Asset divestiture
| Asset divestiture | Unit of measurement | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Quantity | # | 7,731 | 5,441 | 2,672 | 4,718 |
| Net Book Value | COP | 71,857,718,587 | 24,978,003,206 | 9,854,979,248 | 45,276,886,507 |
Marketing
Marketing is the fifth and last link in the value chain and it connects Ecopetrol with markets in Colombia and the world, while maximizing value generation thanks to its commercial excellence.
Ecopetrol has established the following goals for the company:
Products
Below are the products traded by Ecopetrol:
Crude oil
Fuels derived
from crude oil
ACPM or Diesel
Fuel oil
Turbo fuel or jet fuel
Regular and extra motor gasoline
Kerosene
Aviation gasoline or avgas
Petrochemical and industrial products
In the case of energy sales to maintain the operational continuity of some Ecopetrol Group’s companies, Ecopetrol Energía SAS ESP was responsible for this task until December 31, 2021. Upon completing the acquisition of
51.4 %
shares in ISA,
Ecopetrol S.A. (direct and indirect shareholder of 100% of the shares at Ecopetrol Energía), took on the commitment to divest from said company in the shortest time possible in an agile and diligent manner. For this reason, Ecopetrol S.A. formally initiated the selection process for a new marketer.
First in Latin America to
offset carbon in crude oil sales
In 2021, Ecopetrol sold the first shipment of carbon neutral crude oil to PetroChina, the largest oil and gas producer and distributor in China. This transaction turned Ecopetrol into the first company in Latin America to incorporate carbon offsetting into its business operations.
The transaction corresponds to a shipment of one (1) million barrels of Ecopetrol Castilla Blend® to be delivered to the client in February 2022. The carbon emissions of the cargo, equivalent to 32,000 tons of CO2, will be offset with carbon credits generated through a renewable energy project in the northwestern region of Colombia. This initiative adheres to the highest international certification standards12 and seeks to contribute to the country’s emission reduction goals.
The offset covers Scope 1 and 2 emissions generated throughout the crude oil value chain, including production, dilution, and transportation up to the Coveñas Terminal in the Colombian Atlantic Coast.
12. Verra international certification standard.
12. Estándar de certificación internacional Verra.
2021 National and
international clients
(102-7)
Crude oil
Ecopetrol’s international crude oil client portfolio consists of 21 companies.
65%
are refiners
that use crude oil as raw material to load their refineries and produce refined products for different uses. The remaining 35% are marketers who act as commercial intermediaries to access new customers and markets.
Liquid fuels
Ecopetrol has 35 clients,
28
national and seven
7
international,
who purchase gasoline, diesel, jet fuel, marine diesel, fuel oil, kerosene, and avgas. To purchase products, these clients must have authorization from the MME and/or the Energy and Gas Regulation Commission (CREG, by its Spanish acronym), as established in current regulations governing the agents in the chain.
Petrochemical and industrial clients
Ecopetrol has 140 clients between
transformers
and marketers.
The products purchased by clients include solvents, lubricant bases, paraffins, polyethylene, asphalt, sulphur, propylene, arotar, and coke, which are used as raw materials to manufacture a large number of products for end consumers, such as: glue, paint, plastics, candles, and car lubricants.
Markets
(102-7)
Geographic
Locations
Crude oil
(kbpd)
Products
(kbped)
Performance
Sales revenue
Sales revenues in 2021 amounted to COP 77.896 trillion (see Graph 14). This figure represents a growth of 86% compared to 2020, due to the increase of the Brent oil indicator (67% compared to 2020) and also due to commercial activities that improved marketing margins thanks to the diversification strategy towards higher value markets and operations backed by the Ecopetrol Group’s assets.
Graph 15.
Sales revenue*
Sales revenue*
Source: Corporate Financial Vice Presidency
*Income from services or debt coverage operations are not included. Does not include natural gas and LPG as of 2020 (-102kbde), volumes reported by the Vice Presidency of Gas.
Sales volume (kbd)
In volumetric terms, crude oil exports experienced a 10% decrease between 2020 and 2021, down to 474 kbde (54 kbde).
Graph 16.
Sales volume (kbde)*
Sales volume (kbde)*
Source: Commercial and Marketing Vice Presidency
*Only considers Ecopetrol sales (does not include Reficar). Does not include natural gas and LPG as of 2020; those volumes are reported by the Vice Presidency of Gas.
Fuels – domestic sales
Ecopetrol’s fuel portfolio in the domestic market is mainly made up of gasoline, diesel, jet fuel, and marine fuels.
Gasoline
sales volume
The gasoline sales volume marketed by Ecopetrol in 2021 amounted to
109,7 kbd
reflecting an increase of
33%
equivalent to 27.2 kbd, compared to 2020, as a result of the recovery in demand, which had decreased due to the preventive isolation measures implemented during the pandemic (see Graph 17).
Graph 17.
Gasoline sales volume (BPD)
Gasoline sales volume (BPD)
Source: Commercial and Marketing Vice Presidency
Diesel
sales volume
Sales in 2021 grew
15%
by
12,7 kbd
from
98,3 kbd
as a result of the recovery in demand after the preventive isolation measures implemented during the pandemic were lifted (see Graph 18).
Graph 18.
Diesel sales volume
Diesel sales volume
Source: Commercial and Marketing Vice Presidency
