The independent firm shaking up Colombia's natural gas scene

Toronto-listed NG Energy International plans to raise natural gas production from its operations in Colombia to more than 130Mf3/d within 18 months, up from a current level of around 20Mf3/d. Chief financial officer Jorge Fonseca tells BNamericas why the company is optimistic about its growth prospects in Colombia and how it aims to provide a solution to the country's looming gas supply crunch. This is the first of a two-part interview.

BNamericas: Could you tell us a little about NG Energy's growth trajectory so far and the company's key projects?

Fonseca: NG is a company that is publicly traded in Toronto on the TSX Venture Exchange. The company portfolio currently consists of three fields in Colombia. One is Tiburón in La Guajira, which is a pure exploratory play on the same trend as La Perla in Venezuela, which is owned by Repsol. La Perla once held as much as 17 trillion cubic feet [Tf3] of gas in place and is currently producing 580 million cubic feet of gas per day [Mf3/d]. 

Additionally, you have Chuchupa and Ballena, which are the two main producing gas fields in Colombia. Tiburón is positioned in the middle of these three prolific gas producing regions and so we believe it to be an asset with tremendous blue sky potential. Nevertheless, it's in La Guajira and it can be a challenging area from a socio-environmental point of view.

We know that by experience because our second field is María Conchita, which is also located in La Guajira, 45 minutes by car from Riohacha, the capital of the department. And in María Conchita, we're already producing close to 20Mf3/d. We produce from two wells, Aruchara 1 and Aruchara 3, which are connected to a 20Mf3/d processing facility and connection pipeline to the TGI national transportation line servicing both the northern and southern Colombian markets.

BNamericas: We have been hearing a lot about the company's plans for María Conchita. What is next for the project?

Fonseca: We are very excited about María Conchita, where we are in the process of evaluating a potential infrastructure expansion allowing for an increase in capacity from 20Mf3/d to 30Mf3/d. In the first quarter of next year, we're going to be drilling Aruchara 4 in order to maintain higher production levels from the field. We have all of the required drilling permits and approvals granted by the [national hydrocarbons agency] ANH and look forward to drilling this well after the success of Aruchara-3. We are very pleased with the progress from María Conchita which may exceed our expectations with its growing potential. A year ago, we were producing 5Mf3/d and now, we are well on our way to 30Mf3/d.

BNamericas: What about the Sinu-9 area?

Fonseca: We call Sinu-9 the crown jewel. It is located in Córdoba department, a one-hour drive from Montería. At Sinu-9 we have two wells, Brujo and Mágico, and we are weeks away from completing a major infrastructure project, which will connect these wells to the Jobo [gas hub] and the Promigas pipeline. 

From Sinu-9, we will have an initial capacity of up to 30Mf3/d with an additional 10Mf3/d coming online within three months. This will bring our total company production to 50Mf3/d. Three months later, that will rise again to 60Mf3/d. And with an increase from María Conchita in the first quarter of next year, our total company production will go up to 70Mf3/d. That will make us, I believe, a very important company in Colombia. 

BNamericas: Especially now that Colombia is facing an imminent gas deficit as demand approaches available supply….

Fonseca: Colombia's gas demand is around 1Bf3/d so when you produce seventy million, you already have 7% of the production of the country. Ecopetrol and the mines and energy ministry have said that supply is declining. Chuchupa and Ballena have been producing for more than 20 years. And they are mature fields so nothing can be done there. And it looks like there's going to be a gap between supply and demand of around 400Mf3/d in the coming years. 

I believe NG is probably the only good news in the industry right now. We are the only ones that can put new gas in the market in the next 36 months and help mitigate the supply issue and the high prices. 

BNamericas: Could you tell us about NG's plans in the medium term?

Fonseca: What I have described so far is only phase one which is 20Mf3/d from María Conchita with an increase to 30Mf3/d expected with processing facility expansion in Q1 and 40Mf3/d coming online from Sinu-9. We expect initial production from Sinu-9 of 10Mf3/d as early as August 15th of this year with additional 10Mf3/d transportation capacity coming online over the next three months. We will be drilling the Hechicero well in 2025 to support phase one production from Sinu-9.

Right now, we are negotiating what we call phase two, in which we will seek a contractor for the construction of two additional pipelines a little further north from the current infrastructure project at Sinu-9. These two pipelines are going to transport up to 40Mf3/d each for a total of up to 80Mf3/d of additional capacity. Next year, in order to meet phase two capacity of 120Mf3/d from Sinu-9, the company plans to drill a minimum of three wells.

BNamericas: Will those pipelines be going to Jobo?

Fonseca: Yes, everything will go to Jobo. And that will take the company from 60Mf3/d in phase one to 130 in phase two, just to have a round number. That's our plan for phase two. And that's our plan for the end of 2025. So in the next 18 months, this company plans to be producing at least 130Mf3/d. We are not naive to the enormity of the task but with great relationships in the country, great partners and continued hard work, we are extremely confident we will meet this objective.

BNamericas: So if everything goes to plan, could NG's 2024 exit production rate exceed the company's previously stated target of 45Mf3/d?

Fonseca: Yes. We're producing close to 20Mf3/d now and we are weeks away from unlocking additional production from Sinu-9, which will build up to 40Mf3/d. It will start at 10Mf3/d in August and reach 40Mf3/d in the coming months. We've guided 45 million to the market for 2024 but I am confident we can exceed this number. 

BNamericas: We read that there were some issues causing delays to the infrastructure project at Sinu-9. Have you overcome those?

Fonseca: Yes, the plan is for the project to be ready for commissioning on the 15th of August. We're working with two main service providers to build the infrastructure. As we speak, the pipeline is 98% complete. This is the most critical part of our infrastructure project, which involves crossing farms and private properties, working with the local communities and inhabitants of the area and we have experienced some minor delays in this regard. This community engagement is a top priority for the company. We want to ensure we have a positive and lasting impact on the communities of our projects and we are committed to making a difference.