NG Energy ratchets up Colombia natural gas expansion

A consortium led by NG Energy International has secured an agreement with infrastructure firm Infraes for an additional 76Mf3/d (million cubic feet a day) of pipeline capacity from its Sinu-9 natural gas project in northern Colombia. 

The parties signed an MOU for a two-stage construction process that is due to be completed 15 months after a definitive agreement, NG Energy said in a press release on Tuesday. 

Under the terms of the non-binding agreement, the pipeline work is expected to be contracted under a Build, Own, Operate and Maintain (BOOM) model in which Infraes would assume 100% of the project's cost. 

ALSO READ: NG Energy eyeing Colombia gas production ramp-up

It will comprise two 38km pipelines, the first of which is due to be ready in the second half of next year and the second in the first half of 2026. 

NG Energy president and director Don Sewell said the expansion would help to alleviate concerns about a looming natural gas deficit in the Andean country. 

“As we commence natural gas sales imminently and complete the first stage of infrastructure projects at Sinu-9, we are taking proactive steps to expedite the exploration and development of the block at this pressing time in Colombia as the natural gas shortage in the country is upon us," NG Energy president and director Don Sewell said. 

"We are grateful for the swiftness of our partners in getting this first step done and are thrilled to again work with Infraes through the planning and execution of the next phase of infrastructure projects at Sinu-9."

He added that, once complete, production capacity at Sinu-9 would rise to 116Mf3/d while the company's overall gross production capacity would reach 136Mf3/d, around 14% of the country's daily demand. 

ALSO READ: The onshore route to securing Colombia's gas self-sufficiency

Over the coming months, the consortium and Infraes will evaluate the most optimal location for a second central processing facility and finalize plans for the logistics of the pipeline infrastructure, he added. 

The other members of the consortium are Clean Energy Resources, Desarrolladora Oleum and First Global.

As part of the next phase of development at Sinu-9, the company is expected to drill the Hechicero-1 well by the end of the first quarter next year, at the latest. In addition, eight exploration and development targets in the area north of Mágis 1 will be drilled with a view to filling the increased infrastructure capacity. 

Meanwhile the company said it would acquire 185km2 of 3D seismic data to enhance and de-risk its development of the southeast portion of the block, among other activities. 

PRIVATE PLACEMENT

NG Energy also announced a private placement agreement with Eight Capital and Clarus Securities Inc. acting as co-lead agents and joint bookrunners. The offering will involve up to 28,572,000 common shares at CA$1.05 per share, potentially raising up to CA$30 million (US$22mn). The offering is expected to close on September 18. 

The company said the funds would primarily be used for drilling and seismic activities at Sinu-9 and Maria Conchita. 

ALSO READ: The independent firm shaking up Colombia's natural gas scene

"The offering is expected to bring tier-1 global and premier Canadian institutions on board as shareholders, as well as existing strategic partners and insiders," NGE chief executive Brian Paes said. 

"This timely investment coincides with Colombia's urgent need for reliable domestic natural gas supply as the country faces a rapidly approaching gas shortage. We are confident that our accelerated development of Sinu-9, which has already demonstrated significant resource growth in its initial stages, will play a vital role in bridging this supply gap."

He added: "As we enter the next phase of development, we are well-positioned to drive production growth, deliver conversion of our large resource base into reserves, and create value for all stakeholders as we continue to execute on our strategic plan."