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The Young Professional's Guide To: Quito, Ecuador—It Is impossible To Get Bored Here

César Briones and Danilo Vasconez, Schlumberger
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In the Andes, surrounded by mountains such as Cotopaxi, Illinizas, and Pichincha, is Quito, the capital of Ecuador. Despite its altitude of 9,186 ft above sea level, the weather between 10°C to 27°C lets people enjoy Quito all year long.

The Spanish founded Quito in 1534, and where Inca’s temples were before, they built churches and monasteries that today make up the Quito historic center, which is declared as a First Cultural Heritage Site of Mankind in 1978 by UNESCO, being the best-preserved historic center in Latin America.

But Quito is more than buildings and parks: Quito is its people. And Ecuadorians are friendly and kind people always willing to help with advice and a smile. As the country’s capital, Quito is the center of inner immigration and people of different regions and provinces of the country live here.

For 4 years in a row (2012–2016), the city has won as South America’s Leading Destination, an award given by the World Travel Awards (considered the “Oscars” in tourism), which guarantee the city’s quality in services, from its international airport to hotels and restaurants being ready to receive foreign visitors.

Although Ecuador is the second-smallest country in South America, it is one of the 17 megadiverse countries in the world, exhibiting a great diversity of plant and animal species. Its charm is also reflected in its four regions: Amazon, Highlands, Coast, and Insular (Galapagos Islands). On average, in just 6 hours driving distance the Coastal and Amazon regions of Ecuador meet; and in 45 minutes flying time one can reach the Galapagos Islands.

Ecuador’s Petroleum Industry

Before the arrival of the Spanish, Ecuadorian natives were aware of the existence of petroleum in the Coastal Region. They called this material Copey or Copé. These fields were produced for exporting raw material to obtain tar. As was the practice in other parts of the world in olden days, natives in Chanduy and Chongón (today Santa Elena province) also used tar to caulk ships.

The industry of extracting petroleum is clearly divided into two periods: The first one started in the Coastal Region, in Santa Elena peninsula, with the production of the first well that Anglo Ecuadorian Oil Fields drilled and completed on 4 November 1911, Ancón-01, obtaining a light oil of 32 °API. During its exploitation period Santa Elena peninsula production satisfied domestic demand.

This first stage until 1960 had important factors to highlight: work was carried out just in Santa Elena peninsula, a simple technology was applied, social and environmental impacts were not considered yet, and economically foreign enterprises were benefited instead of the Ecuadorian state. For example, Anglo, a subsidiary of British Petroleum, gained a 99% interest, while Ecuador gained 1%. This situation has changed gradually. In 1938, for example, then president Alberto Enríquez Gallo through a decree increased a bonus in favor of the state.

On 10 March 1967, Texaco Gulf obtained 2,610 B/D from the Lago Agrio-01 well at 10,171 ft depth. Looking to the future, building of the SOTE (Trans-Ecuadorian Oil Pipeline System) was started in 1970, going through 503 km for transporting oil to the new refinery in the Balao, Esmeraldas province.

The second stage started in 1972 in the Amazon Region. During this period the state changed its role, turned into an active player with a mini oil boom. Under the nationalist government of Rodríguez Lara, the Ecuadorian State Petroleum Corporation (CEPE) was created, responsible for downstream, midstream, and upstream operations. In 1989, the state company turned into Petroecuador, a company divided into Petroproducción, Petroindustrial, and Petrocomercial, each one covering a stage in the petroleum value chain. Until this, Ecuador produced medium crude with less than 30 °API from the North Amazon Region. The consortium CEPE-Texaco-Gulf was in charge of this crude extraction.

Figure 1: Main producing formations in Ecuador. Source:  Baby, P., Rivadeneira, M., and Barragan, S. (2014).

 

The crude oil of Ecuador, according to its API degree, is classified as Oriente Crude with 24 °API and 1.2% sulfur content, and Napo Crude of 19 °API and 2.03% of sulfur. Ecuador exports its petroleum from the port of Balao under the “freight on board” method. The price indicator of Ecuadorian crude oil is WTI. Ecuador was a member of the Organization of Petroleum Exporting Countries (OPEC) from 1973 until 1992, and rejoined OPEC in 2007.

The main producing formations in Ecuador are located in the Oriente basin which has different producing reservoirs developed in the cretaceous time period. The reservoirs are siliciclastic with heterolithic characteristics, which provide different potentials in its sequence (Fig. 2).

In 2010, through a Participation Agreement and a Service Delivery contract, President Rafael Correa’s government reformed the Law of Hydrocarbons. Oil contracts were renegotiated with foreign companies establishing flat rates of USD 35–41/bbl.  Similarly the cost per barrel rose from USD 9 to USD 27 to the state due to these changes in contracts.     

As a normal process, natural oil reserves of Ecuador are dwindling. To recover the curve of production above what’s produced by the group of mature fields known as “Crown Jewels” (which include Sacha, Shushufindi, Libertador, Cuyabeno, Lago Agrio, and Auca fields), the ITT  (initials of Ishpingo, Tiputini, and Tambococha fields) block is being developed. Exploitation of the ITT block, where the country’s biggest remaining oil reserves are (1.672 billion bbl according to Petroamazonas), has been carried out since September last year.

Currently, the daily production in Ecuador is 534,394,40 bbl (Fig. 3). Petroamazonas is the national oil company that leads the exploration and production activity at present, producing almost 80% of the country’s total production. The blocks that were owned by private and state companies are now part of this relatively new state entity.                     

Fig. 3—Ecuador daily production per company. Source: Agencia de Regulación y Control Hidrocarburífero.

Research Initiatives

ITT is a landmark for the petroleum industry in Ecuador. The fields are located in the northeast of Ecuador, in Orellana province. The first field was discovered in 1949, while the others between 1992 and 1993. In 2016, Petroamazonas and Ecuadorian technicians started the activity in Tiputini.

Tiputini is in the borderline of the National Park Yasuní. For that reason, the Ministry of the Environment approved the environmental permit under rigorous and high-standard techniques such as multidirectional, directional, and horizontal drilling to obtain the crude from this field. Advanced technologies will be applied to drill 600 wells until 2025 in the ITT block.

But today Ecuador is searching for a change in its extractive oil model; the modern state university, Yachay-Tech, founded in 2014, is going to implement a new degree in petroleum engineering. Research initiatives in Ecuador could help complement the extraction stage, refining the resource with the proper technology, reducing the amount of imported derivatives, and helping with the deficit of fuel in the country, and demonstrate the significance of oil for the future of Ecuador.

Travel Tips

The Old Town offers many places close to each other such as churches, convents, monasteries, and museums. Some must-sees are La Iglesia de la Compañía de Jesús with its beautiful domes; San Francisco Church and Convent with its legends; and works of The Quito School, an artistic movement from colonial times. Among the churches, the neogothic building of the Basilica of the National Vow has gargoyles with shapes of Ecuadorian animals from Galapagos and Amazon Region such as jaguar, booby, armadillo, and others.

From behind the Old Town rises “El Panecillo,” a semicircular hill in the center of Quito. On its top is a 45-m aluminum sculpture of the Virgin of Quito (a winged virgin), visible from almost all the city. Its original version, a 30-cm wooden sculpture, is from the 18th century by the quiteño artist Bernardo de Legarda. From the top of the hill, one can enjoy beautiful panoramic views of Quito, with the mountains that surround it. The best view is from the top of Pichincha Volcano. One can go there via the TelefériQo, the aerial tramway of the city.

Interesting Facts
  • Quito was declared a first Cultural Heritage of Mankind by UNESCO, because it has the best-preserved historic center.
  • In the San Juan Hill, where Incas had their Quilla Huasi (Moon temple), was built the Basilica of the National Vow, where in a special hall are buried ex-presidents of Ecuador.
  • Quito is the highest-elevation capital city in the world.
  • Cotopaxi, an active snow-covered volcano with an almost perfect conical shape, is visible from Quito.
  • Quito Observatory is the oldest in the continent, dating to 1864.
  • The sculpture of the Winged Virgin in El Panecillo (45 m) is taller than El Cristo del Corcovado (30 m) in Brazil.
  • In spite of being the second-smallest country in South America, half of the bird species of this continent live in Ecuador, and the country has more plant species than all of North America.

 

Between churches and El Panecillo is Ronda Street traced back to 1480 in history. As a traditional street, here one can find Ecuadorian handicrafts, live music, and have a meal in its restaurants. And as a dessert, you can enjoy exotic-flavored ice creams such as fig with honey, quesadillas, rice with milk, machica, and fanesca.

Visiting the museums is a great way to learn about Ecuadorian history: the Wax Museum, El Palacio de Carondelet (The Presidential Palace), the City Museum, Guayasamín Museum, and Casa del Alabado (a museum of Pre-Columbian art).

Quito is the capital city nearest to the equator. Hence, here is a town dedicated to it called “The Middle of the World,” the most-visited tourist destination in Quito. There is a historical monument aligned with the four cardinal points, which divides the north and south hemispheres through an imaginary line across east and west. The monument reminds its visitors of the arrival of the First Geodesic Mission to Ecuador in 1736.

Below is a list of interesting places to visit:

As has been illustrated, it is impossible to get bored in Quito.

The Way Forward

The Amazon Region has been producing oil just in its northside. But there are potential fields of heavy oil (between 15–20 °API) in center and southeast. Through satellite exploration and contrasting with geology, Petroproducción (state production segment) asserts that there are at least 13 prospects in the southeast. In order to verify this information, it is necessary to drill and explore even more. Surely, as time goes by, it would be easier to extract this resource with better technologies.

An international city which won awards for tourism, Quito city is an ever-growing home for young entrepreneurs, with big areas to invest. 

References

Baby P, Rivadeneira M, and Barragan S. (2014). Geology and Petroleum from the Oriente basin [Geologia y Petroleo de la Cuenca Oriente], IRD Ecuador.


Danilo Vasconez is a specialist in reservoir engineering and numerical simulation at Schlumberger with experience in integrated reservoir characterization studies in the Oriente and Los Llanos basin of Ecuador and Colombia. He is currently assigned to a joint-venture project for production optimization with Schlumberger Production Management. As a reservoir engineering consultant, he is co-responsible for workover and infill drilling Capex proposals and planning through integrated petrophysical, geological, and reservoir characterization schemes in reservoirs with high water cut.  Vasconez holds an MSc in reservoir evaluation and management from Heriot-Watt University.

César Briones is a production engineer at the Kamana joint-venture project for production optimization at Schlumberger Production Management. He is currently involved in the consortium’s drilling operations and procedures, while at the same time contributing to the production forecast, reserves, and well candidates team in the joint-venture. Prior to joining Schlumberger, Briones was an intern with Petrobell where he worked with the reservoir team. In the future he plans to dig deeper into production management to deliver better solutions for Kamana.


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