ARCO Announces Startup of Villano Oil Field in Ecuador

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08 July 1999
QUITO, ECUADOR - Production from the Villano oil field began flowing into the Trans Ecuadorian Pipeline System (SOTE) it was announced today by field operator ARCO Oriente, Inc., a subsidiary of Los Angeles-based ARCO (NYSE: ARC).

ARCO and Agip Oil (Ecuador) BV, a subsidiary of Eni, the Italian oil and natural gas company, operate the field under a service contract with Petroecuador, Ecuador's national oil company, and hold interests of 60% and 40% respectively.

Villano production into the SOTE was officially opened today by a ribbon-cutting ceremony presided over by the Minister of Energy and Mines, Rene Ortiz.

The initial rate into the SOTE is approximately 6,000 barrels per day (b/d). This rate is expected to increase to 40,000 b/d later this year as additional wells are completed and as ARCO and Petroecuador complete a 60,000 b/d expansion of the SOTE.

"This is a great day for all of us," said Herb Vickers, the Quito-based president of ARCO Oriente, Inc "The ARCO team, with the support of Agip, Petroecuador and many government agencies, Fluor Daniels and our many contractors, overcame many challenges along the way and made it all happen."

Entry into the SOTE marks the culmination of an oil development effort that began with signing of the contract in 1988 and the Villano field discovery in 1992. Ecuador approved a Plan of Development in 1997; an Environmental Impact Assessment was completed in 1998. First production from the field was on 27 May, 1999. Field reserves are 200 million barrels of 21-degree API crude oil. Ultimately, nine wells will be needed to produce 40,000 b/d from the field.

The Villano drillsite is located some 40 kilometers into the rainforest. Only the wells and minimal facilities are located at the actual point of production. Oil is transported out of the forest by a unique flowline system specifically designed to minimize impact on the environment and processed at the Central Processing Facility (CPF) located out of the primary forest east of Puyo. Villano oil then flows north through a 140 kilometer secondary pipeline to the SOTE tie-in point at Baeza, and then on to Balao for export or processing for domestic consumption.
In addition to being Ecuador's newest oil field, Villano has been regarded as setting a new standard for environmental and socially responsible development in the rainforest. From the beginning, the goal of ARCO, Agip, and Petroecuador was to minimize the project's impact on the tropical environment and protect fragile ecosystems. The field was developed completely without access roads. Rigs, people and supplies were transferred to and from the field by helicopter. The flowline out of the forest was installed using a monorail to string the pipe and move equipment. The flowline virtually weaves between the trees, minimizing the number of trees cut and eliminating extended breaks in the forest canopy.

"What the team did in installing the 'Invisible Pipeline,' as we have come to call the flowline from Villano to the CPF, is simply amazing," said Vickers. "The care that the team took in laying a pipeline through the rainforest is phenomenal. This same care was used throughout the project. All of us are proud to have been part of the Villano Project."

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