Venezuela finds major oil pocket on land just as reserves begin to lag

A major oil discovery in northeastern Venezuela has sparked optimism about prospects of finding additional oil in an area of the country where oil fields appeared to be running dry.

The find, which also could improve Venezuela's lagging proven oil reserves totals, clearly stems from current high petroleum prices, which allow for costly drilling at depths previously unexploited because of cost. The newly discovered oil, located in the state of Monagas, is at a depth of 12,000 feet.

Venezuelan oil geologists recall that it was a similar discovery in Mexico just seven years ago that rescued Mexico's flagging oil industry and quickly turned that country into the world's fourth-largest oil producer. Venezuelans, who have worried for years about their dwindling reserves, see the find as significant.

Adding a new dimension to the nation's futture oil prospects, the find could take some of the urgency off the costly development of the Orinoco tar belt, where huge quantities of oil are contained in a molasses-like substance. Exploitation of the belt, a 20,000-square-mile area along the Orinoco River in eastern Venezuela, is under way.

The problems of removing oil from the tar belt are staggering and the cost is enormous, although it is estimated that the Orinoco project could produce 1 million bbl. oil daily by the year 2000, a figure equal to half of Venezuela's current oil production.

Just three months ago, after years of study, the Venezuelan government, study , signed a contract with a United States firm, the Lummus Company, to develop and produce heavy crude oil in the tar belt. Current estimates of start-up development costs range upward from $8 billion -- but sources in Caracas, the Venezuelan capital, say the cost will eventually go to a staggering $25 billion.

If additional conventional reserves like the new find in Monagas are located, pressure for the quick development of the tar belt will lessen.

The new find is limited so far to one test well, but its size is significant. The well is producing more than 3,000 barrels of oil daily -- much more than older wells at 3,000 feet were yielding.

Petroven, Venezuela's state-owned oil company, is reactivating a number of older wells in the area in hopes of discovering more oil at depths of 12,000 and more feet below the surface.

Oil officials admit surprise at finding the relatively light crude oil at 12, 000 feet. They had long regarded the oil fields in the area as increasingly unproductive. Although the actual field where the new drilling took place is one that had been successfully exploited for decades, its production had begun to peter out recently.

The Monagas find is spurring oil exploration at greater depths in other parts of Venezuela, including important oil fields around Lake Maracaibo in the state of Zulia, where much of the country's oil reserves have been located.