Partner Spotlight: How OPIC helped one Oklahoma business revive an aging Colombian oil field
It’s said that if you build it they will come, but when trying to introduce a promising technology into an emerging market, it’s not always that easy. Sadanand Joshi (pictured), President of Joshi Technologies of Tulsa, Oklahoma, learned this when he sought to apply an advanced oil production technology he developed to an aging oil field in Colombia.
“As a small business seeking to do business in Colombia, I knew that no bank in the U.S. would give us a loan,” says Joshi, who holds a PhD in mechanical engineering and has been recognized for his pioneering research that led to more advanced oil production techniques such as horizontal drilling. His company had successfully produced oil in several small fields in the U.S. as well as Canada and India, but after it invested in the Palagua field in a remote region of northern Colombia, it could not obtain the financing needed to move forward with production.
“Without OPIC it would not have been possible. We would have had to sell the project,” says Joshi.
In 2004, OPIC provided a $3.8 million loan to Joshi which it used to support production at Palagua. At the time, the Palagua field had already produced 110 million barrels of crude oil under the management of a major multinational oil company, and was considered to be near the end of its producing life.
However by applying “slanted drilling” technology, a variation of the innovative horizontal drilling technique that Joshi helped develop, Joshi and its local partners were able to increase yields. Since committing the initial loan, OPIC has provided three additional loans to Joshi and the field has produced more than 4,000 barrels per day for the past decade – surpassing its total yield at the time Joshi first became an investor.
In addition to successfully increasing output at a field that larger oil producers had considered to be past its prime, the Palagua field has delivered multiple benefits to the surrounding community and the country. By helping extend the life of an existing field, the company has increased production with far less disruption to the environment than would result from drilling a new field. Because Joshi runs its operations with natural gas produced from the Palagua field, it is also self-sustaining. The operation has also created several permanent skilled jobs in a remote region of the country with limited employment opportunities, and it employs additional workers on a seasonal basis.
Joshi has also invested in the community by local school. And it is optimistic about the future of the Palagua field. By applying some of its mathematical modeling technology it developed to enhance oil and gas discovery, it has discovered additional oil in the field and it expects to continue producing for years to come.