MercoPress. South Atlantic News Agency

ENAP to drill for gas in Tierra del Fuego

Natural gas exploration in Chilean Tierra del Fuego has been given the green light from the Environmental Office following the approval of the Environment Impact for the ten million US dollar project.

The exploratory well to be drilled by ENAP, Chile's government oil company, in Mercedes Lake was preceded by a 3D seismic survey which after assessing the local geology helped locate the several places where to explore.

"This is a strategic project given the current energy crisis, particularly for the Region", said Maria Cristina Lagos, Acting Environmental Office Director.

According to the Environment Impact, ENAP is planning to drill several wells at an estimated unitary cost of 10 million US dollars.

Natural gas has become strategic for ENAP refineries particularly beginning 2007 when the capacity will have reached 1,3 million cubic meters per day, which can not be replace by other types of fuel.

ENAP sources estimate that next June/July drilling could begin in Lake Mendoza.

Last winter's energy crisis when Argentina unilaterally restricted natural gas provision to supply domestic demand, has forced Chile to look for alternative sources and Magallanes Region is strategic, not only because of its production potential but because of the Methanex complex, one of the world's largest producers of methanol.

The supply of natural gas to the Methanex complex is vital for the industry and last winter there were some supply shortages. Either from Magallanes Region or imported natural gas from Indonesia or Papua Guinea is another option.

The Lake Mercedes area coves 120 square kilometres and is 110 miles south of the city of Porvenir.

"The fact is there's natural gas. However we must assess the commercial potential and if it's important", said an ENAP source in Punta Arenas.