MercoPress. South Atlantic News Agency

Massive investment in Magallanes region gas exploration

Chile's government owned oil and gas company ENAP is planning to invest over 300 million US dollars in the next three years to develop natural gas deposits in Magallanes Region, in the extreme south of the country.

"We are undertaking a tremendously aggressive plan, if we take into account that only three years ago there was no investment program for Magallanes", said Nelson Muñoz head of ENAP's exploration and Sipetrol CEO. Sipetrol is ENAP overseas corporation which has invested in hydrocarbons explorations outside of Chile, in places as distant as Ecuador and Egypt, in both of them successfully. But the decision to return to Magallanes is well founded, said Muñoz who recalls that two gas and oil discoveries were confirmed in 2007. One of them is in the Lago Mercedes area, where ENAP is working with the German company WinterShall to help with the challenging technical difficulties they are facing. The second at San Gregorio (140 kilometers from Punta Arenas) where ENAP already exploits the Palenque gas deposit. The two wells have a daily production of 425.000 cubic meters, which although modest is similar to what Argentina is currently pumping to central Chile since the neighbor decided to privilege domestic consumption and only sell the surplus. Mr. Muñoz said that ENAP in Magallanes is working at three different levels: one is extreme searching for gas bubbles at 4.000 plus meters deep such is the case in Lago Mercedes. A second level is 1.500 meters, which is the deposit at Palenque and finally drilling between 500 and 1.000 meters in Magallanes abundant coal deposit areas. This last option will begin to be developed next month with five drillings. "These basic work models have been well received by the private sector which is very enthusiastic about beginning surveying in several blocks", said Muñoz. ENAP total investment program for the next three years is 600 million US dollars and half of that amount is going to Magallanes. "And could increase if results are positive", according to Muñoz. In the Palenque deposit three new wells are being drilled which could mean trebling production to a million cubic meters per day. If this is achieved Punta Arenas could become self supported from the area. "We have plans for further exploration in El Vellón, 30 kilometers from Palenque, and in the Dorado-Riquelme block", said Muñoz. But ENAP is also going to cross the Magellan strait to develop the Arenal block. "This decade the natural gas business is different and the models of exploitation and technology have evolved tremendously, which means Chile and ENAP have turned their eyes to the Magallanes basin", concluded Mr. Muñoz.