MercoPress. South Atlantic News Agency

Chile determined to boost natural gas production in Magallanes

The plan is mainly geared to ensure a steady supply of natural gas for the Methanex plant in Punta Arenas

A full fledged effort to search for more natural gas in the extreme south of Chile has been undertaken by the Chilean government and the private sector. The plan anticipates the drilling of 22 new wells, 120 kilometres to the north east of Punta Arenas in the Dorado-Riquelme quadrant, which already has a daily production of 450.000 cubic metres.

The operation includes the Chilean government, Chilean owned oil company Enap and methanol manufacturer Methanex which has seen its production seriously curtailed in recent years because of insufficient supply of natural gas from neighbouring Argentina.

Mines minister Santiago Gonzalez, Enap’s General Manager Rodrigo Azócar and Canada’s Methanex vice-president for Latinamerica Paul Schiodtz delivered in Punta Arenas details of the Special Operation Contract, CEOP, which is scheduled to extend for several years and demand an investment of at least 90 million US dollars.

The target is to significantly increase the production of natural gas in Magallanes Region for local consumption but mainly for the Methanex complex.

CEOP are an initiative to attract hydrocarbons (oil and natural gas) exploration and production in Magallanes in the framework of the “Chile Invests” plan launched in March 2007.

This is the fourth association of this kind with a foreign company in the region.

Methanex has a second agreement in the Otway quadrant with Wintershall and Geopark, which soon should become effective.

The operation in Dorado-Riquelme already includes six wells drilled in 2008, of which as said above two are already in production.

Minister Rodriguez said the three-side alliance will boost hydrocarbons exploration in the region and create an estimated 120 direct jobs.

“Enap is investing in Magallanes to show we are convinced there’s plenty of gas in the region which should help us overcome disappointing circumstances from the past”, said Enap General Manager Azócar.

“We’ve been in the region producing methanol for two decades and we have a very close relation with Enap. Agreements of this kind are part of our long term development strategy and hopefully we’ll have a significant production increase in the near future”, said Paul Schiodtz from Methanex.

He added that with the latest CEOP, Methanex will have invested in the region in gas production over 150 million US dollars.

“With production from Dorado-Riquelme we expect to have the second block of our methanol complex operational by the last quarter of this year”, emphasized Schciodtz who revealed that original plans to move part of the factory to some other country with more natural gas available, have been “frozen” for the moment.

When Argentina limited natural gas supply to privilege domestic demand, in spite of existing contracts, Methanex production plunged to a quarter and plans to remove the plant from Punta Arenas were seriously considered.