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Chile's ENAP produces first tight gas in Magallanes

Highlights

ENAP has produced its first non-conventional natural gas through hydraulic fracturing in Tierra del Fuego, the Chilean state oil company said Tuesday.

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Gas was produced from two exploration wells on ENAP's Arenal block in the southernmost Magallanes region, the heart of Chile's modest oil and gas industry, ENAP said.

The wells have produced an average of 120,000 cubic meters/day during the testing period although this figure is set to decline as the well stabilizes, the company said.


While these preliminary figures can vary, ENAP classified the results as the identification of a new non-conventional gas deposit, it said.

Once brought into production, the gas will supply residential consumers on Tierra del Fuego and the regional capital Punta Arenas.

These results will give us greater operational flexibility to meet gas demand from the city during winter 2013 and to continue working towards covering the deficit in winter 2014, said ENAP's exploration and production manager, Hesketh Skeeter.

The wells were first drilled vertically in late 2012 and early 2013 using ENAP's own drilling equipment, while specialized services were provided by Weatherford and Cameron, the company said.

ENAP is investing $100 million in exploration and production in Magallanes this year, the greatest amount in 15 years, in a bid to beat production shortfall in the region. Supplies were severely curtailed after neighboring Argentina halted gas exports, forcing Methanex to slash production at its Cabo Negro methanol facility, the region's largest gas consumer.

ENAP CEO Ricardo Cruzat, however, underlined that it is not yet clear how far the find will help to resolve the region's energy problems.

"While these results are an important milestone for our exploration strategy, we must wait the results of the final technical and economic evaluation which will determine the volume recoverable reserves from this new reservoir," Cruzat said.

--Tom Azzopardi, newsdesk@platts.com  
--Edited by Richard Rubin, richard.rubin@platts.com