Chile awards E&P rights for Magallanes blocks

Dec. 24, 2007
Chile has awarded oil and gas exploration and production rights to foreign companies that will invest at least $267 million each in the southern Magellan region.

Chile has awarded oil and gas exploration and production rights to foreign companies that will invest at least $267 million each in the southern Magellan region.

“It’s historic,” said Mining Minister Karen Poniachik. “The round is going to contribute to the diversification of our country’s energy supply and millions of dollars are going to be spent in the area.”

Poniachik said contracts will be signed with Total SA, Apache Canada Ltd., Pan-American Energy LLC, Greymouth Petroleum Holding Ltd., and IPR-Manas.

IPR-Manas was awarded E&P rights for Tranquilo block and plans to invest $33.3 million in the three phases of exploration. IPR, of Dallas, will operate the block on behalf of itself and its partner, Manas Petroleum Corp., Baar, Switzerland.

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Apache Corp. was awarded both Russfin and Lenga blocks, where it plans to invest $23.4 million and $24.9 million, respectively.

Greymouth was awarded Porvenir, Brotula, Isla Magdalena, and Caupolican blocks. It plans to spend a total of $107 million in the three exploration phases.

Total was awarded Otway block, where it will invest $44.5 million. Pan-American was awarded the Coiron block, where it will invest $34 million.

No bids were received for the Bahia Inutil block.

The winners will sign special operating contracts with the government that will run for as long as 35 years, including a maximum 25-year production phase.

The first phase of exploration will begin when contracts are formally signed in December and will last for 36 months. The second and third phases will last for 24 months each.

Poniachik said each company has promised to begin exploration within 6 months of signing the contract.

“They’ll begin exploring immediately after the contracts are signed in December,” she said, adding, “They’ll want to take advantage of the warm summer weather we’re having in the region at the moment.”

Meanwhile, GeoPark Holdings Ltd., Hamilton, Bermuda, reported success at the San Miguel-1 exploration well on the 440,000-acre Fell Block.

The well, on a structure defined in GeoPark’s 2006-07 3D seismic program, gauged 3 MMcfd of gas, 65 b/d of condensate, and 35 b/d of water from Cretaceous Springhill at 3,020 m on a 10-mm choke with 980 psi wellhead pressure.

GeoPark commissioned a gas production and dew point facility in September that permits rapid hook-up of new production to the main gas infrastructure.

Apache said the Chilean rights will give the company 1 million acres alongside a 714,000-acre prospecting region it already controls on Argentina’s side of the island region.

Apache will split its interest in one of the Chilean zones, known as Lenga, with Empresa Nacional del Petroleo, the country’s national oil company.

Apache will have a 100% stake in the larger region, Rusfin. The company said it plans to spend $18.3 million during the first phase of exploration.

Apache committed to shoot 232 sq miles of seismic and drill two exploration wells in the first exploration period on the Chilean side.

Apache’s net production on the Argentina side is 113 MMcfd of gas and 4,200 b/d of liquids.