PERU'S BASINS HOLD OPPORTUNITIES

S.K. Bhattacharjee
Sita Oil Exploration House Inc.
Houston

Peru sometimes appears as an obscure country in the nations of the Americas.

Yet the natural resource distribution per unit area of its territory is so high that it even attracted various conquistadors from as far as Europe during the 14th century.

It appears that not too many independent oil exploration companies, especially from the U.S., have understood the potential well.

Political events of the recent past may be partly to blame for much negativism regarding investment in exploration and production. Many bright spots loom behind the gloomy opinion.

The potential has been well identified by a few smart U.S. oil companies, such as Mobil Oil Corp. and Occidental Petroleum Corp., and several Peruvian independents.

PERU'S PLUSES

Important elements in Peru for U.S. independents to watch are:

Eighteen land and offshore basins.
Surface area 1.2 million sq km.
Coast line 2,500 km.
Exploration history 100 years.
Estimated recoverable reserves 16-20 billion bbl.
Attractive terms issued recently.
Profit repatriation and crude export.
Proximity to U.S. West Coast.
Abundance of local technical experts.
Excellent communication facilities with U.S. and rest of world.

BASINS SUMMARY

Here is a brief summary of Peruvian geology and tectonics (Fig. 1).

Two general classes of basins exist (Fig. 2). They are:

Forearc and backarc basins, such as the Talara, Progreso, Trujillo, Lima, Mollendo, Lancones, Sechura, Salaverry, Pisco, and Moquegua basins.

Interior basins, such as the Santiago, Bagua, Huallaga, Ene, Titicaca, Maranon, Ucayali, and Madre de Dios basins.

Two cartoon "play concept" sketches show the basin types (Figs. 3, 4). Basin status is shown in the table.

Reservoir rocks extend from Devonian to Tertiary and are fed from rich source rocks at various geological time levels.

The table makes it clear how few basins have been explored adequately. Only the land portion of the Talara basin can be considered "semimature" in exploration.

RESERVE POTENTIAL

Various contractors under Petroleos del Peru have come forth with several reserve numbers.

The often quoted figure of 16.3 billion bbl includes proved, probable, and possible. The figure is based on a certain discovery factor averaged from the Talara and Maranon basins only.

There is little doubt that the number will increase rapidly if several other basins are explored and drilled. There are eight basins without a single exploratory well.

Cumulative production is 1.2-1.4 billion bbl, most of it from the Talara basin.

OPPORTUNITIES

The current situation in the U.S. domestic oil exploration environment is difficult for independents, many of which are looking for overseas opportunities.

Strategic calculation for diversification should include Peru as a target because the government more than ever before is conscious about privatization of the sick oil industry there.

Petroperu and political leaders are cooperative for joint ventures and other investment in Peru.

A strong tide of decentralization is hitting South American nations from Argentina to Venezuela.

In the author's opinion, U.S. independents large and small should take advantage of the window of investment climate and position themselves for future market at home where indigenous production is sliding quickly and low gas prices are hurting the cash flow potential.

There are several discovered and semideveloped fields that remain available for proper development programs.