Shell/Mobil gets 60-day Camisea extension

Perupetro SA, Peru's state oil regulatory company, has given the combine of Royal Dutch/Shell Group and Mobil Corp. units that is appraising Peru's Camisea natural gas/condensate fields another 60 days to continue evaluating the project.

May 25, 1998

4 min read

Shell Prospecting & Development Peru BV (SPDP) and Mobil Exploration & Producing Peru Inc. last month asked for a 6-month extension to continue appraising the fields before proceeding to the $2.5 billion project (OGJ, Apr. 6, 1998, p. 40). Their 2-year contract to appraise the fields expired May 16; Perupetro awarded the extension May 15. Under that contract, the combine could request an extension of up to 6 months, provided Perupetro found its request technically justifiable.

Elsewhere, the group developing Peru's first integrated natural gas/ power project has raised its estimate of gas reserves in the field being developed for that project by 43% to 440 bcf, spurring a possible expansion of the project.

El Niño problems

Perupetro said that the consortium's progress had been delayed by logistical problems caused by the El Niño weather phenomenon.

For example, at the time that operator Shell was bringing in exploration equipment to its El Mundo base camp, low water levels in the river delayed equipment deliveries and the start-up of the drilling program.

Perupetro, which hired consultants DeGolyer & MacNaughton to analyze Shell's data on Camisea reservoirs, also confirmed the extent of reservoir fracturing that Shell had reported after appraising the first two wells. It decided, however, that 2 months should be sufficient to complete its work.

Andrew Vickers, SPDP's external affairs manager, said that his company is confident that the 2 months would be sufficient to decide by July 15 on whether to go ahead with the project. He added, however, that the shorter time granted for additional studies increased risks in the development stage.

The second stage, to be completed over 41/2 years, calls for building infrastructure, including gas and liquids pipelines, a gas treatment plant at Camisea, and an NGL fractionating plant at Lima. Shell, which discovered the Camisea fields more than a decade ago during a $200 million exploration campaign, estimates reserves at 11 tcf of gas and 600 million bbl of condensate.

Drilling update

Shell said that the drilling of its third well, San Martin 3, was a few days ahead of schedule. The company had earlier estimated that it would be completed by mid-July.

Shell previously completed two appraisal wells, Cashiriari 2 and Cashiriari 3, which revealed fractured reservoirs.

Shell said that it will continue evaluating the fields and would try to develop "these national resources" in the best possible way to benefit all parties involved in the project. It added that Shell and Mobil maintain their confidence that the Camisea project will go ahead and expect to make a final decision on the investment by mid-July.

Aguaytia

Aguaytia Energy del Peru SRL (AEP) revised its earlier estimates of 307 bcf in Peru's central jungle Aguaytia natural gas field after drilling five new wells in the field and completing further technical studies.

Its 55 MMcfd of gas output will fuel AEP's $260 million integrated natural gas and electric power project, on which construction started July 30, 1996, and was completed early this year. The company expects to begin full commercial operations of its power plant by the end of May. AEP is owned by a consortium of U.S. companies: Maple Gas Corp., PanEnergy International Development Corp., El Paso Energy International Co., Illinova Generating Co., Scudder Latin American Power Fund, and PP&L Global Inc.

The project includes development of Aguaytia gas field and construction and operation of: gas processing and natural gas liquid fractionation facilities; 299 km of gas and NGL pipelines; a 160-MW power plant; and a 392-km electric transmission line to the coast.

"As a result of this significant increase in gas reserves, we are currently evaluating the possibility of expanding the Aguaytia natural gas and electric power project," said Rex W. Canon, AEP's executive vice-president.

The feasibility study will be completed in second half 1998, and the group will make a decision after yearend. The expansion may include construction of an additional 80-MW generation unit. Another possibility the company is considering is to convert the entire power plant facility to a more efficient combined-cycle operation, which could take its current 160-MW capacity to 360 MW.