Natural Gas Discovery in the Magallanes Area of Chile

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Researched by Industrial Info Resources (Sugar Land, Texas). In March 2006, Chile´s President Ricardo Lagos declared that the country´s state-owned petroleum company, ENAP discovered a large gas field in the Lago Mercedes basin. This area is more commonly known as the Magallanes area of Chile. It has been said that this new discovery easily takes on the burden of supplying gas to the southern zone of Chile allowing for more supply to the north. ENAP plans to invest $50 million in natural gas exploration over the course of the next two years.

ENAP and Helmerich & Payne International Drilling, Incorporated (NYSE:HP)(Tulsa, Oklahoma), which specializes in energy exploration and production, jointly signed an agreement in July 2005 to search for natural gas in Lago Mercedes basin (Chile). The drilling for natural gas started in November last year; however, Helmerich & Payne International Drilling will not be able to estimate the total capacity of the reserve in Lago Mercedes until reaching 4,000 meters depth (13,123 feet), a target that is estimated to be reached next month. According to the project, the oil companies will construct three parallel oil and gas pipelines spanning 123 kilometers (77 miles) from Lago Mercedes field to ENAP´s Cullen plant in Tierra del Fuego (Argentina).

Over the last few years, Chile has struggled with its lack of hydrocarbon reserves, mainly due to Argentina´s shortage in its own gas supply. Therefore, ENAP is willing to quantify gas reserves in Magallanes area to supply up to five million cubic meters per day of gas to southern and central Chile.

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