Bachelet traveled with state oil company Enap CEO Enrique Davila to the area last week to see the progress of the exploration, Davila said. Both Davila and Bachelet were speaking at the ceremony to lay the first stone of the liquefied natural gas (LNG) regasification terminal at Quintero in the center of the country.
In order for the reserves to be commercially viable, the well would need to produce at least 125,000 cubic meters of gas a day. If reserves prove viable, it could assure the supply of gas to Chile's Region XII through 2020 and eventually contribute to rest of the country's demand, according to an earlier BNamericas report.
Gas produced in Lago Mercedes would be transported north to Punta Arenas, which would imply the construction of 400km of gas pipeline.
Drilling for natural gas in Lago Mercedes started in November 2005 and is being carried out by US-based Helmerich & Payne International Drilling (NYSE: HP).
Enap has known about sizable gas reserves in Magallanes for decades but only now has the price of gas domestically risen to the point where E&P in this region has become feasible.
Meanwhile, Enap submitted on Wednesday environmental documents for exploration drilling in the Riquelme-Manzano and Dorado-Puerto Sara blocks, which like Lago Mercedes are in Region XII. Both blocks lie 80-150km north of Punta Arenas. Enap's budget there is US$2.5mn, which includes 3D seismic.
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