Development mainly would cover exploration and eventual production of natural gas from methane coal beds, according to a statement from parent company Layne Christensen.
The requested exploration concession relates to a 720,000-acre (2,900 sq km) area in the Arauco basin.
The ministry will negotiate exclusively with Layne, which aims to sign a contract by year-end to begin testing and exploration by the start of the southern hemisphere summer, the statement said.
If successful, the company could begin production in 2008, according to a ministry statement.
The project would mark the first exploration of coalbed natural gas conducted in gas-hungry Chile and could provide new hope for the country's energy diversification efforts, the statement said.
"We believe the Arauco Basin offers exceptional resource potential with shallow access to thick coals at gas contents often seen in the better western US basins. The project area has nearby infrastructure with access to both industrial and consumer markets," Layne Energy's president Colin Kinley said in the company statement.
Layne Energy would develop the project with a partner while maintaining a 50% working interest.
Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports. Click here for a Free two week trial to our Latin America Oil & Gas information service.
Most Popular Articles
From the Career Center
Jobs that may interest you