Enap, Fracture Sign Contract for Lago Mercedes Exploration

Chilean state oil company Enap and UK production optimization consulting firm Fracture Technologies have signed a contract for exploration consulting work at the Lago Mercedes blocks in the Magallanes region, a Fracture Technologies spokesperson told BNamericas.

There are hydrocarbons reserves that could satisfy Chilean capital Santiago's energy needs for 50 years in the Lago Mercedes area, but the technology to extract the unique composition of natural gas with a naturally occurring diesel does not exist in Chile, Enap exploration manager Nelson Munoz told the mining commission of Chile's senate, according to a senate statement.

Enap has temporarily suspended work in the Lago Mercedes blocks to develop a larger project that could require additional investment of US$100mn, Chilean press reported.

Enap has so far invested US$50mn of the US$80mn authorized for exploration in the area.

"We looking at starting work at the end of August and finishing around October or November," the Fracture Technologies spokesperson said. "We specialize in hydrologic fracturing. It's a process that enhances production in reservoirs of this nature."

The spokesperson could not comment on the value of the contract due to confidentiality agreements, but said the contract has several phases.

"We are looking at a single well in the first phase and the project could go beyond that," the spokesperson said.

Energy-strapped Chile is heavily promoting the Magallanes region as a solution to falling natural gas exports from Argentina.

Chile's government launched hydrocarbons E&P tenders for 10 blocks in Magallanes and has made road show presentations in Canada and Argentina promoting the blocks.

Bidders must submit offers by October 10 in time for the November 15 announcement of awards. The government aims to sign contracts in December.

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