BPZ to Spud Well Offshore Peru in July

Houston-based oil and gas company BPZ Energy expects to spud the first of three wells in an initial drilling program at its Corvina gas field offshore Peru in July, the company said in a statement.

The Corvina field is in block Z-1, where plans are to drill an initial three wells as well as recomplete an existing shut-in gas well. Drilling is part of a gas-to-power project, which includes the construction of a 10-mile gas pipeline to a planned 160MW gas-fired power plant.

Drilling to total depth is estimated to take 25-28 days. The company has refurbished the CX-11 drilling platform and will use a drilling rig secured from Petrex under a two-year contract extendable for a further year.

To transport the drilling rig from dock to platform, BPZ has acquired and equipped deck barge BPZ-01, which is en route to Peru from Seattle and is scheduled to arrive in mid-June. The company is also refurbishing a dock in Talara to facilitate drilling and logistical operations.

Total costs for refurbishing the CX-11 platform, drilling three wells and recompleting the fourth, design and construction costs for the pipelines to bring gas to shore, and material and labor costs to construct the power plant are now estimated at US$127mn, up US$15mn from the previous estimate.

BPZ attributed the increase to the acquisition of the deck barge and the tight market for oil and gas drilling equipment and oil field services as well as other significant cost increases in other industry-related items such as project insurance.

The capital costs do not include Peruvian value-added tax (IGV), which is generally recoverable against future revenue or in some cases under an early recovery program, the statement said.

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