March Resources Gets Green Light Chilean Exploration Project

March Resources

Chile's Ministry of Mining and Energy has authorized March Resources to have exclusive oil and gas exploration and development rights to two blocks in Northern Chile in the Tamarugal Basin.

The Pica North and Pica South blocks in this basin consist of a total of 10,000 square kms (2,500,000 acres). The definitive Special Operations Contracts ("SPOC") for each of these areas are currently being negotiated. The SPOC outlines the exploration and development rights on the blocks, which are valid for a period of 35 years and will detail the work commitments that are required for each of the two blocks.

Pica North And Pica South Description
The Tamarugal Basin of Northern Chile is a Jurassic age back-arc basin with strong similarities to the very prolific, Cretaceous age, Neuquen Basin of Argentina. Thick accumulations of petroliferous, black marine shales with interbedded, craton derived, sandstone reservoir beds are common in both basins. The surface of the Tamarugal Basin is the extremely arid Atacama Desert.

During the period from 1960-1961, the Chilean government drilled six wells along the western portion of the Tamarugal Basin to test anomalies identified by early geophysical techniques. The wells were unsuccessful, penetrating primarily volcanic intrusives and volcanic sediments of an arc environment. Only minor occurrences of marine sediments were encountered. No drilling has been done since 1962.

In the 1980's, renewed government surface geological field studies confirmed the presence of more than 2,000 meters of black shales, with good source bed potential, inter-fingering with eastern transgressive sandstones and conglomerates. Several oil seeps and live oil occurrences were identified. Major oil companies expressed interest but preferred to evaluate developing prospects in Argentina and Peru. At that time, due to its location on the west side of the Andes, many companies still believed the Tamarugal Basin to be a fore-arc basin.

During the period from 1996 through 2001 various exploration operations were conducted. These operations included the shooting of 430 kilometers of 120-fold seismic data, the reprocessing of 224 kilometers of 24-fold seismic data, the acquisition of 2,071 gravity stations, 2,000 kilometers of continuous magnetic survey, and the examination of 60 surface sections. Extensive satellite, geochemical, petrological, palynological, and detailed, all-inclusive computer-generated basin evaluation studies were also conducted. Approximately $US 4.1 million was spent on this initial exploration program. These data files have been made available to March for review in the offices of the ministry.

The results of the extensive field investigations confirmed the presence of a Jurassic back-arc basin, similar to the prolific Neuquen Basin of Argentina, with over 6,000 meters of marine sandstones, oolitic limestones, and black shales with total organic carbon values as high as 6%. A series of north-south compressional folds/thrusts were mapped on the surface and in the sub-surface by the most current geophysical techniques. Mapped structures are of the magnitude of 15 miles by 5 miles with greater than 2,000 feet of closure.

As a result of the thickness of the vast black shale source-bed sequence, as well as the thermal history, modeling efforts by Platte River Associates, an independent engineering and consulting firm, have indicated that prospects are more likely to be gas prone than oil bearing. The modeling program indicates gas saturation of all Jurassic and Cretaceous sandstone reservoir beds. Due to the deep burial, the early Jurassic source beds went through the oil window and into the gas window by the close of the Jurassic period. Following late-Cretaceous and early-Tertiary tectonism, gas expulsion from late-Jurassic source beds continues to charge the structures.

Three drilling locations have been selected to test and evaluate the North Pica Block. The first location incorporates the end results of four seismic line crossings, shale geochemical analyses, two years of surface stratigraphic studies, gravity and magnetic analyses, thermal studies, and detailed computer generated basin studies.

The primary structure, on the North Pica Block, as presently mapped with the current geophysical control, is approximately 16 miles long and 4 miles wide, with a vertical closure of 2,500 feet. Two objective sandstone horizons, one at an estimated depth of 4,300 feet and one at an estimated top of 7,000 feet, are anticipated as a result of detailed surface stratigraphic studies. Porosities in the range of 12-19% and permeabilities up to 5 MD have been measured in the surface outcrops. As a result of high-angle reverse faulting, a repeat of the deeper sandstone could be encountered at an estimated depth of 8,470 feet. Additional sandstone reservoirs are anticipated to a depth of 12,800 feet. All of the Jurassic black marine shales, which are at this locality are in excess of a measured 16,000 feet, and estimated to have been in the hydrocarbon generating window since the end of Jurassic time.