Commercial Reserves 99% Certain in Lago Mercedes Well

Chile's state oil company Enap's second well in Region XII's Lago Mercedes basin, known as Springhill, is 99% certain to provide commercially viable reserves, a source close to the process told BNamericas, confirming a report by newspaper El Mercurio.

The well would have to provide at least 5 million cubic meters a day (Mm3/d) of gas and the company will announce its final drilling results within the next two weeks, the paper reported.

If the well does not provide commercial reserves, the company will begin exploring a third well in the block.

Enap also is conducting 3-D seismic works on two other blocks in the region, dubbed Dorado-Puerto Sara and Riquelme-Manzano.

Brazil's federal energy company Petrobras (NYSE: PBR), US oil company Marathon (NYSE:MRO) and UK gas company BG (NYSE: BG) each have sent proposals to Enap for joint operation of the Dorado-Puerto Sara block.

Enap and the country's mining and energy ministry could respond to the companies before month-end, according to the report.

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).

Chile has faced energy shortages due to Argentine natural gas export restrictions and as a result has turned its attention to gas exploration in Region XII and a liquefied natural gas (LNG) re-gasification terminal in Region V.

Gas restrictions could reach 12 Mm3/d in the second half of 2006, up from 8 Mm3/d in 2005, the paper reported in a separate article.

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