SANTIAGO, Chile, Oct. 7 (UPI) -- A new natural gas discovery in Chile's extreme south raised prospects of a bigger find on the Tierra del Fuego island in the Magallanes region, state-run oil and gas company Empresa Nacional del Petroleo S.A. announced.
Chile ranks 58th in the global ranking of natural gas producers but hopes to catch up and increase its market share. The government is also giving priority to completing repairs after infrastructural damage caused by the Feb. 27 earthquake and aftershocks.
ENAP indicated the latest strike showed promise of a larger range of natural gas deposits in the south.
The gas find was made in the Arenal exploration block on the Tierra del Fuego island, said the company that supplies about 80 percent of Chile's fuel needs and exports quantities to Canada. Enap also exports refined products to Ecuador and Peru and markets in Central America.
Initial production tests carried out in the block's Springhill formation showed flows of 6.4 million cubic feet daily of natural gas, ENAP said.
The company is planning production tests of longer duration in the immediate future to determine volumes under stabilized conditions that provide additional information on the reserves and the size of the deposit.
ENAP said it was very encouraged by the find because the Arenal well forms part of a portfolio of prospects on which it was working and would continue to develop over the next few years.
ENAP produces 141 million cubic feet of natural gas in Magallanes and the new discovery represents about 5 percent of total production in the region.
ENAP began exploring the region for natural gas deposits in 2008 after several seismic surveys. So far the company has drilled five wells, three of which have proven to be productive.
The company's 2010 exploration program includes the drilling another three wells that will allow it to corroborate the geological models on which the discoveries made are based. ENAP plans to continue the drilling campaign of exploration prospects in the same block next year.
The company mounted a major fight back after the earthquake, which severely hit its profitability. ENAP produced a net consolidated loss of $81 million, mainly reflecting effect of the tremor on operations of its refineries. First quarter results included the loss of $64 million for impairment of fixed assets damaged in this disaster.
The earthquake upset the operations of the Biobio and Aconcagua refineries. The Biobio refinery is still struggling to resume full operations.