Chilean oil finds a boost to economy

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SANTIAGO, Chile, July 8 (UPI) -- New discoveries of oil and gas in the extreme south of Chile will boost the country's economic prospects amid extensive post-quake reconstruction and repositioning of the government's recovery program.

News of the latest finds was revealed by GeoPark Holdings, which is operating on the Fell block in the extreme south of Chile.

GeoPark released the results after successful tests on two wells. Cerro Iturbe 1 yielded gas after drilling to a depth of about 10,212 feet while Tetera 4 produced oil, the company said.

GeoPark has a 100 percent working interest in the Fell Block, which is on Chile's continental shelf at the Atlantic entrance of the Magellan Strait.

Cerro Iturbe 1 was drilled on an undrilled prospect located in the northwest region of the Fell Block, the company said.

A production test in the Springhill formation, at approximately 9,847 feet, flowed at a rate of approximately 14.6 million cubic feet per day of gas with 137 barrels per day condensate and no water with a well-head pressure of 2,417 pounds per square inch, the company said.

GeoPark said the results were preliminary and further production history will be required to determine stabilized flow rates. A gas flow line is being constructed and it is expected to connect the well to the main pipeline and marketing infrastructure during July.

Tetera 4 was drilled and completed to a total depth of 10,029 feet on a prospect in the north central region of the Fell Block which had tested small quantities of oil by previous license holders but never been produced commercially.

A production test in the Springhill formation, at approximately 9,554 feet in an 8 foot perforated interval, flowed at a rate of approximately 115 bpd of oil and 350 bpd of water through a choke of 12 mm and with a well head pressure of 43 psi.

GeoPark said it had installed a beam pump and surface facilities and put the well on production at a rate of approximately 100 bpd oil and 250 bpd water. Further production history will be required to determine stabilized flow rates from this well and potential development drilling opportunities, said the company.

In other drilling activities on the Fell Block in Chile, an appraisal well Ayelen 2, targeted for the shallow El Salto (Tertiary) gas producing formation, reached a total depth of 2,914 feet. Production testing is scheduled during this month.

GeoPark is currently drilling well Yagan Norte 2 which is targeting the Springhill and Tobifera formations at depths of more than 10,000 feet. The company is also conducting a three-dimensional seismic survey on the Otway Block in Chile.

GeoPark is carrying out this year a work and investment program for a total $50 million-$60 million that is likely to entail drilling of 14 to 18 wells, 2-D and 3-D seismic surveys and an expansion of production infrastructure.

The company owns and operates six blocks in Chile and Argentina that cover a total of 3.7 million gross acres.

GeoPark Chief Executive Officer James F. Park said, "We are pleased with continuing strong results from our drilling program on the Fell Block in Chile."

He said the company's team had focused on discovering new fields and rehabilitating abandoned ones.

He added GeoPark was looking forward with confidence "to the remainder of our work program this year, which represents a balance of development, appraisal and exploration wells and seismic focused on both increasing oil and gas production and reserves and opening up new prospective areas on the Fell, Otway and Tranquilo blocks."

GeoPark produces about 30 percent of Chile's hydrocarbons and supplies all the oil extracted to Chile's government oil company Enap and all the natural gas to Methanex, the huge methanol complex a few miles from Punta Arenas. Methanex is a world leader in production of methanol.

GeoPark Holdings Limited was founded in 2002 and has its headquarters in Hamilton, Bermuda.

Chile recently intensified its search for hydrocarbon resources to boost national earnings amid major financial challenges posed by a massive reconstruction program that began after the Feb. 27 earthquake.