Chilean oil prospects improve

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SANTIAGO, Chile, Nov. 18 (UPI) -- Chilean oil prospects have improved with a new find in the south as the country vies with other Latin American producers to secure a place in the non-OPEC oil producers' club.

Chile is a minor oil producer and its proven oil reserves until 2006 didn't exceed 150 million barrels of oil equivalent. The scenario is changing, however, with the government redoubling efforts to prospect for commercial quantities of oil and gas.

That endeavor is driven by strategic forecasts of rising oil and gas consumption as the economy bounces back after the 2008 downturn and the effects of an 8.8 magnitude earthquake in February.

Chile's need for energy security was accentuated by difficulties with Argentina over natural gas supplies and continued dependence on imports from Brazil and, more worryingly, distant suppliers Angola and Nigeria.

Recent rises in crude oil prices gave new impetus to government-led efforts to encourage the corporate sector to invest more into prospecting and refining.

Most of Chile's energy sector is privatized, with Empresa Nacional del Petroleo controlling the bulk of oil production and refining.

Officials said Chile could benefit from more investment going into developing its gas sector, with proven natural gas reserves of 3.5 trillion cubic feet.

GeoPark Holdings Ltd., one of the companies active in Chile, said this week it successfully drilled and tested a new well in the Fell block in the extreme south of Chile.

The well produced about 1,578 barrels per day of oil, already put on the market.

The company has a 100 percent working interest in the block and successfully drilled and tested another well on the Fell Block in September.

GeoPark Chief Executive Officer James F. Park said the company was "pleased with continuing strong results from our drilling program on the Fell Block in Chile -- and with our team's demonstrated reliability in both discovering new fields and rehabilitating abandoned fields."

He said 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 supplies one-third of hydrocarbons produced in Chile. It channels its oil output to ENAP and natural gas production to Methanex, a major producer of methanol at Cabo Negro, near Punta Arenas.

The strategically situated Methanex plant enables the company to ship methanol by tanker to all its major markets in Asia, South and North America, Europe and South Africa.

Chile hopes it can develop its oil industry to a level that will enable it to become self-sufficient and eventually become an oil exporter.