Empresa Nacional del Petroleo said it struck gas on the Tierra del Fuego island after a series of exploratory operations carried out with its own expertise. No foreign participants were mentioned in ENAP's announcement.
ENAP has been reporting for three years on encouraging signs of a likely major gas discovery on the Tierra del Fuego island.
EANP said the gas find was "a successful experiment" with hydraulic fracturing to extract non-conventional tight gas at the Arenal Block in Tierra del Fuego, where the company operates with no partners.
It said the find was made in vertical exploration wells that had been drilled in late 2012 and early 2013. Special equipment was used to inject water, sand and chemicals to permeate the rock and facilitate the gas flow.
Although the preliminary flow could decline as the well stabilizes, ENAP said the result pointed to the discovery of a new non conventional gas deposit.
A 25-mile pipeline will channel the natural gas during the experimental stage to residents in Punta Arenas and Tierra del Fuego, the company said.
ENAP Chief Executive Officer Ricardo Cruzat said the gas find proved the company's "original hypothesis."
"We must wait for the results of the technical and commercial assessment which we will have once the wells are connected to the collector pipeline with output stabilized and quantification of productivity," Cruzat said.
That, he said, will determine the volume of recoverable gas.
The initial flows reached an average 393,600 cubic feet per day per well plus some extra volume of condensate gas.
ENAP is investing $100 million this year in the Magallanes region, he said.
He said the investment was "our highest in the last 15 years, but we must take these preliminary results with caution and continue with the two-year plan."
ENAP has been in talks with various fracking industry companies outside Chile to hasten the process of exploration and production of gas and condensates extracted through the processed.
ENAP's current natural-gas production supplies the southern city of Punta Arenas and its output is also sold to Canadian methanol producer Methanex Corp., the world's largest supplier of methanol.
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