SNAPSHOT: Camisea exploration development

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Tuesday, July 8, 2014

"Camisea resources, which have served as the base for development of the last 10 years in Peru, this time will reach markets in the south and permit sustained growth, which is the only viable manner to reduce poverty in our country," according to energy and mines minister Eleodoro Mayorga.

The official made the comment at the award of natural gas pipeline concession Gasoducto Sur Peruano (GSP), which will transport Camisea natural gas and NGLs.

Authorities expect GSP to drive power plant construction, such as the Nodo Energético del Sur thermoelectric project, natural gas distribution investment and petrochemical development.

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The latest milestone, however, has been accompanied by uncertainty over natural gas availability and offtake.

The need to certify new reserves is seen as paramount to further tap Camisea, which began production 10 years ago. Energy and mines ministry data pegs 2P natural gas reserves at block 88 at 12Tf3 (340Bm3) and 3.97Tf3 at block 56.

Information from state hydrocarbons promotion agency Perupetro highlights exploration projects in Camisea and surrounding areas.

Evaluation is underway of prospective resources at block 56 and there are plans to shoot 197km 2D and 298km2 3D seismic at block 88 where two wells are scheduled to be drilled.

The acquisition of 150km 2D seismic and two wells are in the pipeline for block 57 and a 362km2 3D seismic campaign is planned for block 58.

And at block 76, three prospects have been identified with one well due to be spudded.

The strategic importance of this energy asset to Peru is evident in natural gas production figures.

Camisea blocks 88 and 56 represented 83.5% of the 2.12Tf3 produced in 1994-2013, according to Perupetro. Beatriz Merino, president of Peru's hydrocarbons association SPH, has said the country now could not live without Camisea gas.

At the end of last year, there were 227 VNG stations and over 170,000 vehicles converted to CNG, and at end-March, more than 170,000 homes and businesses were using natural gas along with 485 industrial users. Camisea gas-fired power plants represent over 60% of offtakers.

Nevertheless, challenges exist such as increasing socio-environmental scrutiny and opposition from local communities and indigenous groups.

Stalled investment has been attributed to permitting and red tape. Hydrocarbons exploration and production investment in Peru totaled US$298mn in January-April compared to US$454mn in the year-ago period.

BNamericas will host its fourth LatAm Power Generation Summit in Santiago, Chile, on August 13-14. Click here to download the agenda.