Camisea Partners Start Drilling 6/5/2006
8.7 trillion OGJ (1/1/06)
Stranded gas off Peru
Annex I: Peru LNG specifics
Annex II: Peru LNG plant location - Pampa Melchorita
Repsol YPF Participate in Camisea Project
and Peru LNG 6/2/2005
CNPC the second largest oil producer in Peru
Reviving Peru O&GJ April 4, 2005
Gas produced from the Greater Camisea fields 2005
Peru mineral manufactured goods exports 2005
|Exploration and Production Camisea 11 Tcf||Peru
LNG Holds Official Signing and Site
Dedication with President Toledo 2006
|Peru LNG Holds
Official Signing and Site Dedication with President Toledo
Peru LNG January 12, 2006
Peru LNG, a partnership between Hunt Oil Company, SK Corporation and Repsol YPF announced that a ceremony was held today at Pampa Melchorita with special guests President Alejandro Toledo of Peru; Ray L. Hunt, CEO of Hunt Oil Company, Jeong Joon Yu, Senior Vice President of SK Corporation, and Antonio Brufau, CEO of Repsol YPF, for the purpose of dedicating the Liquefied Natural Gas Plant construction site and signing the official Investment Agreement between the Peru LNG partnership and the Government of Peru.
Participating in the ceremony at Km169 on the South Pan-American Highway along with the partnership representatives and President Toledo was Peru's Minister of Energy and Mines, Engineer Glodomiro Sanchez.
"This project represents for Peru an approximate investment of US$2.5 billion and additional revenues for the government of over US$200 million per year in royalties and taxes", said Alejandro Toledo, Constitutional President of Peru.
Ray L. Hunt, CEO of Hunt Oil Company, said, "Today is a day for national celebration as what has brought us all together on this site at this time is the beginning of a new era in the prosperity of the Republic of Peru -- an era that will benefit every citizen of this great country and help establish the Republic of Peru as a stable and responsible leader in the family of nations which constitute Latin America."
"For Repsol YPF, its commitment to this interesting project represents a significant step forward in achieving its expectations of growing in the Upstream business and increasing its participation in LNG businesses", said Antonio Brufau, CEO of Repsol YPF.
"SK Corporation, together with other project partners, will make utmost efforts to bring out the success of oil & gas development and LNG projects in Peru, and do our best to work more closely with Peruvian government to strengthen the energy and economic cooperation between Peru and Korea", said Jeong Joon Yu, CEO of SK E&P Co. and Senior Vice President of SK Corporation.
"Peru has been blessed in terms of having a political system which is very much aware of its responsibilities to the people of Peru both today, and for many generations to come. The result of the stability and foresight that is represented by the Government of Peru is why we have gathered here today to dedicate the site and sign this most important Investment Agreement", said Mr. Hunt.
"Peru has always demonstrated compliance with the rules of the game and legal stability, which has allowed this ongoing economic growth", said Carlos del Solar, Director of PLNG and President and General Manager of Hunt Oil Company, Peru.
Ready for scheduling, ECI has Economizer conversion systems ready for Peru, Brazil and UK. Peru will be the first locomotive to operate with a Economizer system while both UK and Brazil expect to operate Cummins KTA 50 generator sets.
reserves of 8.7 trillion OGJ (1/1/06)
Peru wants to increasingly use natural gas to satisfy the country’s energy needs. According to OGJ (1/1/06), Peru has proven natural gas reserves of 8.7 trillion cubic feet (Tcf), the fifth-largest amount in South America. However, Peru’s Deputy Minister of Mines and Energy has indicated that once seismic work is complete on Block 56, Peru’s proven reserves could increase to 15 -16 Tcf. In 2003, the country produced and consumed 19.8 billion cubic feet (Bcf) of natural gas, a 21 percent increase from the previous year. In coming years, Peru will likely become a net exporter of natural gas as the Camisea project comes fully on-stream (see below). Besides Camisea, the largest concentrations of Peru's natural gas production include the Aguaytia gas field (Maple Gas) in central Peru, Block X (Petrobras) in the northwest region, and Block Z-2B (Petro-Tech) located off the northwest coast. To help mitigate Peru’s high oil import bill, the Peruvian government is looking to implement a plan that will stimulate natural gas consumption in the country. The plan targets public and private transportation, by converting vehicles to run on natural gas.
In September 2005, Ecuador’s Ministry of Energy signed a Memorandum of Understanding (MoU) with BPZ Energy in which Peru could export up to 1.1 Tcf of natural gas to Ecuador over a 15-year period. Exports of the natural gas could reach Ecuador as early as October 2006. In 2004, BPZ Energy announced that it had reached agreements to send natural gas from its offshore Block Z-1 to power plants in Peru and southern Ecuador. The project would initially supply 74 Mmcf/d of natural gas to three electricity generators in Arenilla, Ecuador, with an eventual extension to Guayaquil. BPZ also planned to construct a gas-fired power plant in Peru that would source gas from the Block Z-1 fields. Analysts estimate that Block Z-1 contains 130 Bcf of proven reserves and at least 3 Tcf of total possible reserves.Downstream Developments
In November 2005, talks over building a pipeline linking the Camisea project in Peru with northern Chile stalled over a maritime border dispute between the two countries. If talks continue, the project could present an alternative to the aforementioned LNG trading scheme between the two countries. Currently, Chile sources most of its natural gas imports from Argentina , but gas shortages in Argentina have caused several supply disruptions in recent years. The project would depend upon the availability of surplus gas from Camisea, which has already contracted large volumes of future production to domestic needs and LNG export plans. Camisea's operators, though, have stated that there will be enough excess supply for both an LNG terminal and an export pipeline.
Production Camisea 11 Tcf
The Camisea project consists of several natural gas fields located in the Ucayali basin of southeastern Peru, principally in Block 88 along the Camisea River. Analysts estimated that Block 88 contains 11 Tcf of proven plus probable natural gas reserves and 482 million barrels of associated natural gas liquids (NGLs). An international consortium led by Hunt Oil has developed the upstream portion of Camisea, with production beginning in August 2004. The initial production capacity at Camisea was 450 million cubic feet per day (Mmcf/d) of natural gas and 34,000 bbl/d of NGL. However, output capacity is expected to increase once drilling begins (May 2006) on Camisea’s Block 56, adjacent to Block 88. Transportadora de Gas del Peru (TGP), a consortium led by Techint, constructed and now operates parallel natural gas and NGL pipelines that carry Camisea production to Lima and to a fractionation plant in Paracas. In March 2006, the Camisea pipeline ruptured for the fifth time since start-up in August 2004. The latest rupture occurred a week after E-Tech International issued a report warning of additional leaks and spills due to quality construction issues of the pipeline. A Peruvian regulatory committee fined TGP $915,000 for the previous four spills.
The Camisea project provides natural gas for domestic consumption; however, natural gas production from the Camisea project will eventually exceed domestic demand, so project sponsors would like to export any excess production. Hunt Oil leads the Peru LNG consortium, which broke ground in January 2006 on a liquefied natural gas (LNG) export terminal at Pampa Melchorita, 105 miles south of Lima. The Peru LNG facility will have an operating capacity of 4.2 million tons per year, with most of the production destined for the Western United States and Mexico. Peru LNG plans to build a pipeline to feed natural gas from existing natural gas pipelines to the LNG export terminal. Construction of the pipeline is expected to start in the latter half of 2006 and to be completed as early as 2008, with first exports leaving the terminal in 2009. Peru LNG has also held discussions with ENAP, Chile's state-owned oil company, about exporting LNG to that country. Even though the countries share a land border, trading natural gas via LNG could be more cost-effective than the construction of a natural gas pipeline. Both countries already have plans to build the necessary LNG infrastructure.
Besides the Peru LNG project, there have been talks about a potential LNG partnership with Bolivia. That country has the second-largest natural gas reserves in Latin America, but it lacks the coastal access necessary to pursue LNG exports. One proposal under consideration would connect the Margarita gas fields in southern Bolivia to the Peruvian port of Ilo. However, the economic and political feasibility of this proposal is in doubt, and there are no concrete plans to date. For more information on the natural gas sector in Bolivia, please see the Bolivia Country Analysis Brief.
|Gas produced from the
Camisea fields 2005
HOUSTON, Mar. 3 2005
Peru LNG SRL—owned by Hunt Oil Co., Dallas, and SK Corp. of South Korea—has signed agreements to purchase 620 MMcfd of natural gas over 18 years from the Greater Camisea fields consortium in Peru.
Peru LNG will use the gas in a planned $1 billion liquefaction plant it will build at Pampa Melchorita near Cañete, 169 km south of Lima on Peru's Pacific coast. The LNG plant will have an initial capacity of 4.4 million tonnes/year. Land for the plant has been purchased, Hunt said.
Gas produced from the Greater Camisea fields, primarily from Block 56, will be liquefied and shipped to regasification facilities to be built by LNG purchasers, including Belgium's Tractebel Electricity & Gas International, which would regasify it in Mexico (OGJ Online, Oct. 2, 2003). Peru LNG, currently in advanced negotiations with potential buyers, said it anticipates timely decisions.
Peru LNG will spend $800 million for additional wells, pipelines, and other facilities associated with the project. Discussions are under way with Transportadora de Gas del Peru for pipeline transportation from the upstream license holders to the LNG plant.
The Greater Camisea license holders are Pluspetrol Peru SA, Hunt Oil Co. of Peru, SK Corp., Sonatrach Peru Corp. SAC, and Tecpetrol del Peru SAC.
|Pagoreni Field 3tcf
Camisea Partners Start Drilling 6/5/2006
Argentine oil company Pluspetrol has started drilling works on the first of six wells on the Pagoreni field on Peru's block 56, Peruvian media reported. Pagoreni is known as Camisea 2 and its developers are the same for Camisea: Pluspetrol owns 26%, US company Hunt Oil holds 36%, Argentina's Tecpetrol and Algeria's Sonatrach each have 10% and South Korea's SK Corporation has 18%.
The consortium has completed 363 sq km of 3D seismic in the first stage of development, which concludes in September, newspaper Gestion reported. The consortium plans to invest some US$700mn in the subsequent stages, Pluspetrol CEO Norberto Benito reportedly said. Eventual production - expected at levels of 600 million cubic feet of gas a day - would be directed to the Malvinas gas processing plant and from there to an liquefied natural gas (LNG) liquefaction plant for export to North America.
The Pangoreni field reportedly has 3 trillion cubic feet of gas reserves.
|Peru Puts First
CNG-Powered Locomotive into Service
17 June 2005
Reuters. Peru’s Ferrocarril Central Andino (FCCA) officially unveiled what it calls the world’s first CNG-powered train on Thursday. The cargo and passenger train, which runs along the world’s highest railway at 16,076 feet (4,900 meters) above sea level in Peru’s central Andes, will switch from diesel to run on two CNG engines designed by General Electric.
Ferrocarril Central Andino, 82% owned by Peruvian capital and 18% owned by US-based Railroad Development Corp. (RDC), has operated the line between Lima and the central Huancayo region since 1999. The company says it plans to convert all eight engines in its fleet to CNG from diesel in the next seven months.
The engines, which had been under test for some time and as described in Latin Tracks in 2004 are dual-fuel capable, with diesel as a backup for certain sections when the trains are working upgrade. A slug unit will carry the CNG tanks.
According to the EIA, Peru has proven natural gas reserves of 8.7 trillion cubic feet (Tcf), the fourth-largest amount in South America. The giant Camisea gasfield started production in August 2004, and Peru hopes to become a net energy exporter with gas sales to mexico form 2009.
On June 18, Peru's Vice-President David Waisman visited Ferrocarril Central Andino, to launch its first diesel loco converted to operate on compressed natural gas. Unveiling two new 3 900 hp GE locos at the same event, FCAPresident Juan de Dios Olaechea said the railway's entire loco fleet would be converted to CNG within six months.
|Repsol YPF to
Camisea Project and Peru LNG 6/2/2005
Repsol YPF 6/2/2005
Repsol YPF has signed a Memorandum Of Understanding with the North American petroleum company Hunt Oil regarding Repsol YPF's future participation in Peru LNG and Camisea. The specifics of the operation are subject to due diligence.
Hunt Oil and SK Corporation currently own the Peru LNG project. The new agreement brings Repsol YPF into the project as a third participant. Peru LNG will build, own and operate a liquefaction facility at Pampa Melchorita (Peru). That plant is expected to be operational in 2009 and will produce 4.0 mmtpa of LNG for delivery to the west coast of North and Central America.
The Camisea fields will supply the natural gas for Peru LNG from block 88 and block 56 in central Peru. The Memorandum Of Understanding also contemplates Repsol YPF taking a stake in Transportadora de Gas del Peru SA (TGP), the company that delivers natural gas and natural gas liquids from the Camisea area via a trans-Andean pipeline.
This operation builds upon the lines of activity outlined in Repsol YPF's 2005-2009 Strategic Plan, and which contemplates growth in upstream and increasing the company's presence in those area and businesses where there are high levels of profitability, such as the integrated LNG businesses in the Pacific Basin.
Repsol YPF's Strategic Plan also contemplates the company increasing its commitment with respect to the assets related to the production of natural gas, especially LNG, in the integrated projects of Gassi Touil (Algeria), Persian LNG (Iran), and the Caribbean (Venezuela and Trinidad & Tobago). Repsol YPF will take advantage of business opportunities and economies of scale resulting from the Gas Natural SDG joint venture, which will become the third largest LNG operator in the world, and will generate for Repsol YPF 10 million dollars per year in cost savings.
Annex I: Peru LNG specifics
The Peru LNG Project has already signed agreements to purchase 620 MMCFD of gas from the consortium of companies that constitute the upstream license holders in the Greater Camisea area of Peru. The term of purchase agreements, which begin upon completion of the construction of the liquefaction plant in Peru, is for 18 years.
Once the natural gas produced from the Greater Camisea fields (to be supplied primarily from Block 56) is converted into LNG, the LNG will be exported by ship to re-gasification facilities to be built by purchasers of Peru's LNG. Peru LNG is in advanced stages of negotiations with a number of potential purchasers and anticipates that final decisions associated with these negotiations will be made in the near future.
The project requires a plant and related marine facilities to export the LNG. Some of the major components of the plant include: A unit for the reception and processing of natural gas; Tanks to store the LNG; Port facilities to load the LNG onto ships, including associated piping and a breakwater to create an area of calm water suitable for marine loading operations; Administrative facilities, maintenance shops and warehouses; Housing facilities for workers and associated sewage treatment.
Plant operation will involve the following: Natural gas will arrive at the plant through a branch pipeline from the Camisea-Lima gas pipeline; The natural gas will be converted into liquefied natural gas by cooling it to a temperature of minus 163 ° Celsius; The liquefied natural gas (LNG) will be stored in tanks until loaded onto LNG transport vessels and shipped by sea approximately every 5 days; Maintenance of the plant and associated port facilities will be carried out on a continual basis; The plant will be operated by trained personnel in accordance with applicable regulations and standards to minimize risks to personnel, the public, and the environment. The plant is projected to operate for a minimum of 20 years.
The plant will be self sufficient for its water and electricity requirements. Natural gas powered turbine generators will provide electric power and a seawater desalination plant will provide process and potable water. During the first year of construction, while the desalination plant is being built, water from the lower reaches of the Cañete River will be used to control dust that could be generated during ground preparation. Bottled water will be used for drinking. All liquid or solid waste generated will be adequately treated prior to final disposal. Additionally, fire fighting, flare and venting systems will provide the necessary safety protection in case of a plant upset or emergency during start-up and operation.
Per LNG has completed comprehensive studies of the physical, biological and social aspects in and around the area of the proposed LNG facility. Peruvian residents provided comments on the EIA through Peru's Ministry of Energy and Mines' public consultation and hearing process.
Annex II: Peru LNG plant location - Pampa Melchorita
Located in a remote area of Peru, Camisea contains approximately 13 TCF of gas with significant associated liquids. The consortium has been awarded the contract to construct and operate the transportation system (i. e. the downstream portion of the project) to move Camisea gas and associated liquids to market. This includes the construction of a 700 km gas pipeline from the Camisea fields to the city of Lima and a 575 km liquids export line.
As far as the liquefaction terminal, the site originally selected was Pampa Clarita, located 154 kilometers south of Lima. Detailed engineering studies revealed that the site offered the most technically favorable conditions. However, results from an archeological study revealed an important cultural development: An archaeological site evaluation led to the discovery of the mummified remains of a two-year old boy that had lain under Pampa Clarita for an estimated 500 years. In an effort to avoid disruption of the area's rich cultural heritage, the decision was made to discard Pampa Clarita as a possible site.
|CNPC the second
largest oil producer in Peru after Pluspetrol
CNPC entered Peru in the early 1990s with development contracts for Blocks 6 and 7 in Talala oil field. In January 2004, CNPC acquired part of the Argentine company Pluspetrol’s shares in Peruvian oil fields in Blocks 8 and 1 A/B. This has made CNPC the second largest oil producer in Peru after Pluspetrol
|Stranded gas off
Peru to be developed
Oil & Gas Journal, February 7, 2005
BPZ Energy Inc., Houston, signed a third agreement to sell natural gas from currently idle gas and condensate fields off Peru to electric power generating concerns in Ecuador and Peru.
The three-phase project will require construction of a total of 140 miles of pipeline, refurbishment of existing production facilities in Corvina and Piedra Redonda fields on Block Z-1, in which it holds 100% interest, and the drilling of additional wells (OGJ Online, Jan. 5, 2005).
First phase gas sales, to be delivered in first half 2006 through a proposed 10-mile pipeline from Corvina field, will support BPZ's integrated electric power project at Caleta Cruz, Peru (see map, OGJ, Jan. 24, 2005, p. 38).
Under a recent Phase II sales agreement, BPZ would sell a peak 27 MMcfd of gas to Ecuadorian state-owned Electroguayas SA to feed a 96-Mw turbine being built at Arenillas, Ecuador, 8 miles east of the Peru border and 40 miles northeast of Corvina field. A 40-mile pipeline is planned.
In the third phase, BPZ would construct a line to deliver gas another 90 miles further north from Arenillas to Guayaquil, Ecuador.
|Reviving Peru Oil
& Gas Journal, April 4, 2005
Pres. Toledo’s approval rating may indeed be in the single digits, but it has to be said that Peru has not changed its energy policy since the privatization of Petroperu and the passage of the hydrocarbon law of 1993.
Furthermore, in the past few years the government has made a genuine effort to improve the terms and conditions offered to oil companies and provide incentives to investment. These include alternative methods for calculating royalties, free sharing of technical information, reimbursement of sales taxes incurred during the exploration period, accelerated bidding procedures, etc. The result has been a noticeable revival of interest in upstream activities.
The arrival of Camisea gas to Lima in August 2004 was a historic event for Peru because, if anything else, changing governments did not waiver on policy and showed that Peru can attract large, long-term investment in the face of sharp opposition from various interest groups.
There is nothing in the current political discourse in Peru, or prevailing political conditions, that would lead one to fear the real possibility of policy changes adversely affecting the oil and gas industry in Peru. That is a welcome sign.
consortium partners led by Hunt Oil Co
Oil & Gas Journal, September 13, 2004
Peru awarded a license contract Sept. 7 for exploration on Block 56 in Peru's Amazon rainforest to Peru LNG consortium partners led by Hunt Oil Co. and including Pluspetrol Peru Corp. SA, SK Corp., Sonatrach, and Tecpetrol del Peru SAC. Block 56, adjacent the Camisea natural gas megacomplex, holds reserves estimated at 3 tcf of natural gas from Pagoreni and Mipaya fields (OGJ Online, June 16, 2004). Gas from Block 56 would be exported as LNG to Mexico and the US by 2008 from a proposed $2.25 billion liquefaction plant south of Lima that the group plans to begin building July 1, 2005 (OGJ Online, June 16, 2004).
|BPZ Energy to
develop gas finds off Peru
Oil & Gas Journal, January 17, 2005
A newly public Houston independent plans to develop gas discoveries on the Pacific shelf just off northwestern Peru for power generation onshore.
BPZ Energy Inc., Houston, acquired full interest in Block Z-1 near the marine boundary with Ecuador and plans to develop nearly 1 tcf of proved and probable reserves in the Corvina and Piedra Redonda gas and condensate discoveries.
Gas from the existing Corvina platform, to be refurbished, would flow through a 10-mile pipeline to supply a 140-Mw electric power plant to be built at Caleta La Cruz, Peru. Eventually, BPZ hopes to ship gas to Guayaquil, Ecuador, 90 miles north.