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Chile’s ENAP to develop CBM project with Galilee Energy

World Coal,

The Magallanes Basin in southern Chile is set to witness the development of a coalbed methane (CBM) project, after Galilee Energy signed a memorandum of understanding (MOU) with Chile’s state-owned oil and gas company, Empresa Nactional del Petróleo (ENAP).

ENAP and Galilee Energy will develop the project in a region covering approximately 7200 km2 in the northwest are of the Magallanes Basin. The company’s will evaluate the potential for large-scale CBM production. Previous work has indicated the key objective to be the Eocene-Oligocene Loreto Formation, which contains 10 –20 m of coals at depths ranging from surface to over 120o m.

Galilee Energy has mooted the idea of developing CBM operations in South America for some time, and this deal represents the first step in the company building its exploration portfolio on the continent.

“We are excited to take the first step in building an exploration portfolio in South America in line with our previously announced company strategy. The Magallanes Basin CBM project provides Galilee with ground floor entry into an area with significant potential. We are very pleased to be aligned with ENAP who, as the largest Operator in the basin, brings a wealth of knowledge and experience,” managing director of Galilee Energy, Peter Lansom, said.

Galilee will operate the joint study with the initial CBM component to be completed in six months. The agreement provides that the two companies intend to apply for one or more exploration concessions (CEOPs) over the high-graded CBM areas with Galilee as operator, and ownership interests to be agreed.

Chile consistently rates as a very favourable destination for resource development due to its political stability, good fiscal terms for hydrocarbon production and strong economic climate.

Galilee has also commenced reviews of a number of other onshore basins in Chile to identify further areas for expansion and to build on the strategic position the company is establishing in the south. 

Written by Sam Dodson

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