Fracking has Come to Chile

Last week, state oil company ENAP announced a successful frack at its Arenal block in Tierra del Fuego. Reportedly the first such campaign in the country.

The results appear decent. The fracked well is reportedly flowing 120,000 cubic metres per day. Or about 4.2 million cubic feet daily. Along with an undisclosed amount of condensate.

Particularly encouraging is that the frack was performed on a vertical well. Results with horizontal drilling technology could be even better.

Being a first-of-kind program, the well was almost certainly expensive (ENAP didn't disclose the cost). But given Chile's advanced industrial sector, this might be the kind of place where a productive and affordable oilfield services sector could be developed.

Creating a workable services industry is the single biggest obstacle to shale development outside North America. And it appears Chile is committed to becoming a leader in this area.

ENAP has said it will spend $100 million on unconventional exploration this year. Its highest spending level in 15 years.

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The firm has also made the heads-up move of partnering with "foreign technology providers". Undoubtedly ones with U.S. experience. There's no substitute for learning from the pioneers.

This is going to be a spot to watch. If the Chileans are successful, the country could well become a "centre of excellence" for South American unconventional development.

This would be a big boost for shale gas (and oil) on the continent.

Here's to new fracks in new lands,

Dave Forest