SPE-169469-MS

Strategy for the Development of Shale Gas in Peruvian Fields

J. W. Porlles, Universidad Nacional de Ingeniería

Copyright 2014, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Latin American and Caribbean Petroleum Engineering Conference held in Maracaibo, Venezuela, 21–23 May2014.

This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contentsof the paper have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material does not necessarily reflectany position of the Society of Petroleum Engineers, its officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the writtenconsent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations maynot be copied. The abstract must contain conspicuous acknowledgment of SPE copyright.

Abstract

Currently, few shale gas fields have been discovered in Peru. These fields require technical and economicstrategies for optimal development. The main aim of this paper is to show the location of sedimentarybasins and stratigraphic columns of the main basins, where we can see the source rocks, which are likelyto be candidates for exploration for shale gas and shale oil. On the basis of a comprehensive analysis, itwill show different fields and their possible development techniques.

IntroductionThe accelerated development of unconventional gas from shale is causing a stir in the international oilmarket. The technological advances of recent years have enabled the production of shale gas (mainly U.S.)to grow, causing a drastic reduction in the price of natural gas (NG) worldwide. In addition, internationalstudies there are not information relating to Peru, and this is a country with a high potential for shale gasand shale oil, since it has facilities and logistics to perform and respecting the environment due to thoseplaces are located in highly sensitive areas.

GeologyFrom the geological point of view, Peru has 18 sedimentary basins with oil and gas explorationpossibilities. All these basins are related to the processes of plate tectonics and the lifting of the PeruvianAndes.

Eight of the 18 basins are wholly or partially located offshore, they are: Tumbes-Progreso, Talara,Sechura, Salaverry, Trujillo, Lima, Pisco and Mollendo. The remaining 10 are in the mainland (onshore):Lancones, Moquegua, Santiago, Bagua, Huallaga, Jan, Titicaca, Marañón, Ucayali and Madre de Dios.

Tumbes-Progreso and Talara Basin, since the last century has had commercial production of oil,particularly in the Talara Basin has been intensively exploited and has accumulated a production of about1 500 million barrels of oil. The other basins located in the continental shelf only been explored by seismicsurveys and the drilling of some wells. In the Basin, located on the eastern slope of the Andes and theAmazon Region, should highlight important discoveries. In the North Forest in the Marañon Basin,production has been accumulated to date from about 900 million barrels of oil. In the Central forest,Ucayali Basin, Maquía fields and Agua Caliente have accumulated 22 million barrels, and Aguaytía

producing non-associated gas has accumulated 4 million of liquids of Natural Gas. In the Southern Forestin the 80’s Camisea fields with proven reserves of about 8 trillion cubic feet and 600 million barrels ofliquids were discovered. (Fuente Ministerio de Energía y Minas). FIGURA 1.

Despite all exploratory work done and discovered hydrocarbons remain Sedimentary basins that havenot been sufficiently explored, those with likely to contain hydrocarbons so, there are still opportunitiesfor new discoveries in commercial quantities. According JPT (Journal of petroleum technology) of SPE(Society of petroleum engineer), shale basins in this part of South America are: Ucayali Basin, Madre deDios and Marañon (Figure 2). Further shows that Peru has not posted the unconventional hydrocarbonreserves, as Table 1.

The above table shows that in Peru is not prohibited fracturing and this is true because many hydraulicfracturing running on the Talara basin, but the regulatory framework is needed for hydraulic fracturing inshale gas and shale oil. Unfortunately exploration in Peru has not been enough, and this is the amount ofelectric logs that have been taken, which shows that there are too many unexplored areas, as shown inFIGURE 3 below (Source TGS).

We will describe the major sedimentary basins with potential for shale gas and shale oil:

FIGURA 1—(Source MEM)

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UCAYALI BASINThe Ucayali Basin has multiple source rocks in the Mesozoic and Paleozoic sequences. Commercialhydrocarbon production and most wildcats with shows point to their presence. The Triassic/JurassicPucara Group is a bituminous carbonate with interbedded organic rich shale sections considered theprincipal source rock for the oil and gas in the southern Maranñon and northern Ucayali Basins (Maquia,Aguaytia and tests). The Late Permian Ene Formation is the source of the oil in the Agua Caliente Fieldand the oil tested in well La Colpa 1X. Excellent quality source rocks have been found within the Ene inthe Ene Basin. The Ambo/Tarma -Copacabana Formations have marine shales and carbonates in thesouthern portion of the basin. Ambo has sourced the giant gas/condensate fields of Camisea.

Maple Energy completed the drilling and testing of the Santa Rosa 1X Well and found unconventionalgas in the Devonian Shale in Block 31-E. (Source Business Financial Newswire). Maple tested the TarmaGreen Sands from 12, 594 feet to 12, 705 feet and from 12, 725 to 12, 780 feet of depth and the DevonianShale from 12, 825 to 13, 044 feet and from 13, 051 to 13, 077 feet of depth for potential gas production.While the Tarma Green Sands did not flow any gas, the underlying Devonian Shale had gas shows whiletesting the well. (FIGURE 4).

FIGURA 2—(Source SPE)

Table 2—(Source SPE)

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The Devonian Shale formation in Block 31-E issignificant in terms of both potential thickness andgeographic size, but significant additional work isrequired to determine if this shale gas opportunitycan be developed to produce gas in commercialquantities. Further evaluation of this shale gas op-portunity will be undertaken before committing tospend additional expenditures for the appraisal ofthis potential shale gas field, and the company willtemporarily plug the well (FIGURE 5).

Figure 6, the oil-generating rocks Cabanillas sys-tem in the Ucayali basin is decribed by Suhas Ta-lukdar, PARCEP, in 2002.

TALARA BASINTalara Basin province is located on the continentalshelf along the northern coast of Peru (FIGURE 7).Its eastern limit is delineated by the La Brea–Amotape Mountains of the Coastal Range, and theassociated uplift that separates the basin from theLancones and Sechura Basins. The southeastboundary is east of the La Casita fault and the PaitaHigh uplift, between the Talara and Secura Basins;the south boundary is the Trujillo Basin. The westboundary of the province is the approximate loca-tion of the Nazca Plate subduction zone under the

South American Plate. Effective generation cookers have been checked particularly for generatorsintervals Mesozoic and Terciado and assume that several sections have been overripe samples very nearintrusive bodies of the Coastal Batholith outcrop, may find optimal maturity away thereof, to the sea.

DRILLING AND FRACTURINGTo develop shale gas and shale oil are there are the following technology, which is being used worldwideand has been tested successfully: Horizontal drilling and fracking (hydraulic fracturing).

Horizontal drilling allows to reach the area where shale gas is located, but even this form of drillingis better because the area is environmentally sensitive.

The hydraulic fracture takes place smoothly on the north coast having all logistics for sending.However in the jungle do not have the logistics to perform, why should make a program to carryequipment to the jungle.

FACILITIESUcayali basin has the facilities of the Camisea project where a processing plant where the oil is transferredto where Pisco fractionation plant (liquid ) and Lurin ( C1 and C2). In addition, there is a liquefaction plantfor export (Melchorita Plant). Figure 8. Moreover, Maple in Pucallpa currently is producing at Block 31,which has a refinery in Pucallpa city.

Talara basin gas production takes Pariñas Gas Plant by GMP, which has a natural gas processing plantlocated 7 kilometers north of the city of Talara, Piura. As a result of processing, they obtain dry naturalgas, which is distributed to the Malacas Power Generation Plant and the Talara Refinery. Also, they

FIGURA 3—(Source TGS)

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fractionate gas liquids and obtain LPG, Natural Gas Condensates, finally they can obtain pentane, hexaneand other special solvents.

REGULATORY FRAMEWORKBeing a sensitive area, Peruvian state regulates activities that make companies want to explore and drill.Peru has not developed the regulatory framework for the exploration and production of shale gas and shaleoil, therefore must be developed the regulatory framework to minimize adverse environmental and socialimpact. It should also promote the responsible development of resources for the benefit of the local andnational economy, it must be fully integrated into the energy and security policy.

Regulatory framework to hydrocarbon sector, Hydrocarbons Law No. 26221, which is governed by thefollowing previous regulations:

- Regulations for the Implementation of the Royalty and Compensation on Oil Contracts DS No.049-93 and DS -EM -EM 017-2003.- Regulation of Tax Stability Warranty and Tax Rules LOH DS N 032 -95- EF.- Regulation of Oil Companies Rated DS No. 030-2004 -EM.

FIGURA 4—

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- Law on the Right to Prior Indigenous Peoples Law No. 29785 and DS -MC 001-2012 Consultation.- Rules of Participation for conducting activities Hydrocarbon DS N ° 012-2008 –EM- Guidelines for Citizen Participation in Hydrocarbon Activities.- Supreme Decree governing the Exploration - Exploitation and Environmental Protection in Hydro-carbon DS 032-2002 -EM and DS 015-2006 -E.

FIGURA 5—

FIGURA 6—

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FIGURA 7—

FIGURA 8—

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Results and Conclusions

1. Explorations results was shown on the Ucayali basin, demonstrating the potential for shale gas inPeru, due to the discover in the Devonian Formation in Santa Rosa 1X well.

2. Eight of the 18 basins are wholly or partially located offshore, they are: Tumbes-Progreso, Talara,Sechura, Salaverry, Trujillo, Lima, Pisco and Mollendo. The remaining 10 are in the mainland(onshore): Lancones, Moquegua, Santiago, Bagua, Huallaga, Jan, Titicaca, Marañón, Ucayali andMadre de Dios.

3. It was shown that Ucayali and Talara basins are potential for shale gas and shale oil. the sourcerocks were shown for proper prospecting and exploration, showing source rocks, reservoirpotential for shale gas and shale oil.

4. Further studies should be performed in the áreas of geology, geophysics, geochemistry andreservoir to understand the development of shale gas and shale oil in Peru.

Reference1 Minaya, I. “MODELADO DE LOS SISTEMAS PETROLEROS EN LAS CUENCAS SUB-

ANDINAS DEL PERÚ” UNI-Peru.2 Martinez, E. “UCAYALI/ENE BASIN, PERU, HYDROCARBON EVALUATION PERU-

PETRO S.A./PARSEP” PERUPETRO.3 Higley, D. “The Talara Basin Province of Northwestern Peru: Cretaceous-Tertiary Total Petro-

leum System” USGS.4 Jannine Delgado - Presentación Perú Escenario Actual5 Suhas Talukdar, PARCEP, Dec.20026 Informe quincenal de la SNMPE- Perú.7 Suhas Talukdar, PARCEP, Dec.2002.

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