Echo is pursuing a high value piped onshore gas strategy to exploit multi Tcf exploration potential in proven basins across LatAm.


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Overview

Latin America is an emerging world economy, which has undergone rapid economic growth over the last decade. Primary energy consumption has more than tripled in the last 40 years according to the BP Statistical Review of World Energy (2017).

Currently gas makes up 22% of the energy matrix, and is set for continued growth (BP Statistical Review of World Energy, 2017). Latin America looks to meet ever-growing energy demand, whilst focusing on clean energy, meaning the future is natural gas.

The need for reserve replacement is increasingly in the spotlight as key economies seek to reduce their reliance on external LNG imports and boost domestic production. Existing infrastructure across a gas hungry continent makes Latin America a region rich in opportunities within the upstream sector. 

LatAm Energy Consumption by Fuel Type (MMtoe)

BP Statistical Review of World Energy (2017)

 

A Proven Hydrocarbon Province

Latin American is well renowned for its natural resources. The continent is estimated to hold proven oil reserves of over 327 billion barrels and natural gas reserves in excess of 268 Tcf. Undiscovered conventional natural gas resources have been estimated to hold as much as 678 trillion cubic feet of natural gas. This highlights the scale of potential gas opportunities that Latin America has to offer.

Hydrocarbon exploration exists across the entirety of Latin America both onshore and offshore, where Echo's focus has been on proven onshore basins with existing infrastructure. These basins include the prolific Tarija and Austral basins, recognised as provinces that may hold significant potential for undiscovered natural gas reserves.

 

268.0 Tcf

Proven Gas Reserves

678.5 Tcf

Unproven Gas Resources (Mean)

327.9 Gbbl

Proven Oil Reserves

125.9 Gbbl

Unproven Oil Resources (Mean)

Proven data from BP Statistical Review of World Energy (2017); Unproven data from USGS (2012)

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Underutilised Infrastructure

The use of natural gas infrastructure in Latin America dates back to the 1950s/60s, and the beginning of cross-border natural gas trade. Since then, a cross-border gas network in excess of 10,000 km has been constructed with the ability to deliver over 1.92 Tcf per year to neighbouring countries. Whilst such transport exists, only 12.5% of this network is at full capacity. 

On top of this, 7 major LNG import terminals exist across the region with a total capacity of 33.5 billion cubic meters per year. Two further terminals currently under construction as efforts are made to try and satisfy an ever-increasing natural gas demand.

Source: Oxford Institute of Energy Studies (2016)

 

Cross-Border Pipelines

10,204 km

length

1.92 Tcf

per year capacity

 

LNG Import Terminals

7

operational

1.18 Tcf

per year

Source: Oxford Institute of Energy Studies (2016)

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A Gas Hungry Continent

Natural gas is the world's fastest growing hydrocarbon, and world consumption is estimated to increase by 43% from 2015 to 2040 (World Energy Outlook, 2017). Natural gas continues to be an attractive fuel for electric power generation due to its low capital costs, favourable heat rates, and relatively low fuel cost.

The exploration of natural gas in South America has been neglected in the past with focus primarily directed towards exploration for oil. The demand for natural gas has continued to grow significantly with consumption increasing by 26.9% in the last decade. Production has only seen an increase of 14.9% in the same period, providing an ever widening supply demand gap. By 2016 natural gas consumption across Latin America had reached in excess of 6.1 Tcf per year (BP Statistical Review of World Energy, 2017). 

Liquid Natural Gas (LNG) imports began in the late 2000's in order to satisfy increasing gas demand, and low domestic production. Imported volumes had reached in excess of 547.4 Bcf in 2016, with Argentina, Brazil and Chile all importing substantial volumes to fuel their energy demand (BP Statistical Review of World Energy, 2017). Furthermore, Bolivian exported gas has a lower price than LNG imports.

Natural Gas Demand South America

Source: BP Statistical Review of World Energy (2017)