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Uruguay eyes shale bonanza

The US Geological Survey claim huge shale gas resources discovered in Uruguay could transform the oil dependent nation

Potentially vast unconventional energy resources, including 13.3 trillion cubic feet (cf) of shale gas, claims the US Geological Survey (USGS), could transform import-dependent Uruguay’s energy future.

The country has no domestic oil or gas production and imports the 2.8 trillion cf of gas it consumes every year, according to Cedigaz. Imported oil meets 60% of Uruguay’s primary energy needs, but the country hopes to develop domestic gas, wind and biomass resources. It is also planning a liquefied natural gas import terminal.

But if Uruguay could develop even a fraction of the shale gas the USGS claims is recoverable, it could enhance the country’s energy security and significantly cut its import bills. The USGS released the figures after assessing potentially recoverable shale-gas and shale-oil resources in the Norte sub-basin, in the Uruguayan sector of the Paraná basin, which stretches across parts of Brazil, Uruguay, Paraguay and Argentina.

In its report, the USGS says the Norte sub-basin’s Devonian Cordobes formation alone could hold an estimated 508 million barrels of shale oil and 499 million barrels of natural gas liquids.

The tip of the iceberg?

The findings follow an April report from the US Energy Information Administration (EIA) claiming Uruguay could have 21 trillion cf of recoverable shale-gas resources. The EIA report came as state-owned Ancap announced the discovery of shale-oil deposits in the central province of Durazno. But Ancap president Raul Sendic was cautious, saying the find “could be nothing – or it could be the tip of the iceberg”.

The USGS echoed Sendic’s caution, saying the potentially huge resources in the Norte sub-basin are, at this stage, just estimates. Chris Schenk, one of the report’s lead authors, added that there was “colossal uncertainty” with the numbers and that the resource potential could, in fact, be zero.

But the government remains keen to encourage exploration of any potential oil or gas resources. In October 2009, Ancap signed a joint-venture deal with Schuepbach Energy to search for shale gas across a 10,000 square km area in the country’s north. At the time, the US company’s chief executive, Martin Schuepbach, described Uruguay’s shales as similar to Texas’ prolific Barnett Shale.

And in September this year, Ancap launched a second conventional licensing round, offering a total of 15 offshore blocks, spread across the Punta del Este, Pelotas and Oriental del Plata basins. The government said interest in the round has been high. Winners of blocks in the first round included a consortium of Brazil’s Petrobras, Argentina’s YPF and Portugal’s Galp.

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