“We have adopted the concept of responsible energy transition. It implies the coexistence, competition and complementarity of all forms of energy in the coming decades.affirmed the manager of Ancap’s Energy Transition, Santiago Ferro.
The exploration and production of oil and hydrocarbons, together with the production of green hydrogen, are the two lines of work that are carried out today in the Uruguayan offshore.
Why is it still looking for hydrocarbons in Uruguay?
Ferro said in the first place that the world will continue to need hydrocarbons for several more decades. And secondly, he highlighted the geological similarities that it presents Uruguay regarding Namibiathe African country where there were recently two major hydrocarbon discoveries.
“150 million years ago we were the same geographical place. Given the same origin of the offshore basins of Namibia than those of Uruguay, there are many analogies. Even in certain parts of the basins in Uruguay there is greater potential, Because there is a greater thickness of sediments, then there is a greater potential for the generation of natural gas, which in turn is a better fuel for various elements of the energy transition. This can also be something positive,” Ferro said at a conference organized by Ancap and the Regional Association of Oil and Natural Gas Companies in Latin America and the Caribbean (Arpel).
What contracts are in force or about to be signed?
Today the company has a contract Challenger Energy Group (former Bahamas Petroleum) in block 1 of the offshore. And there are contracts from five other areas already awarded that will soon be sent to the Executive Power, so that after approval, they can be signed with the companies.
The company Shell has been awarded blocks 2, 4 and 7, Argentina YPF block 5, and APA Corporation block 6. These blocks have a committed nominal investment of about US$ 125 million. This investment is at the cost and risk of private oil companies.
The current open round system allows oil companies to present themselves to qualify and bid at any time of the year. In this way, two stages are carried out per year, with the opening of offers in May and November.
What jobs will the oil companies do?
Ferro explained that most of the exploratory work that the oil companies are going to do is “desktop.” That is, interpretation of data reprocessing, and not so much activities at sea. In any case, there will be 3D seismic (2,500 square kilometers), and also the drilling of an exploratory well to which APA Corporation committed in block 6.
According to the executive, if in the future there were to be production from a discovery, “the requirements also point to sustainability.”
“In the contracts neither the venting nor the burning of natural gas is allowed. Therefore, the carbon intensity of the barrels that could potentially be produced here in Uruguay would be quite close to the lower values, 7 kilos, 9 kilos of CO2 per barrel produced. From that standpoint, they would be barrels with less carbon intensity than other destinations,” he stated.
offshore wind farms
The H2U Offshore program aims to produce green hydrogen or derivatives for export, from wind farms installed in the sea. In this way, the public company seeks to promote a long-term program to attract private investment from large international companies through different incentives, and without risk to the State.
Initially, it had been thought that a first offshore block could be tendered (there are 10) last year. Ancap already has everything ready from a technical point of view to move forward, but there are still regulatory aspects that depend on the Executive Power, according to what it learned The Observer. The international call could materialize in the course of this year.
Ferro highlighted that one of the “paradigms” of this project is the “flexibility of development”. “We are talking about hydrogen or derivatives, about the possibility of generating energy in the sea, but producing hydrogen on land or it can all be focused on the sea. This flexibility is precisely one of the strengths of the project and it is one of the things that developers are most interested in, ”he pointed out.
“The window of opportunity”
The defined areas have a potential of 3 GW of energy production. As an example, the executive mentioned that if it is taken into account that the installed capacity of all of Uruguay is close to 5 GW, in only two of these blocks the generation capacity would be equivalent to that of the entire country. And the hydrogen production capacity is equal to 200,000 tons per year.
Uruguay will offer the blocks at sea free of charge and will place requirements for compliance with work plans and environmental regulations. The contract model that will be proposed in the international calls will include different stages of investigation and analysis, so that the energy companies carry out feasibility studies and can evaluate the potential of the areas.
These evaluation periods can be extended between 2 and 10 years, before a company has to decide whether to move to an investment and development stage. to produce in the assigned area. Ancap could be associated with the project when the development plan is presented.
“There is a window of opportunity. For example, Germany is very eager to secure long-term energy projects, and Uruguay or South America is identified as the source of this future resource. There is precisely a great eagerness to secure projects in countries that offer investment guarantees such as Uruguay”, concluded Ferro.
