Very little commentary has appeared on the effects of the recent Chilean earthquake on the country’s oil and gas industry. The magnitude 8.8 (moment magnitude scale) earthquake occurred at 3:34 am on Saturday, February 27, off the coast of the Maule region, central Chile. The epicenter was 330 km southwest of the capital, Santiago. It was the largest quake in Chile in 50 years (since the 1960 Valdivia earthquake) and set off a tsunami that battered the Chilean coast and resulted in hundreds of deaths and substantial damage to property and infrastructure.

No warning?

The Chilean hydrographic and oceanographic service (SHOA), failed to send out a nationwide tsunami alert following the earthquake. SHOA is a branch of the Chilean Navy (“Armada de Chile”). Immediately following the tsunami, Chile’s defense minister, Francisco Vidal Salinas, said that the Chilean Navy had made a mistake by not immediately issuing a tsunami warning, which could have saved lives. The head of the service, Commander Mariano Rojas, was fired on March 5. According to the Santiago Times, Commander Rojas will be replaced by Commander Patricio Carrasco.

In a national catastrophe, there is seldom a single factor upon which all blame can rest. Was Rojas really the single point of failure? Perhaps the uncoordinated response by SHOA can be tied to the story of a ship launched a few hours too early – the Cape Horn.

Naval officials preoccupied? In the days preceding the earthquake and subsequent, devastating tsunamis, Chile hosted the COPONA 2010 – Congreso Panamerican do Poder Naval (Pan American Naval Power Conference) in Santiago. Some conference attendees participated in a post-conference site visit to the port city of Talcahuano and its naval dockyard (ASMAR) to witness the planned launch of the Chilean Navy's newest oceanographic vessel: AGS 61 Cabo de Hornos (Cape Horn). The launching ceremony was scheduled for 1:30 pm Saturday and was to be attended by the President of the Republic of Chile, Michelle Bachelet. According to the IQPC:

The oceanographic and fisheries vessel (AGS) is a state-of-the-art survey vessel built to serve Chile’s needs to develop and survey new resources while monitoring existing ones. Her design, compliant with ICES Cooperative Research Report 209 relating to underwater noise reduction, is built for worldwide geologic, fishery resource survey and oceanographic research. Cabo de Hornos is the latest oceanographic research vessel built under the MEDUSA project – a long-standing desire of Chile’s oceanographic and fishing community to be able to conduct enhanced marine studies, gain a greater knowledge of Chilean seas and gather invaluable information for the best possible management of Chile’s natural resources.

Talcahuano engulfed The Cabo de Hornos was built to replace the Chilean Navy's Vidal Gormaz, but the tsunami that engulfed the port of Talcahuano swept the new ship from its rails and left it lodged behind a crane. The ASMAR shipyard was heavily damaged and authorities estimated it will take five years to rebuild. The European Union Satellite Centre (EUSC) issued a report on March 5 diagramming damage to the shipyard, which includes a broken pier, at least five large ships that were tossed and grounded, and other damaged vessels. Video footage from Mega Noticias, in which Commander Rojas talks with commentator Rafael Cavada, shows floating cranes and at least one floating drydock tossed up by the tsunami. On March 9, Public Works Minister Sergio Bitar said that Chile has complete connectivity by land, air and sea, except for the port of Talcahuano. Many of the repairs to Chle's roads, bridges, airports, dams, canals, coastlines could be done this year, but the port repairs will take longer. Petroleum sector Chile’s Magallanes basin has crude reserves of about 150 mbo in a few dozen fields, but production is declining. State-owned Empresa Nacional del Petroleo (ENAP) controls Chile’s oil sector and operates three refineries with 226,800 b/d of crude oil refining capacity. On March 3, Reuters reported that two of ENAP's refineries were shut as a result of the earthquake: the BioBio refinery north of Conception and the Aconcagua refinery near Santiago. Another earthquake struck offshore Bio-Bio on March 5, magnitude 6.6 (USGS details). ENAP later declared force majeure on a crude shipment from Ecuador's Petroecuador due to refinery damage. Sonacol operates Chile’s domestic oil transport network, with 290 miles of domestic crude oil and product pipelines and a fleet of oil tankers. Chile imports crude oil predominantly from Argentina, Brazil, Angola, and Nigeria, partly through two crude oil import pipelines: the 270-mile, 115,000-bbl/d Trasandino pipeline, supplying crude from Argentina to southern Chile, and the Arica-Sica pipeline, crossing into far northern Chile from Bolivia.

Chile has about 3.5 Tcf proven natural gas reserves and does not produce enough to cover domestic consumption. There are four main gas import pipelines, two in the north, one serving Santiago, and another farther south, paralleling the Talcahuan-Nequen crude oil pipeline. Reuters reported that "Argentina will double its daily supply of natural gas to Chile" and that the earthquake has not damaged pipelines between the two countries.

The Quintero Bay LNG receiving and regasification terminal operated by BG Group, 155 km northwest of Santiago, was not damaged. The single-train Mejillones LNG regasification project in Antofagasta, northern Chile, was also unaffected.

Spanish word of the day: “terremoto” (earthquake)

Postscript, 11 March 2010, 10:00am CST - Chile experienced two more large earthquakes this morning, magnitude 6.9, with epicenter in Libertador O-Higgins. Details from USGS here.