Natural gas hydrates are crystalline solids formed by natural gas (mainly methane) and water that are stable under thermobaric conditions of high pressure and low temperature. Methane hydrate is found in polar areas of permafrost and in offshore basins of continental margins. These accumulations may represent an enormous source of methane. Based on global estimations of methane concentration in natural gas hydrates, the methane content may be several times greater than those of technically recoverable, conventional natural gas resources. In the continental margin of Uruguay, seismic evidence for the occurrence of gas hydrate is based on the presence of (bottom simulating reflectors) BSRs in 2D seismic reflection sections. Here we present results regarding gas hydrates and associated free gas distribution assessment offshore Uruguay, based on BSR mapping and applying a probabilistic approach. A mean value of 25,890 km2 for the area of occurrence shows a great potential for this nonconventional resource, encouraging further research.

This paper presents a probabilistic techno-economic evaluation of several turbidite prospects recognized, through 3D seismic, in deep to ultra-deep water of the Punta del Este and Pelotas sedimentary basins, offshore of Uruguay. The production potential of many prospective turbidite reservoirs on the Atlantic margin has been recognized before, and new turbidite prospects were identified in Uruguay's maritime zone after analyzing data from the world's deepest water-depth well (Raya-X1) drilled in 2016. The estimated ultimate recovery of oil and gas was determined, for each prospect, by carrying out probabilistic resource analyses (Monte Carlo simulations) using 3D seismic and key parameters from analog turbidite fields located in sedimentary basins along the Atlantic margin. Black oil fluid was assumed and the production concept involves FPSO vessels. The produced oil would be exported via tankers and the associated gas would be either sent to shore through a gas pipeline, or re-injected into the formation. For the economic evaluation, the latest fiscal terms of the applicable production-sharing contract, for offshore assets in Uruguay, were considered. The outcomes of the probabilistic economic analyses include, for each prospect, several key performance indicators such as: net present value, internal rate of return, maximum negative cash flow, breakeven oil price, government take and entitlement percentage of hydrocarbons. These indicators were determined after running Monte Carlo simulations, which considered probability distribution functions for fixed and variable capital and operational expenditures, along with well productivities and decline rates. Regarding the economics of the project, several scenarios of incremental profit oil for the government and maximum association percentage for ANCAP, the National Oil Company of Uruguay, were evaluated. The cases considered show how key negotiables and variables, featuring in the tender process offered to oil companies interested in Uruguay's offshore hydrocarbon assets, may affect the economics and development solutions of a typical field development project. Considering a plausible base case of 20% ANCAP association and no incremental profit oil for the state, the results show that, for the biggest prospects, the breakeven oil price is situated near 60 USD/bbl. The analysis also shows that the smaller prospects would need to be developed as satellites of the nearby principal prospects in order to become attractive for development. This study sheds light on the exploration potential of turbidites, offshore of Uruguay, and analyzed resource volumes, production profiles and economic returns of a hypothetic development in the case of a commercial discovery. The analyses provide useful templates for international oil companies, which, under the new and more flexible Uruguay Open Round licensing regime, may be interested in the exploration and imminent development of the Uruguayan offshore sedimentary basins.

From 2009, when the first offshore bidding round took place in Uruguay, and in particular from the second bidding round that constituted a enormous step in the exploratory history of Uruguay, our country faces a new and nontraditional hydrocarbons upstream activity. Government take, including the National Oil Company association in the case of a discovery, is already fixed under the Production Sharing Contracts in force and do not vary much with the field size. Therefore, a possible strategy to maximize the local revenues (income from Uruguayan services, products and human resources), which constitutes a key part for a sound distribution of petroleum revenues within the country, would be to increase the local content in the supply chain.Taking into consideration analogous geological basins, and the geological and technical probability of success for offshore Uruguay as a frontier basin, the field size and hydrocarbon potential was evaluated from a stochastic point of view. The cash flow analysis of a hypothetic oil development was carried out, incorporating the actual economic variables of the contracts in force offshore Uruguay, as well as the current fiscal regime. The standard project parameters, investments yardsticks and the government and contractor takes were calculated with the aim to obtain the Uruguayan rent and the relative impact of the local content.This work constitutes the first approach to the analysis of expenditures and investment during the current stage of exploration, and the eventual phases of appraisal, development and production offshore Uruguay. The technical and economic evaluation applied to a portfolio of offshore prospects models the level of expenditures and investment from exploration to production.The assessment of the potential impact of the activity on macroeconomic variables is carried out considering the local services and products that would be necessary for each stage, in order to identify the areas where increasing local content will provide the larger impact in the country economy.

Hydrocarbon exploration offshore Uruguay has been historically very limited. Only two wells were drilled in shallow waters in 1976. Additionally, there are about 30.000Km of 2D reflection seismic, including 6.400Km acquired in 2011. ANCAP, the National Oil Company, offered offshore areas for exploration and exploitation of hydrocarbons to interested international oil companies through Uruguay Round 2009. This bidding round successfully ended with the signature of contracts for two areas. This auspicious result, in addition to the interest shown by the upstream industry, have lead ANCAP to launch the Uruguay Round II.The most recent 2D seismic survey allowed the definition of several prospects. This article presents the risk analysis and economic evaluation of the potential development of three prospects offshore Uruguay, of different type and depth, considering for each one the possible occurrence of dry natural gas, natural gas with condensate or oil.The Estimated Ultimate Recovery, Net Present Value, Internal Rate of Return and Payout were determined for each prospect by Monte Carlo simulation. Different development concepts were considered for each case. A sensitivity analysis of the key variables (reservoir parameters, hydrocarbons price, capital and operational expenditures) was carried out showing the impact of each variable on the project. Finally, a decision tree analysis was used to compute the Expected Monetary Value of each case, incorporating the geological chance of success and minimum economic field size as inputs for the assessment.ANCAP signs the exploration and production contracts with offshore Contractors on behalf of the Uruguayan Government, and is in charge of designing the fiscal regime ruling in Uruguay. Thus, this analysis includes the latest and real terms applied in Uruguay Round II, including ANCAP's participation and actual market considerations; consequently it provides a very good estimation of the oil company's take.This work constitutes the first evaluation of this kind applied to prospects offshore Uruguay, therefore its results and conclusions are significant for those international oil companies that might be interested in carrying out exploration activities in offshore Uruguayan basins.

Uruguayan geological basins imply a high exploratory risk and therefore present a frontier status. However, Latin America and West Africa are the regions in which exploratory activity has seen a remarkable increment, with major discoveries and significant investment in the last decade, and plenty of E&P opportunities nowadays. Within this context, The Uruguayan Government has recently approved a new bidding system for onshore and offshore areas, Open Uruguay Round, including very competitive features and contractual terms, after evaluating other countries’ petroleum fiscal regimes.