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Hidden treasures: Central American Gas

Hydrocarbon Engineering,

The full article from Gordon Cope can be found in the February issue of Hydrocarbon Engineering. Subscribers can login here to view the issue online.

Gas in Central America is dominated by one major producer and consumer: Mexico. According to the US Energy Information Administration (EIA), the country has 12 trillion ft3 of reserves, mostly in the south. Proven reserves are expected to rise dramatically in the future, however, as 90% of the probable and possible reserves are located in the underexplored northern region.

Because the growth in production is not keeping up with the growth in consumption, Mexico must import at least 1 billion ft3/d. Most currently comes from the US via pipeline, but the country is also increasing its LNG capacity.

Elsewhere in Central America

However, when looking to the south of Mexico, gas prospects (indeed, any hydrocarbon production) drop dramatically. According to the EIA, Nicaragua, Honduras, Costa Rica, Panama and El Salvador produced no oil in 2011. Belize produced 4000 bpd, and Guatemala produced 11 000 bpd. Nobody produced gas, period.

Yet the region is not without potential. For the last several decades, Missouri based Black Star 231 Corp has been exploring in Central America, acquiring significant exploration licenses in Nicaragua and Honduras. Black Star believes there are substantial reserves in Central America, but there are so few wells and geological and engineering information that any estimates are at best speculation.


Guatemala, located directly south of Mexico, has a long, but sparse, history of exploration and production. The country has several significant hydrocarbon bearing basins, including the Peten Basin adjacent to Mexico and the Pacific Basin on its West Coast. Government figures estimate that there are well over 1 billion bbls of oil in place, as well as the presence of natural gas in the Pacific Basin. Peak production reached 25 000 bpd in 2003, but has since dwindled to under 10 000 bpd.


Belize is also home to a portion of the productive Petren Basin, known locally as the Corozal Basin. The Belize Geology and Petroleum Department is promoting exploration in the region, noting that tectonic activity has created the potential for structural closures bounded by faults and pinch outs that could be delineated through modern seismic technology. During the 1980s, exploratory wells drilled in the basin have encountered oil shows in the Yalbac and Hillbank formations, but no commercial deposits. In 2005, however, Belize based Belize Natural Energy (BNE) found 25 million bbls of oil reserves at the Spanish Lookout and Never Delay fields in the Corozal Basin. BNE subsequently constructed field and transportation infrastructure, and is currently producing 3300 bpd.


Honduras has potential for hydrocarbon production, but has never seen commercial development. Many geologists believe the Yojoa limestones of the central La Mosquitia Basin are similar to producing limestones in the Peten Basin of Guatemala. 20 years ago, the Cambria Oil Company drilled to a depth of 17 000 ft without encountering hydrocarbons. The lack may be attributable to a paucity of source rock.

Costa Rica

Although Costa Rica is dominated by volcanic arc geology, the country holds more than 40 000 km2 of sedimentary basins, many of which contain organic rich shale source rocks, potential reservoirs and oil seeps.

Development barriers

While great potential exists in Central America, there are many reasons why production is lagging compared to its regional neighbours. The first is the limited geological potential of the region. The second issue: the lack of geological information. Finally, the region has long held animosity to foreign corporations.

The future

Central American countries need to modernise their hydrocarbon regulatory regimes and make fiscal regimes more attractive to wildcatting. Basic geological research of the local resources needs to be undertaken before the region will become seriously attractive to oil and gas companies.

The full article from Gordon Cope can be found in the February issue of Hydrocarbon Engineering.

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