Block Z-1 Project BPZ Energy, Inc. (BPZ) is developing an integrated gas-to-power project in northwest Peru, near the border with Ecuador.  The project is designed to produce gas from their current gas reserves offshore and generate electricity for the growing demand for electricity in northern Peru.  

The project involves: refurbishment of an existing platform located offshore in the Corvina field in Block Z-1 some 10 miles from shore; rehabilitation of an existing suspended well and initially the drilling of two new producing wells at the platform location; installation of a 10 diameter pipeline to transport gas from the platform to shore; construction and operation of a gas processing plant capable of processing 125 million standard cubic feet per day (MMSCFD ) and a 160 MW single cycle gas power plant with initial gas supply requirements of 40 MMSCFD.

The platform upgrade program began in September 2005, with drilling starting in September 2006.  Construction of the pipeline, the onshore gas processing plant and power plant is scheduled to begin in early 2007 with first power generation anticipated in October 2007.

BPZ is planning in the future to supply gas from the Corvina field to third party power generators in south west Ecuador via a 40 mile pipeline to be constructed.  The expansion for supplying Ecuador will also include drilling two additional producing wells. - Monetization of Natural Gas & Creation of Gas Markets:

This project will support the monetization of hydrocarbons, particularly stranded natural gas reserves, in Peru.  It will not only explore, develop and produce natural gas, but will also create regional markets for natural gas.  Peru and Ecuador are two countries that are both desperate to increase their gas and electricity supplies.  BPZs project will directly increase electricity supplies in Peru through the construction of the Caleta Cruz power plant, and will potentially increase electricity supplies in Ecuador by selling natural gas to power producers in Arenillas.

- Contribution to Peruvian Government Revenue:

The project facilitates the production and sale of gas and, possibly, liquids, which provide an important source of revenue to the country through royalties and taxes.

- Creating Local Employment and Sourcing in Peru:

The project will create direct new employment opportunities in Peru associated with the exploration and development of Block Z-1, construction and maintenance of the Caleta Cruz power plant and the potential construction of the pipeline to Ecuador.  The project will also have an impact on secondary employment through services provided by local contractors.

- Fuel Substitution and Transmission System Stability:

Since most thermal capacity in both Peru and Ecuador is diesel generated, IFCs support of the project will help to substitute the more expensive and more polluting imports of diesel and fuel oil for clean natural gas in both countries.  The project will reduce transmission constraints by reversing the flow of electricity from South to North.  The plant will also have an important role for providing stability to the system through its location at the end of a long line in the transmission network.  

- Community Development:

BPZ has designed a Social Development Plan (SDP) and will commit approximately $250,000 annually to support this effort. The main components the SDP plan is to cover are: educational and training programs for the communities in worker capacity development, micro enterprise development and health and nutrition; basic needs and infrastructure development projects; the generation of alliances and partnerships for the implementation of long-term development projects particularly relating to health and education; and meeting local philanthropic needs. Early implementation of some SDP programs has already begun to benefit the local communities (for more details, see the ESRS).

IFC plans to monitor the following development impacts: 

- employment; 
- local/national purchasing; 
- payments to regional governments; and 
- investments in community programs.