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Argentine bid to replicate U.S. shale boom boosted by majors

PABLO GONZALEZ

BUENOS AIRES (Bloomberg) -- Argentina is benefiting from the experience of the world’s largest oil companies as it develops shale deposits in a bid to gain energy independence, said a board member of a provincial oil company.

Exxon Mobil’s Argentina unit and province-run Gas y Petroleo del Neuquen, or GyP, on May 20, reported their largest shale discovery in southern Argentina’s Vaca Muerta formation. The Bajo del Choique X-2 horizontal well is producing 770 bopd in its first flow test, Exxon said in a statement. Exxon operates the block and has an 85% stake. GyP owns the remaining 15%.

“We are betting on developing the horizontal technology along with Exxon because we are convinced that is the way to get greater output despite being costly,” said GyP Director Gustavo Nagel in an emailed response to questions.

Vaca Muerta’s oil production more than tripled in the first quarter from a year ago, according to data compiled by Bloomberg Industries, boosted primarily by a JV between state-owned YPF and Chevron.

YPF’s output from the Loma Campana area in Vaca Muerta rose to 12,800 bpd from 4,200 bbl after investing $1.2 bn in a pilot year with San Ramon, California-based Chevron.

Argentine Planning Minister Julio De Vido signed an accord with U.S. Deputy Secretary of Energy Daniel Poneman on May 21 to strengthen cooperation in non-conventional hydrocarbons, intelligence networks, nuclear energy and renewable energies, according to an email sent by the Argentine government. At a meeting in Buenos Aires, De Vido and Poneman discussed technology transfers at Vaca Muerta.

GyP has partnerships with 18 additional foreign oil companies to develop shale in Vaca Muerta, Nagel said. Vaca Muerta is a mostly untapped 30,000 sq km (11,600 sq mi) region, which holds at least 23 billion bbl of oil, according to a survey by Ryder Scott. Vaca Muerta has 350 wells, of which 160 are commercially producing, Nagel said.

Argentina will need $300 bn to develop Vaca Muerta over a six-year period to make the country energy independent starting in 2020 and keep it producing for as many as 40 years, Shell Argentine unit President Juan Aranguren said on Dec. 10. Argentina posted a record $6.1 bn energy deficit last year after 20 years of surpluses through 2010.

Shell tripled its investment budget to $500 mn this year for Vaca Muerta, the world’s second-largest shale gas formation and the world’s fourth-largest shale oil deposit.

05/22/2014

 

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