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 Corp. (XOM:US)’s Argentina unit and provincial-run Gas & Petroleo del Neuquen SA, or GYP, yesterday reported their largest shale discovery in southern Argentina’s Vaca Muerta formation. The Bajo del Choique X-2 horizontal well is producing 770 barrels of oil a day in its first flow test, Exxon said in a statement. Exxon operates the block and has an 85 percent stake while GyP owns the remaining 15 percent.
“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 e-mailed response to Bloomberg questions.
Vaca Muerta’s oil production more than tripled in the first quarter from a year earlier, according to data compiled by Bloomberg Industries, boosted primarily by a joint venture between YPF SA (YPF:US), Argentina’s largest company, and Chevron Corp. (CVX:US) YPF’s output from the Loma Campana area in Vaca Muerta rose to 12,800 barrels a day from 4,200 barrels after investing $1.2 billion in a pilot year with San Ramon, California-based Chevron.
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 square-kilometer (11,600 square-mile) region, which holds at least 23 billion barrels 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 billion 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, Royal Dutch Shell Plc (RDSA) Argentine unit President Juan Aranguren said on Dec. 10. Argentina posted a record $6.1 billion energy deficit last year after 20 years of surpluses through 2010.
Shell tripled its investment budget to $500 million this year for Vaca Muerta, the world’s second-largest shale gas formation and the world’s fourth-largest shale oil deposit.
Exxon, Shell and Chevron are the three biggest oil companies by market value.
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