Argentina planning gas pipelines, seeking upstream investors

Argentina plans to build natural gas pipelines and hopes to attract more oil and gas investment for the Vaca Muerta shale play in the Neuquen basin, according to Argentina Energy Minister Gustavo Lopetegui.

Analysts estimate Vaca Muerta needs investments of US$5-10 billion/year to boost production compared with current investments of about US$4.3 billion/year.

By the 30^th September, Argentina plans to announce construction contracts of up of US$1.8 billion for gas pipelines linking Vaca Muerta with Buenos Aires, Mr Lopetegui said, adding that two phases of the pipeline could move as much as 40 million cu m/day of gas, more than half of Vaca Muerta’s current gas production.

Vaca Muerta’s crude oil production is expected to reach 100,000 b/d in this year’s second half compared with current production of 80,000 b/d, he said.

“Vaca Muerta must grow harmonically so it is possible to produce, transport, and sell without problems,” he added.

More companies are completing Vaca Muerta wells using hydraulic fracturing, Mr Lopetegui said, adding seven companies reported more than 560 frac jobs during January and February, which compared with a monthly average of 143 fractures during 2016, all done by YPF.

The Vaca Muerta play involves Late Jurassic to Early Cretaceous reservoirs in northern Patagonia holding oil and gas. The US Energy Information Administration has estimated Vaca Muerta resources at 16.2 billion bbl of oil and 308 tcf of gas.

Oil market reforms

Mr Lopetegui said Argentina’s energy potential has been hindered by macro-economic conditions of previous years, including “artificial pricing” as of 2011. “We all know that the problem is not below the ground.”

But Argentina is in transition now, he said, undergoing regulatory and market reforms, including moving to market pricing.

While in Houston to attend CERAWeek by IHS Markit, Mr Lopetegui spoke at a separate luncheon hosted by IAPG Houston, an independent sister organisation of the Instituto Argentino del Petroleo y del Gas, a non-profit organisation serving Argentina’s oil and gas industry.

Vaca Muerta has attracted renewed industry interest in recent years.

Last year, Qatar Petroleum became a 30% equity holder with two ExxonMobil affiliates in Argentina. The farm-in deal involved interests in seven Vaca Muerta blocks under unconventional exploration licences with active drilling plans and exploitation licences with pilot drilling and production

Source: Oil & Gas Journal