YPF and Chevron signed MOU in unconventionals
YPF SA (YPF) the Argentina’s national oil company and the international oil company Chevron Corporation (Chevron) signed a memorandum of understanding to explore and develop the local unconventional resources in oil and gas.
According to the US Energy Information Administration (EIA) Argentina is the largest producer of natural gas and the third one of oil in South America.
Until the years 2000s, the production was increasing steadily to cover the domestic consumption and to export mostly to USA, Chile and China.
But on the last 10 years the local needs continue to grow while, the oil and gas fields were maturing and suffering from lack of capital expenditure to maintain the production and replace the depleting fields because of a curbing tax system.
Since 2008 Argentina’s natural gas production cannot meet its domestic demand and on actual trends Argentina should turn in oil deficit in 2013.
In order to stop this decline in production, Argentina published the Petroleum Plus program to re-motivate the oil and gas companies to invest in new fields and unconventional resources without export limitations.
YPF is the first oil producer in Argentina with about one third of the national production and the second natural gas operator with approximately 20% market share.
The 51% stakes held by the spanish Repsol in YPF were seized precisely under the allegation of under investments, leading to legal battle between Repsol and the Argentina Government for compensation.
The other most active companies in Argentina are:
- Pan American Energy (PAE) owned by BP and Bridas Corporation (Bridas), a 50/50 joint venture between China National Offshore Oil Corp. (CNOOC) and Bridas Energy
- Sinopec through the acquisition of Occidental Argentine
- Chevron
Argentina to hold 300 years reserves of shale gas
To support the Petroleum Plus program Argentina is counting on its 2.5 billion barrels of proven reserves and undeveloped unconventional resources of natural gas and of shale oil in the Loma La Lata field of the Vaca Muerta shale formation in the Neuquen province.
According to the last estimations the Loma La lata may contain up to 741 million of recoverable shale oil.
Regarding the natural gas, the Argentine proven reserves declined to 13.4 trillion cubic feet (tcf) on January 2012 but according to EIA and Advanced Resources International, Argentina would retain 774tcf of recoverable reserves of natural gas under the form of shale gas.
These reserves represent 300 years of the actual Argentine consumption and position Argentina as the world third largest country after USA and China.
More than half of these shale gas resources are concentrated in the Neuquen basin.
Chevron and YPF find tight oil in Vaca Muerta
If Chevron is the only fourth largest oil and gas company in Argentina, Chevron is operating in the El Trapial field of the Neuquen basin through four concessions contracts.
Deploying it expertise in enhanced oil recovery (EOR) to stop and compensate the depleting of the maturing fields, Chevron managed to extend in December 2011 its concession in El Trapial up to 2032.
Then on first half 2012, Chevron started an exploratory drilling campaign in this El Trapial field of the Vaca Muerta area for shale gas and tight oil.
These first appraisal wells were successful in discovering tight oil reservoirs with low porosity and permeability.
From these encouraging results, Chevron and YPF signed a memorandum of understanding (MOU) to explore further the shale gas and the tight oil in the Vaca Muerta.
For the period 2013 – 2017, YPF is planning to invest $24.7 billion capital expenditure, with the memorandum of understanding signed with Chevron, YPF is expecting to attract other international oil company to rise funds up to $40 billion to explore and develop the Vaca Muerta shale gas and tight oil reserves in Argentina.
