Fracking Argentina

La Evolución de la Fracturicación Hidráulica en el País y el Mundo

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XTO Energy has invested $250 million to develop a pilot of 5 horizontal wells in Argentina, El Inversor reports. Fracturing will take place in Vaca Muerta, North of Neuquen Capital, in the two blocks “Bajo Del Choique” and “La Invernada”, both located south of Añelo. The project is in cooperation with Gas y Petroleo del Neuquen (GyP) who will have a 10% stake. It will be the first time that the ExxonMobil subsidiary begins a drilling operation in Argentina. The oil giant also intends to build a production facility capable of separation and storage and a pipeline directly into the system for marketing.

XTO Energy is specialized in unconventional drillings, and has been involved in over 30,000 drillings in the USA and Canada. Vaca Muerta has not yet paid the dividends it was expected to just a few years ago, and for XTO Energy and ExxonMobil this latest project is of major importance for determining future plans to invest in the basin. If the programme is successful the company will have to decide whether it wishes to move towards the full development of the project, which would require 20-­30 years and more than $10,000 million in additional investments.

Today, Vaca Muerta produces around 50,000 bbl/day, a rate which an IHS Energy report expects to double by 2018 (and for for output to reach 560.000 bbl/day by 2040). Vaca Muerta has favourable traits similar to those of the Permian Basin in the US such as thick, high quality, organic­-rich shale, but the production still has to overcome a number of obstacles to realize its full potential.

Vaca Muerta is largely unexplored due to lack of investment. It is estimated that YPF needs up to $200 billion to fully exploit the formation, which would require significant investment from outside. Since Makri took office in 2015 he has been focusing on introducing a number of free ­market initiatives to boost the economy, and the question is to which degree this will benefit the oil and gas industry.

Drilling costs are another obstacle. Chevron has decreased its drilling costs in Vaca Muerta by 20%, mainly through the discovery of a sand deposits in Chubut, eliminating the need for imported sand. Horizontal drillings rely on access to natural resources such as sand and water, facilities for processing and refining and sufficient infrastructure to allow a high number of trucks and heavy equipment to pass in and out of the area.

 

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