July 22, 2014
YPF finds shale in Chubut province
Company appears to show there is potential for resources beyond Vaca Muerta
State-controlled energy company YPF has made the first shale oil and gas discovery in the province of Chubut, the company said yesterday. The discovery, in the San Jorge basin, is located more than 1,000 km southeast of the Vaca Muerta mega shale field in Neuquén that has garnered international attention.
“The preliminary results are hopeful: daily production of 50 cubic meters of oil and water, and 12,000 cubic meters of gas,” the company said in a press release. “This figures, which add up to other results previously announced, are a milestone in YPF’s history and will allow to incorporate Chubut as another province with a lot of potential in unconventional hydrocarbons.”
YPF CEO Miguel Galuccio confirmed the company discovered 39 API gravity oil, a measure of how heavy or light a petroleum liquid is compared to water, and natural gas with a caloric value of 11,000 kilocalorie per cubic metre.
Still, the potential of the field cannot be calculated yet according to Galuccio.
“We have good pressure at the well and we are opening it by managing the pressure so it produces the highest amount of oil and gas possible. We don’t know the potential of the well yet, it’s just a small dot in a large map,” Galuccio said. “This confirms the potential of non-conventional resources in the country.”
This was the first discovery at El Trébol field in the D-129 shale formation in Chubut. The well that hit the find was 3,591 metres deep and was discovered using water obtained from a previous production process and not with fresh water — a first for the country
Oil production in Chubut grew in the first quarter of the year 10 percent compared to the same period last year, the highest production values over the last 28 years, according to YPF. Thanks to those results, the province currently receives double the royalties it received at the beginning of the year. Last year, investments on oil and gas projects in Chubut grew 32 percent compared to 2012.
“This is an amazing discovery not only because it widens the horizon in the province and the San Jorge basin but also because it increments the potential and the expectations of reaching energy sovereignty,” Governor Martín Buzzi said yesterday. “This basin has provided in the last 100 years 50 percent of the oil consumed by Argentina.”
Earlier this week, ExxonMobil’s local operations, along with provincially owned Gas y Petroleo del Neuquén announced the discovery of shale oil and gas at a Vaca Muerta formation well in the province of Neuquén. Located in an area rich in liquid fuels, the Bajo del Choique X-2 well was drilled to an estimated depth of 4,750 metres, out of which 3,570 metres were carried out vertically and 1,000 horizontally.
Output at the well during the first recovery test was reported by ExxonMobil to have clocked in at 770 barrels of oil per day through a 4.7 millimetre hole. ExxonMobil holds an 85 percent stake of the Bajo del Choique well. Gas y Petroleo del Neuquén holds the remaining 15 percent.
YPF hopes to boost the development of unconventional hydrocarbon resources in the country to revert the drop in gas and oil production that led the government to expropriate a majority stake in the company.
YPF plans to increase oil production by three percent and natural gas production six percent this year while reducing the cost of drilling in the promising Vaca Muerta formation, one of the world’s biggest shale reserves that could double the country’s energy output within a decade.
A US Department of Energy report shows that Argentina has more natural gas trapped in shale rock than all of Europe, a 774-trillion-cubic-feet bounty that could transform the outlook for Western Hemisphere supply. The country’s shale gas reserves trail only China and the United States.
Nevertheless, the country needs foreign investment to develop the formation and has signed only one major Vaca Muerta deal, a US$1.24 billion joint venture with US-based Chevron Corp.
YPF estimates an investment of US$5.5 billion this year, most of which will be earmarked for exploration and production with only US$1 billion going to the retail refinery and retail sales sectors.
Herald with Reuters