BUENOS AIRES (Dow Jones Newswires), Nov. 7, 2011
YPF, Argentina's biggest oil and gas company, on Monday confirmed the existence of 927 million barrels of unconventional oil in Neuquen Province.
The find has the potential to position Argentina among the world's leading producers of shale oil, or unconventional oil extracted from tight sands or shale rock formations.
Similar discoveries in the U.S. have dramatically reversed fortunes in the country's oil and gas industry, which only a decade ago was widely expected to be in irreversible decline.
YPF's find, based on output from 15 producing wells in the Loma La Lata Norte area, includes a previously announced discovery of more than 150 million barrels of high-quality shale oil in the Vaca Muerta formation, YPF said in a statement.
Citing the consulting firm Wood Mackenzie, YPF said the shale formation in Vaca Muerta is among the "best in the world."
The discovery, which has yet to be certified and does not yet form part of the company's reserves, is the product of YPF's five-year oil and gas exploration program in Argentina.
YPF expects to invest about $2.9 billion in exploration and production during 2011. That's the most the company has invested in any year in at least 20 years.
YPF began exploring for shale oil in 2007.
YPF also said it has outlined another 502-square-kilometer area that could contain additional oil and gas resources.
Last December, YPF said it found an estimated 4.5 trillion cubic feet of unconventional gas after drilling four exploratory wells on the south side of its Loma La Lata field.
YPF said this discovery alone would increase its expected gas reserves to 16 years from six at the time. YPF said it expected initial gas output to be 2 million cubic meters a day and eventually reach between 4 Mmcm/d and 5 Mmcm/d.
That find was considered potentially groundbreaking in Argentina, where proven gas reserves fell 51% to 13.3 trillion cubic feet between 2000 and 2009. The decline has been so alarming that eight former energy secretaries warned last year that Argentina would run out of gas in eight years.
Government officials in Argentina hope unconventional oil and gas will give a new lifeline to Argentina's energy industry, which has suffered from capped prices and regulatory controls which, executives say, have stymied investment in the sector.
Neuquen is a key producing area for YPF, accounting for 53% of the company's proven crude oil reserves and 72% of its proven gas reserves at the end of 2010, according to YPF's 20-F filing with the U.S. Securities and Exchange Commission.
YPF's majority shareholder is Spain's Repsol YPF SA (REP, REP.MC), which has a 57.4% stake in the company. Argentina's Grupo Petersen holds a 25.4% stake while the company's free-floating shares total about 17%.
Copyright (c) 2011 Dow Jones & Company, Inc.
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