The whole world knows that shale revolutionized the U.S. energy industry. Now oil and gas executives are salivating when they think of Argentina’s booming shale industry.
Argentina ranks second in the world, behind China, in potentially recoverable shale-gas reserves, with 802 trillion cubic feet, according to a study last October by the U.S. Energy Information Administration. Argentina also ranks fourth in shale oil with an estimated 27 billion barrels.
In July, YPF and Chevron inked a deal to spend $1.2 billion to further develop shale oil and gas resources in the Vaca Muerta formation. The deal calls for an initial phase in which 100 wells will be drilled in a 5,000-acre tract in the Loma La Lata Norte and Loma Campana areas.
Chevron said the deal gives it the chance to grow production beyond its 2017 target of 3.3 million barrels per day. Chevron says shale will help it make Argentina energy independent.
Chevron Argentina currently produces an average of 21,000 barrels of crude oil and 4 million cubic feet of natural gas in the Neuquen Basin. The Loma La Lata area is currently producing more than 10,000 barrels of oil-equivalent per day.
“This strategic investment will allow Chevron to take part in the Vaca Muerta, one of the most exciting shale oil and gas plays in the world today,” Chevron vice chairman George Kirkland said in a statement.
YPF said that Chevron will spend the first $300 million of the total planned outlay once a concession is granted by local officials. After that, both companies may continue with the total development of the areas, YPF said.
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