YPF Reports Major Shale Gas Find in Argentina

Argentina-based YPF reports it has discovered an estimated 4.5 Tcf of non-conventional natural gas reserves south of Loma La Lata in Argentina's Neuquina Basin.

"By means of effort and investment in cutting edge technology, we have been able to discover huge volumes of non-conventional gas (shale and tight gas) in Loma La Lata, which opens interesting development perspectives for the country," said YPF Executive Chairman and CEO Sebastian Eskenazi at a meeting in Buenos Aires Tuesday.

YPF drilled four tight gas wells that are flowing initial daily production of 100,000 cubic meters of gas per well. According to the Associated Press, the shale gas find is estimated to contain up to 257 Tcf of reserves and could supply Argentina for 50 years. However, the deposits are not yet proven and will be more expensive to extract than conventional natural gas.

Eskenazi also announced that YPF has replaced 100 percent of its crude oil reserves after a 13-year effort to reverse the country's oil production decline, and has fulfilled the investment commitments laid out by Eskenazi in December 2009, when he announced an exploration and production development program for 2010 through 2014. The results were announced at a meeting in Buenos Aires Tuesday attended by Argentina's President Cristina Fernandez, wife of late Argentine President Nestor Kirchner, as well as government, business and university leaders from throughout Argentina.

As part of the exploration and production plan, YPF has entered into agreements with 12 provinces and 21 universities and national academic institutions to deepen research on Argentina's potential oil and gas reserves, and also began exploratory drilling in the high-risk San Juan intermountain valley border area in late November with the Ansilta es-1 well in the Tamberias block.

The Ansilta es-1 well will target a sedimentary column from the Triassic Age. Three stratigraphic wells are expected to be drilled at the boundaries of the Neuquina basin, Cerro Pozo, in Mendoza to search for heavy oil. YPF also will conduct a 3D seismic survey in the Los Tordillos sub-basin and, in the next two years, will drill additional exploratory wells with Occidental Argentina.

As part of this plan, 11,412 exploratory wells were compiled, recatalogged and revalidated throughout Argentina to review and adjust oil and gas reserve estimates; 56,900 technical reports on existing basins within the country also were compiled. YPF also began in 2009 conducting several studies to analyze oil systems of non-productive basins, including cuttings slurrification and wire line coring from numerous wells located in different provinces, petrographic, petrophysical, X-rays, palynological and geochemical analysis.

Additionally, YPF has entered master cooperation agreements with the provinces of Buenos Aires, Entre Rios, Formosa, Chaco, Santa Cruz, San Juan, Cordoba, Santa Fe, La Rioja, Salta, Tucuman and Misiones to complete existing information on exploratory activities conducted and to determine the size of potential hydrocarbon resources.

The company has relied on a number of universities for its exploratory program, including ITBA, Universidad Nacional de la Patagonia san Juan Bosco, General San Martin de Catamarca, Córdoba, Formosa, Jujuy, La Plata, Luján, Mar del Plata, Río Cuarto, Rosario, Salta, San Juan, Tucumán, Chaco Austral, Comahue, del Litoral, del Sur, UTN. Additionally, we have signed agreements with IAPG, INA and the Superior Council of Professional Geologists.

Furthermore, YPF is negotiating master agreements with La Rioja, San Luis, Nordeste and Quilmes universities.

The company also has launched more than $1.5 million in projects to expand Argentina's refining capacity, the largest capital investment in Argentina in the past decade, in an effort to expand the number of fuels available and improve gasoline quantity.