Energy Watchblog: Vaca Muerta

<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaVDRJp4iG581JyIaH0zcTN26aEoFWujEt4fg2-PUMpBc-IHNDSXMq1ZEKbMr5LWnkNXIprXiAHM1zlU9qJ7ric_i9l2nPS02cxIx-SLkIlP0WUv_3ZV46glhXXfuufwwJjrtuHQGRLBbl/s1600/vaca_muerta_basin.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="237" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaVDRJp4iG581JyIaH0zcTN26aEoFWujEt4fg2-PUMpBc-IHNDSXMq1ZEKbMr5LWnkNXIprXiAHM1zlU9qJ7ric_i9l2nPS02cxIx-SLkIlP0WUv_3ZV46glhXXfuufwwJjrtuHQGRLBbl/s320/vaca_muerta_basin.jpg" width="320" /></a></div>Oil and gas companies are expected to invest between US$5bn and US$6bn in 2014 in the Argentine province of Neuquén, according to local press, citing a report by the provincial government. The forecasted investment for next year represents a significant increase from the US$4.1bn invested in Neuquén E&P in 2013.<br /><br />Unconventional plays will receive the majority of the capital influx, with the Vaca Muerta shale play taking approximately 60% of the total. Of the 635 wells to be drilled next year, 323 will target shale and tight sand deposits as opposed to 195 of the 471 wells drilled in 2013.   Topping the list, national oil company YPF's (NYSE: YPF) investment in the province is expected to reach US$3bn. YPF will destine the funds primarily to its Loma La Lata shale, and its El Orejano and Rincón del Mangrullo tight gas pilot projects with Chevron (NYSE: CVX), Dow Chemical (NYSE: DOW) and Pampa Energía (NYSE: PAM) respectively.<br /><br />While other firms focus on exploration, France's Total (NYSE: TOT) will be the only one, apart from YPF, working on an unconventional pilot project in the province. Called Aguada Pichana, Total is expected to invest US$380mn on the 20-well Vaca Muerta pilot.     ExxonMobil (NYSE: XOM) plans to invest approximately US$250mn, according to the reports, followed by US$185mn from Pan American Energy, who will focus on exploration of the Lindero Atravesado formation.<br /><br />Petrobras (NYSE: PBR) will invest US$113mn, primarily on its Río Neuquén and El Mangrullo areas. O&G Developments, a subsidiary of Shell (NYSE: RDS.A) in Argentina, will invest at least US$90mn (max US$500mn) on its Sierras Blancas license.     Meanwhile, Wintershall is rumored to have signed a definitive partnership with provincial oil company GyP to drill a dozen wells on the Aguada Federal block.

E&P companies in Neuquén to invest up to US$6bn in 2014

Oil and gas companies are expected to invest between US$5bn and US$6bn in 2014 in the Argentine province of Neuquén, according to local pres...

<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_EIYR2a6Y7q4M1fDs6JZ-SK3LSr8kjT7aQ9-kG5dhPqFHislREYfMR6DmGRYrp7pCCePNep542Wb6SNGWrZiUUxbiYCDpUHybv-PTY6lcByu_vIq_lt_RxxROKI3R_L7mEIU37jmoLPM3/s1600/vaca_muerta_basin.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="237" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_EIYR2a6Y7q4M1fDs6JZ-SK3LSr8kjT7aQ9-kG5dhPqFHislREYfMR6DmGRYrp7pCCePNep542Wb6SNGWrZiUUxbiYCDpUHybv-PTY6lcByu_vIq_lt_RxxROKI3R_L7mEIU37jmoLPM3/s320/vaca_muerta_basin.jpg" width="320" /></a></div><i><span style="font-family: Arial, Helvetica, sans-serif;">Partnerships with foreign players that have the know-how and funding are seen as key to unlocking the shale riches that Argentina's Vaca Muerta play holds.</span></i><br /><br /><div class="text-contenido" style="background-color: white; margin: 0px 10px 0px 0px;"><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">After signing a deal with nationalized YPF in June, US super major Chevron has invested US$1.24bn to develop the Loma Campana subsection of Vaca Muerta. The 132-well shale oil pilot program is on schedule to be completed in March 2014. More than 1,500 wells would be drilled during a second US$16bn phase of development, with production expected to reach 50,000b/d oil and 3Mm3/d gas.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">In September the local unit of Dow Chemical signed a deal with YPF develop shale gas on the El Orejano block of Vaca Muerta. The chemical company has adopted an innovative vertically integrated way to secure gas supply for its plants in Argentina.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">Neuquén provincial oil and gas company GyP signed a letter of intent (LOI) with German firm Wintershall in September to invest US$108mn in Vaca Muerta shale exploration. Over the next two years Wintershall-led exploration will focus on the Aguada Federal block of the Aguada del Chañar area. GyP is expected to sign an E&P deal for the same play with Brazil's Petrobras in the near future.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">In December Azabache Energy and Rio Bravo Commercial Enterprises (RBE) entered into an agreement whereby RBE will pay US$5mn for a 23.76% interest in the Covunco Norte-Sur block in Argentina's Neuquén basin. Proceeds will be used for fracking on the block, according to Azabache.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">At the beginning of December Argentine President Cristina Fernández met with the head of China's CNOOC Li Fanrong and Carlos Bulgheroni, head of Grupo Bridas, CNOOC's Argentine JV partner. This presidential meeting could signal an impending deal after a US$1.5bn MOU between Bridas and YPF for Vaca Muerta expired earlier this year as Repsol threatened legal action against partnerships with YPF in the wake of the expropriation of its stake in the firm.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">Repsol is expected to halt legal action over the expropriation if a definitive agreement is reached with Argentine authorities, which could pave the way for more partnerships with YPF.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;">Over US$1.5bn worth of Vaca Muerta partnerships have been announced in 2013. With the entrance of new players, the development of untapped areas and signs of an end to the conflict with Repsol, this figure should continue to grow.</span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="line-height: 1.6em;">Argentina continues to cast a keen eye on progress in the US, where the rapid emergence of shale and tight oil has spawned job growth </span><span style="line-height: 1.6em;">while reducing fuel imports.</span></span></div><div style="line-height: 18px; margin-bottom: 20px;"><span style="font-family: Arial, Helvetica, sans-serif;"><span style="line-height: 1.6em;">Given</span><span style="line-height: 1.6em;"> the lack of unconventional technology and </span>know-how among local firms, and their difficulty in <span style="line-height: 1.6em;">accessing competitive financing, joint ventures are key to Vaca Muerta's development.</span></span></div></div>

2013 REVIEW : Vaca Muerta shale deals

Partnerships with foreign players that have the know-how and funding are seen as key to unlocking the shale riches that Argentina's Vaca...