Although the infrastructure to transport and move oil is still scarce and oil exploration and search operations are in full swing, Vaca Muerta continues to break new records. This formation of shale oil (shale oil) has become one of the hopes of Argentina’s economy. To this day, with a relatively small investment, it is producing significant quantities of crude oil and gas. The big projects (oil, gas and infrastructure) are yet to come. Despite everything, the growing production of crude oil and gas from this field has already allowed Argentina registers first energy surpluses in Argentina for a long time.
Little by little, the Neuquén region is rising and consolidating itself as the largest hydrocarbon-producing province in Argentina, thanks to the permanent growth of the Vaca Muerta fields, the centerpiece of the oil emporium that is being generated in this province. Thus, in October, Crude oil production reached a new historical record with 447,460 barrels per daywhich represents an increase of 0.13% compared to the previous month and a notable increase of 26.35% compared to the same month in 2023.
This increase in production has even more value when analyzing the context in which the oil market finds itself, with extremely volatile prices that are reaching around 73 dollars per barrel, a relatively low level for the prices that have dominated the market since the covid pandemic ended. The lower crude oil prices, the less incentive there is to produce new oil. However, production costs at Vaca Muerta (the breakeven estimated at about $36 a barrel) are relatively low, allowing frackers and producers in the area, such as YPF or Pampa Energía, continue working to produce more oil, even at current prices.
Thus, according to the latest data published this Thursday by the Ministry of Energy and Natural Resources of Neuquén, the increase in crude oil is largely due to the good performance of large areas such as Bajada del Palo Oeste, Coirón Amargo Suroeste, Lindero Atravesado, La Amarga Chica and Loma La Lata, that drove the increase in October production. In accumulated terms, between January and October 2024, oil production was 24.15% higher than that registered in the same period of 2023.
The geologists They estimate that this field could have crude oil reserves of 16,000 million barrels shale oil (shale oril), which makes it the largest reserve of unconventional crude oil in Latin America and one of the largest reserves of unconventional hydrocarbons in the world. Vaca Muerta is often compared to the prolific Eagle Ford shale field in Texas, a field that pumps about 1.2 million barrels of oil. The United States Energy Information Administration (EIA) confirmed in 2019 that Vaca Muerta and Eagle Ford share similar depths, thicknesses, pressures, and mineral compositions.
It should be remembered that the crude oil extracted in Vaca Muerta is shale oil, so it is necessary to use fracking or hydraulic fracturing for its extraction. This is an extraction technique known since the 1950s and practiced in the world for several decades, but which did not fully exploit until just over a decade ago, with the Permian Basin of the United States as a great representative. The US Permian Basin already produces more than 6 million barrels of crude oil each. Fracking consists of the injection of a fluid composed of 95% water; 4.5% sand and 0.5% additives to create the necessary pathways through which hydrocarbons flow naturally. This operation is done in stages and for only 1 to 2 days. Once completed, the well remains in production for the next 20 to 40 years, YPF assures. Vaca Muerta is the richest shale oil deposit in South America.
All of this has led to industry investment being concentrated in this ‘piece of land’. The Government of Argentina explained in a note published in September that the production of unconventional hydrocarbons in Argentina continues to display sustained growth. For example, the oil company YPF, controlled by the Argentine State, has received authorization to carry out a new exploration campaign in an area north of the enormous Vaca Muerta unconventional hydrocarbon formation and under the jurisdiction of the Argentine province of Mendoza (west ), as revealed by official sources. As reported by the Government of Mendoza in a statement, the provincial Executive granted permission for YPF to begin the second exploratory period in the CN VII A area.
Argentina’s great hope
From YPF itself they explain that The country’s crude oil production could double (Argentina currently produces just over 700,000 barrels of crude oil per day) in the coming years to exceed one million barrels per day, which would generate exports of 18 billion dollars annually in 2026. with a surplus in the energy balance of about 12.5 billion dollars. This would mean the entry of a ‘flow’ of dollars that would allow Argentina to face with greater security the end of the exchange rate and the payment of the country’s external debt. Even those estimates could fall short. There are calculations that assure that Argentina could achieve an energy surplus of $30 billion in 2030, according to a report released last week by the firm PwC.
According to projections from the consulting firm, Argentina would achieve a production of one million barrels of oil and more than 250 million cubic meters of gas per day by 2030. “Vaca Muerta has the geological capacity to take the country to levels of production never seen before. In this new scenario, the interest of local and international companies in investing in unconventional oil and gas is very significant given the high potential that Vaca Muerta has”, Ezequiel Mirazón, partner at PwC Argentina and expert in energy and mining.
Although this miracle of Vaca Muerta is not directly related to the Government of Javier Milei (it is indirectly because Milei is facilitating the investment and providing legal certainty) it could become an important leg to help Argentina avoid default and recover from the economic crisis in which the country has been immersed since last year.
“With regard to gas, Argentina could be self-sufficient and constitute a strategic resource as part of the energy transitions to contribute to decarbonizing the world’s economies. Our country could quickly become a firm exporter of gas to the region, especially to Chile and Brazil and in a later step, an exporter to the world with an LNG plant,” YPF assures.
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