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Argentina Shale Production 2017

The unconventional oil and gas production in the Argentine Republic is concentrated in the Neuquén Province from where tight and shale formations are exploited being Vaca Muerta, Los Molles and Lajas the main formations of interest. The shale gas production reached in August 2017 the 37,810Kboe per day and the shale oil production reached the 37,909kBbl/day in the same month, showing an increment of 18,5% for the gas and 34% for the oil production compared with August 2016.

The unconventional oil and gas production in the Argentine Republic is concentrated in the Neuquén Province from where tight and shale formations are exploited being Vaca Muerta, Los Molles and Lajas the main formations of interest. The shale gas production reached in August 2017 the 37,810Kboe per day and the shale oil production reached the 37,909kBbl/day in the same month, showing an increment of 18,5% for the gas and 34% for the oil production compared with August 2016.

Author:

Emanuel Omar Martin

Published online: 02/11/2018

© Creative Commons

Main exploitation areas:

The Neuquén Province is divided into 170 areas or blocks for the hydrocarbons exploration and production of which 56 block are currently in tender process for the production of unconventional hydrocarbons. By increasing the depth in all of these 56 blocks we are finding the shale formations: Vaca Muerta, Los Molles y Los Monos.

Figure 1 In this picture we can see a comparison of depth, thickness and TOC between the main Argentinians and US shale plays (Picture modified from Alex Valdez 2017).

Figure 1 In this picture we can see a comparison of depth, thickness and TOC between the main Argentinians and US shale plays (Picture modified from Alex Valdez 2017).

The operators companies that work in the area are divided into domestic, foreign companies and forming consortium between them. Among them we can highlight the oil company YPF, GyP, Pan American Energy and Pampa Energia which are developing pilots in different areas by forming consortia with Chevron, Exxon Mobil, Shell, Petronas and other as we can see in the next map of the Neuquén Province.

Figure 2 is a map of a part of the Neuquén Province showing the areas with shale activity and the companies working on they. (Picture modified from Alex Valdez 2017).

Figure 2 is a map of a part of the Neuquén Province showing the areas with shale activity and the companies working on they. (Picture modified from Alex Valdez 2017).

Drilling activity

Drilling activity has shown a reduction of 30% with respect to last year, going from the 140 wells drilled in the year 2016 to 90 wells in the year 2017 (August) in formations of tight and from 115 wells to 65 wells drilled in shale formations. In total have been drilled 703 wells in tight formations and 758 wells in shale formations in the country.

This reduction is due mainly to having gone from drilling vertical wells to drilling horizontal wells which require a greater time for its realization and termination due to its greater length and the greater number of hydraulic fractures stages that are made in them.

Figure 3 shows the historical unconventional drilling activity in the province, pink are shale wells and red are tight wells.

Figure 3 shows the historical unconventional drilling activity in the province, pink are shale wells and red are tight wells.

Well design

Since drilling and wells completion are the main investment in the industry together with the main responsible for the volume of hydrocarbons recovered from the productive formation all the operators companies are working in order to optimize their design.

For example the oil company YPF has been evolving from drilling vertical wells in the beginnings to drilling horizontal wells from 1500mt, 2500mt to 3200mts of lateral lengths with 40 fracture steps currently. Together with this the oil company has managed to reduce the drilling times by 27% cutting down also the development costs to 12,90 USD per barrel having as a goal for this year to reach values lower than 10USD.

Figure 4 these graphs show the cumulative oil and gas production vs months in vertical, directional and horizontal well. (Picture modified from Alex Valdez 2017)

Figure 4 these graphs show the cumulative oil and gas production vs months in vertical, directional and horizontal well. (Picture modified from Alex Valdez 2017).

Unconventional oil and gas production:

Oil production

To favor the unconventional oil exploitation in the country Macri government together with the Petroleum Labor Union fixed the oil barrel price during the year 2017 in a minimum price of 55USD for the Medanito crude (similar to the WTI) allowing to achieve a small growth in the production from 31983boe/day in August 2016 to 37909boe/day in August 2017.

Figure 5 shows the shale oil production in Argentina.

Figure 5 shows the shale oil production in Argentina.

Gas production

Also the gas price is regulated by the government in the country being in 4,5USD/MMbtu for the production of conventional gas and in 7,5USD/Mbtu for gas coming from unconventional wells during the year 2018; then it will gradually decrease from 0,5USD/MMbtu year after year until reaching the 6USD/MMBtu in the year 2021. Thanks to this, the production of unconventional gas has had a continuous growth achieved in August 2017 the 37810 Boe per day.

Figure 6 shows the shale gas production in Argentina.

Figure 6 shows the shale gas production in Argentina.

Current situation and political problems

Currently the development of the unconventional industry in the country continues to be stopped mainly by political problems and by the lack of investment in the energy sector inherited from the Kichner era together with the little planning by the provincial and national governments in the development of these reservoirs to future.

Because of this and the large volumes of investments that are required for their development and exploitation the growth shown over these years is mediocre if we want to make an analogy with the shale plays evolution in the United States.

Figure 7 shows the cumulative shale production from Vaca Muerta in a bubble map of the province, green represent shale oil and red represent shale gas.

Figure 7 shows the cumulative shale production from Vaca Muerta in a bubble map of the province, green represent shale oil and red represent shale gas. (Picture modified from Carlo Vale Piana 2017).

Necessary planning

For the correct exploitation of these mega oilfields that position the Argentina in the third and fourth places between the countries with largest reserves of shale gas and oil in the world, respectively, is necessary a comprehensive planning of theirs development throughout theirs useful lives.

To facilitate this work we can divide the shale plays exploitation in two stages:

A first stage that comprises the time necessary to achieve the energy supply of the country and a second stage from which the hydrocarbons produced in excess are exported to different markets.

Figure 8 shows the cumulative gas production from Vaca Muerta Shale in “The Orejano Play”, red points represent horizontal wells and orange points represent vertical wells. As we can see the new horizontal wells are reaching a larger volume of production than vertical wells in their whole life. (Picture modified from Carlo Vale Piana 2017).

Figure 8 shows the cumulative gas production from Vaca Muerta Shale in “The Orejano Play”, red points represent horizontal wells and orange points represent vertical wells. As we can see the new horizontal wells are reaching a larger volume of production than vertical wells in their whole life. (Picture modified from Carlo Vale Piana 2017).

For the first stage which we could name “achieving the self-sufficiency energetic ” should be planned and calculated to detail:

  1. necessary hydrocarbon production (flow) per day to satisfy the energy needs of the country and its continuous growth.
  2. number of wells to be drilled per year to obtain these flows and budget necessary for them.
  3. necessary infrastructure, dates for their realization and their budget. Here we should consider not only the usual surface installations for the production of an oilfield if not also the construction of gas and oil pipelines that connect the field production with the sources of consumption in the country, repair and/or build railways between the port and the oilfields to mobilize materials at competent prices, The expansion of existing distilleries or the construction of new distilleries and the planning of the growth in the affected urbanization.
  4. how many years are going to take this stage under the different possible scenarios
  5. determine which are going to be the politics that govern the oil and gas prices during these years in the country.
  6. which will be the laws and legislation that will govern the oil industry in its entirety during this period.
  7. the necessary labour force, number of jobs to be created and set the corresponding wages during this period.
  8. magnitude of the shale business in millions of dollars during this stage and its impact on the provincial and national economy as well as its percentage in the national GDP.

For the second stage which we could name “Net Exports” should be planned and calculated to detail again:

  1. remaining hydrocarbons volume during the Vaca Muerta useful life to be exported (and others shale formations).
    Figure 9 shows Argentina's gas and oil pipes infrastructure and main ports in the country
    Figure 9 shows Argentina’s gas and oil pipes infrastructure and main ports in the country
  2. wells number to be drilled and budget necessary for them
  3. how long will be this stage under primary recovery considering the different possible scenarios (at least)
  4. determine how will be regulated the oil and gas prices during this second stage
  5. carry out a market study to determine the possible countries to which the gas and oil produced can be exported.
  6. determine if the oil is going to be sold as crude oil or if it’ll be processed in the country and will be sold their distillates (Which will maximize profits, increasing jobs and the national technological development).
  7. plan the construction of distilleries and petrochemical plants (if they’re necessary), determine their location, dates for their construction and budget.
  8. analyze and determine the infrastructure needed to mobilize crude oil and/or its derivatives to ports and/or the construction and/or expansion of international gas and oil pipelines
  9. which will be the laws and legislation that will govern the oil industry in its entirety during this second period
  10. the necessary labour force, jobs to be created and set the corresponding wages during this period
  11. the magnitude of the shale business in millions of dollars during the second stage and its impact on the provincial and national economy as well as its percentage in the national GDP.

Once studied, analyzed and planned in detail the development of the shale formations (or at least of Vaca Muerta), the necessary infrastructure and have determined the judicial framework that will regulate the country in the energy sector during the following decades the government will be able to:

  • visualize and understand easily which means and implies the development of these large oil and gas reserves to the country
  • optimize and maximize their profits
  • show to investors that the development of the shale industry is fully planned and with a solid legal basis in such a way that gives them the necessary security to move their capitals to the country.

Investor Search:

What should the state oil companies and government make?

The first thing that the government representatives and state oil companies should make to get investors (After sitting down to work, plan, calculate and implement the results obtained) is to stop going around the world telling to the different oil companies the excellent petrophysical properties that have Vaca Muerta and the others shale formations in the country.

What they have to make is go and tell to them how many dollars they can earn for each dollar that they invest in the country, how low are the risks of their investments and how solid are their guarantees… When the representatives of the national oil can tell to the world how big is the shale business in Argentina and how much money they can earn with it, only then… only then there will be the necessary investments to develop the shale industry on the corresponding scale.

 

Author: Emanuel Martin, Petroleum Engineer.

Written by the author:

  1. BARNETT TECHNICAL INFORMATION
  2. Eagle Ford Geological Review
  3. WHAT IS HYDRAULIC FRACTURING?
  4. WHERE IS THE GAS STORED?
  5. HOW TO EVALUATE A SHALE PLAY?
  6. FLOW MECHANICS IN SHALE GAS
  7. EXCEL WORKSHEET TO CALCULATE THE PERMEABILITY IN SHALE GAS FIELDS
  8. BEHAVIOR OF ARPS EQUATION IN SHALE PLAYS
  9. U.S. Dry Shale Gas Production
  10. U.S. Tight Oil Production
  11. Argentina Shale Production
  12. U.S. Dry Shale Gas Production 2017
  13. U.S. Tight Oil Production 2017

References:

 

 

 

 

Argentina Shale Production 2017

Emanuel Martin
Emanuel Martin is a Petroleum Engineer graduate from the Faculty of Engineering and a musician educate in the Arts Faculty at National University of Cuyo.
http://www.allaboutshale.com

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