Recent Hydrocarbons discoveries in Argentina: challenges and opportunities
YPF S.A., the biggest E&P Argentine company, has recently announced the discovery of conventional oil at the Chachahuén block located in south Mendoza province, within the Neuquina Basin. The announcement indicated that the finding, equivalent to 40 million barrels, comes as a result of the 2010-2014 Exploration Development Program launched by the company in 2009. The test drillings proved the presence of 500 barrels of oil per day with an average density of 24° API. The third drilled well is still being tested. YPF informed that it will carry out significant exploratory investment in the Chachahuén block by acquiring 3D seismic covering 550 square kilometers (212 square miles) and drilling 28 wells.
This announcement was made two months after the release of a huge unconventional hydrocarbons discovery, following exploratory efforts in the Vaca Muerta formation in Neuquén province, also at the Neuquina Basin.
At that time, the company had confirmed recoverable resources of 927 million barrels of oil equivalent of unconventional hydrocarbons, 741 million of which are high quality oil in an area of 428 square kilometers (165 square miles) of Loma La Lata Norte in Neuquén. This area is part of the 12,000 square kilometers to which YPF owns rights in the Vaca Muerta area, site of one of the world’s largest (30,000 square kilometers/ 11,583 square miles) and highest quality unconventional resources.
YPF has also begun exploration and production activities in another discovery spot, a 502 square kilometers (194 square miles) producing area in the same Vaca Muerta formation. The well is producing 400 boepd of high quality shale oil (35° API).
These announcements, as long as similar ones made in the last few months by other E&P companies operating in Argentina, evidence the possibility of a significant increase in the country’s recoverable reserves. Undoubtedly, these are good news, but they also bring enormous challenges and opportunities: the need for substantial investments to continue exploratory efforts, update existing production, refining, transportation and distribution facilities and construct new ones. All of that aimed at making hydrocarbons and by-products available to eagerly demanding users across Argentina, be them industrial, commercial or residential.
Besides, the Argentine industry is close to use its maximum installed capacity, since it reached an almost 85% average-level by the end of 2011, leaving small room to growth unless new investments in infrastructure are carried out.
For further information on this topic please contact Juan Martín Allende