• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 4 hours Let's shut down dissent like The Conversation in Australia
  • 5 mins Ethanol is the SAVIOR of the Oil Industry, Convenience Store Industry, Automotive Supply Chain Industry and Much More!
  • 8 hours One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 5 hours Saudi State-of-Art Defense System looking the wrong way. MBS must fire Defense Minister. Oh, MBS is Defense Minister. Forget about it.
  • 3 hours Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 7 hours Trump Accidentally Discusses Technology Used In The Border Wall
  • 15 hours Donald Trump Proposes Harnessing Liberal Tears To Provide Clean Energy
  • 22 hours Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control
  • 14 hours Saudis Buying Oil From Iraq
  • 14 hours Saudis Confirm a Cruise Missile from Iranian Origin
  • 5 hours Hong Kong protesters appeal to Trump for support.
  • 1 day China Faces Economic Collapse
  • 1 day Democrats and Gun Views
Alt Text

Can Argentina's Shale Boom Survive?

Argentina’s shale boom is falling…

Alt Text

The U.S. Briefly Overtook Saudi Arabia In Gross Oil Exports

The United States briefly overtook…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Why The Argentinian Shale Boom Isn’t Taking Off

The Vaca Muerta shale play in Argentina has been a hot spot in global oil and gas for the past few years after exploration suggested it could yield oil and gas at competitive production costs, offering Argentina the chance to emulate the U.S. shale boom. But now obstacles are beginning to emerge, slowing down the potential boom.

A recent report by S&P Global Platts quoted industry insiders from the South American country as saying the play needed more independent E&Ps in addition to the supermajors to make the hoped for boom happen.

"For Vaca Muerta to be truly transcendent, there have to be 10, 15, 20 companies like us," the head of one such independent, Vista Oil & Gas, told S&P Global Platts. "If there were 10 projects like this, we could be producing 500,000 b/d for export," Gaston Remy said, referring to Vista’s project in the play that aims to produce 65,000 to 70,000 bpd of crude some day.

Among the Big Oil players who have declared interest in taking part in the development of Vaca Muerta are Chevron and Exxon. They have already invested in exploration there: Exxon has ponied up $250 million and plans to add another $10 billion to this over the next 20-30 years. Chevron invested $1.5 billion when it struck a joint venture deal with YPF four years ago.

This commitment has paid off in that Big Oil tech and expertise has helped reduce the production costs for wells in the Vaca Muerta play, which has been a major problem on the path of the play’s development. Yet it has not been solved fully.

Earlier this year, Oilprice reported that production costs at Vaca Muerta may need to go as low as US$40 per barrel of crude to make it internationally competitive. Yet such low production costs involve reducing the costs of things like frac sand, fracking itself, logistics, and related services. This would not be an easy job to do across the play, given the lack of frac sand deposits near the play or extensive logistics infrastructure. Related: Saudi Arabia, Iraq Prepared To Reverse Oil Production Cuts

On top of this all, Argentina is having yet another financial crisis and it is affecting the energy industry. As a result of the crisis, S&P Global Platts notes, a number of companies active in the Vaca Muerta play last year suffered losses or could not afford to boost exploration activities. Some, like independent Medanito, had to sell assets to reduce its debt pile in the face of a worsening economy.

Unfortunately, it seems the Argentine government is not making things easier for the energy players. Earlier this year the government changed the way it interpreted a subsidy program targeting the development of unconventional oil and gas resources. As a result, two of the largest companies operating in the play suffered several million dollars in losses and another eight delayed their investment plans for the area.

According to Argentine government estimates, the Vaca Muerta play could double the country’s oil production to 1 million bpd by 2023, with natural gas production rising to 260 million cubic meters daily. Yet to do this, the government and the industry must join forces to smooth the often sizeable bumps along the road.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play