Oil and natural gas were flowing from the Vaca Muerta Shale at the rate of 22,900 bbl/d of oil and 1.9 MMcm/d (67 MMcf/d) of natural gas for YPF at the end of the first-quarter 2015. Argentina, the U.S., Canada and China are the only four countries in the world producing commercial volumes of oil and gas from shale plays.

YPF sees a significant upside in the unconventional resource base in Argentina―an estimated 27 Bbbl of oil resources and 22.7 Tcm (802 Tcf) of natural gas.

As the largest shale operator in the country, YPF has three joint ventures in the Vaca Muerta play in the Neuquén Basin: with Chevron at the Loma Campana concession, Dow Chemical at the El Orejano concession and Petronas at the La Amarga Chica concession. In addition, Sinopec and Gazprom recently signed memoranda of understanding with YPF to jointly develop shale in the basin, according to the U.S. Energy Information Administration.

Loma Campana development
As the sixth largest producer in Argentina, Chevron Argentina has several interests in the Vaca Muerta Shale. The most active work is on the Loma Campana concession with YPF as the operator. During 2014 there were 19 rigs active drilling vertical and horizontal wells. A total of 166 wells were drilled in 2014. Plans call for drilling another 150 wells. At year-end 2014, 290 wells
were connected to production facilities.

According to an April 2015 shareholders presentation, YPF expected the complete development to include 1,400 wells at a cost of $15 billion.

This follows agreements that were signed by Chevron and YPF in early 2014. The agreements called for continued investment toward large-scale drilling and production in the 96,000-acre Loma Campana concession, according to Chevron.

The agreements also call for exploration of shale oil and gas resources in the 49,400-acre Narambuena area located about 100 km (60 miles) north of Loma Campana in the Chihuido de la Sierra Negra concession, which is one of the main producing areas in the Neuquén Basin of west-central Argentina. The exploration plan for Narambuena includes a total of nine wells to be drilled in two phases, according to the 2014 supplement to the annual report.

On March 18, 2015, a Chevron press release noted that YPF was making impressive progress as the first development project in Argentina’s Vaca Muerta Formation. Since January 2014 production has doubled, and Loma Campana has become the second-largest oil producer in Argentina. The project area has an estimated recoverable resource of 1 Bboe.

To achieve the Loma Campana development plan, the project team draws on shale experience gained in Chevron’s Appalachian/Michigan and Midcontinentoperations. The Loma Campana team uses walking rigs to drill up to eight wells on one well pad.

Chevron subsidiary General Manager Kevin Maneffa credits YPF for forging the path at Loma Campana after drilling 120 wells during a pilot phase in 2012 and 2013. “The lessons learned from the pilot wells are enabling us to standardize operations and drive costs down, which is key to shale development,” he said.

YPF has been able to reduce the cost per well from $11 million in 2011 to $7.6 million in 2014. Through the first four months of 2015, the company has averaged $7 million per well.

In its joint venture with Petronas, YPF was scheduled to begin drilling in the La Amarga Chica concession in secondquarter 2015. The first stage involves 30 vertical and horizontal wells at a cost of $550 million. The entire development will include more than 1,000 wells at a cost of $9 billion.

The first stage of its work at the El Orejano concession with Dow called for 16 wells at a cost of $180 million. The complete development will include 12 vertical and 172 horizontal producing wells.

Other activity in Argentina
Total has been involved in a large-scale drilling campaign in the Vaca Muerta Formation in Neuquén Province to assess shale gas and oil potential in its operated Neuquén licenses, including Aguada Pichana, San Roque, Rincón la Ceniza and La Escalonada (85% interest in each) along with Aguada de Castro and Pampa de las Yeguas II (42.5% interest in each).

Total has nonoperated interests in Cerro Las Minas (40%), Cerro Partido (45%), Rincón de Aranda (45%) and Veta Escondida (45%).

Wintershall Energía sees the potential of unconventional reservoirs in Argentina as huge, especially in the Vaca Muerta Formation. The company has interests in the San Roque, Aguada Pichana, Bandurria and Aguada Federal concessions.

In March 2015 Wintershall as operator launched its first vertical exploration well in the Aguada Federal concession. The company plans to drill a second well in 2015. Depending on the results, the company will drill six horizontal wells to optimize the development concept. The block, which includes the Vaca Muerta Shale, is in the eastern part of Neuquén Province. The reservoir is situated
between 2,700 m and 3,000 m (8,856 ft and 9,840 ft) deep.

In early 2012 Wintershall Energía was awarded two exploration permits for the blocks CN-V and Ranquil Norte in Mendoza Province. In spring 2013 a 3-D seismic survey was run in the CN-V block. The companies investigated the Ranquil Norte area in 2014.

In the Aguada Pichana block more than 270 wells have been drilled. For 2015 around 10 new wells are planned, most of them targeting tight gas reservoirs.

In 2014 a shale gas pilot project consisting of 12 horizontal wells with horizontal sections ranging from 1.5 km to 2 km (0.9 miles to 1.2 miles) started drilling the Vaca Muerta Formation.

GeoPark noted in its 2014 annual report that it “relinquished two nonproductive blocks in Mendoza Province and also participated in the Mendoza bidding round to acquire a nonoperated 18% interest in two blocks with our partner Pluspetrol. In 2015 we will carry out a seismic survey in an effort to delineate an attractive new shallow oil play [20 MMbbl to 30 MMbbl potential].”

In Fortín de Piedra, Tecpetrol is currently drilling development wells in the Vaca Muerta Formation.

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