Argentina has about 27 billion barrels of technically recoverable shale oil reserves, according to the U.S. Energy Information Administration. (Source: Shutterstock.com)
Exxon Mobil Corp., which is ramping up production in the largest oil field in the U.S., has now committed to expanding its project in Argentina’s Vaca Muerta Basin.
The Irving, Texas-based company said June 11 it plans to complete 90 wells in the Argentinian shale play along with a central production facility and export infrastructure, producing up to 55,000 barrels of oil equivalent per day (boe/d) within five years. If this phase is successful and market conditions are favorable among other factors, Exxon Mobil said it may pursue a second phase that would add up to 75,000 boe/d.
The development is located in Argentina’s Bajo del Choique-La Invernada Block, which spans some 99,000 acres in the Neuquén province.
RELATED: Vaca Muerta: Poised For Liftoff
The decision to proceed with Phase One comes after the company, working with partner Gas y Petróleo del Neuquén (10%), successfully brought three wells online—with three more gearing up for production—as part of an exploration pilot program.
“We are encouraged by the excellent results of our Neuquén pilot project and look forward to increased production through this significant expansion,” said Staale Gjervik, senior vice president of unconventional at Exxon Mobil, said in a statement. “The reforms implemented by the federal and provincial governments have been critically important to enabling the development of the Vaca Muerta Basin as one of the country’s main energy resources.”
Argentina has been working to bounce back from an economic crisis by encouraging development to help increase revenue. Among its latest moves was exempting an import tax on certain goods and machinery, including those used in the Vaca Muerta shale play.
Other incentives have included holding more licensing rounds, particularly for offshore acreage, and offering tax exemptions for companies that invest more than $250 million during a three-year period. The government is also on a path toward eliminating natural gas subsidies by 2022, a decision intended to raise “domestic prices to attract sufficient investment in production,” according to the U.S. Energy Information Administration (EIA).
Argentina has about 27 billion barrels of technically recoverable shale oil reserves, the fourth-largest in the world, EIA data show. About 60% of the country’s reserves are located in the Vaca Muerta.
“Exxon Mobil has been an active player in the Neuquén Basin since 2010 and in Argentina for more than 100 years,” said Daniel De Nigris, Exxon Mobil’s lead country manager, said in the statement. “We will continue to work closely with the government and our partners and will use our expertise and capabilities to bring jobs and other benefits to local communities.”
Development of the South American country’s shale oil and gas reserves has been on the agendas of several big oil companies as the industry awaits the next major shale developments other than those in North America, home of the prolific Permian Basin.
Argentina’s YPF SA, TecPetrol SA, BP Plc, Total SA and Royal Dutch Shell Plc are also Vaca Muerta players.
RELATED: Argentina’s Vaca Muerta Shale Play Takes Shape For Total
Velda Addison can be reached at vaddison@hartenergy.com.
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