Loma Campana: Argentina’s fastest-growing oil & gas concession
It is well-known that Argentina is one of the fastest-growing oil and gas producers in the world, with an abundance of natural resources. What is less-known is that once Vaca Muerta is running at peak production, the United States and Argentina will together account for 30% of the world’s gas production.
The shale giant is significantly larger than the famous Eagle Ford in North America (USA & Mexico) with its quality equaling the Permian basin’s.
Chevron and YPF sign agreement to develop Neuquen Province resources
In July 2013 the Argentinian oil and gas company YPF signed an agreement with Chevron in order to further the development of shale oil and gas resources. The companies agreed to an initial investment of $1.24 billion in order to kickstart the development of Loma Campana, Vaca Muerta’s first play. The initial program included the drilling of 100 wells in a part of the 96,000 acre concession.
Following less than a year of initial assessment and drilling, the results were highly above expectations, with the two companies signing a new deal, to continue with the development of the Loma Campana concession. The agreement focused on increasing the scale of the drilling and production, building off the significant progress made in the initial drilling.
New technology brings out Vaca Muerta’s potential
When YPF and Chevron started drilling the initial 100 wells, the vertical wells showed promise of 300,000 barrels EUR (Estimated Ultimate Recovery) per well. The use of new techniques and horizontal drilling, have increased the potential of the wells to 1 million barrels EUR per well, effectively tripling their future production, with an increasing number of wells showing potential for more than 1.5 million barrels This increase of returns was the result of an industry-wide drive for advancement of shale-related technology.
Following the boom of United States shale hydrocarbons production, more and more operators recognised the potential of shale plays. Operators invested massively in driving unconventional hydrocarbons technology, leading to leaps and bounds in the past 5 years. This rapid development of unconventional hydrocarbons technology, has lead to Vaca Muerta’s profitability skyrocketing.
The Loma Campana field has become Argentina’s second largest oil field, with more than 31,000 bpd produced daily, and projections showing that it can reach 100,000 bpd by 2024.
Rapid increase in production leads to significant midstream investments
As YPF is investing a minimum of $4 billion annually in order to increase production, the need for significant midstream investment in pipelines, storage and transportation increase as well. YPF plans to invest heavily in midstream projects to handle the increased output.
YPF is expanding an oil treatment in plant Loma Campana and plans to build an 88-km pipeline to accommodate the expansion of all Vaca Muerta fields, by the end of the year.
Plans are on the way for contracts worth $3.6 billion, on new infrastructure for Vaca Muerta to accommodate the goal of drilling 1,700 wells by 2023, quadrupling shale gas production and increasing crude oil production sevenfold. Meanwhile, Loma Campana’s expansion is creating contracts worth $1.8 Billion for pipelines linking Vaca Muerta with Buenos Aires, capable of moving 40 million cu m/day of gas.
Midstream investments will total more than $5.4 billion in the next three years alone. Midstream opportunities will multiply as more companies are investing in new concessions in Vaca Muerta, several new blocks will follow Loma Campana’s success.
The time to meet Argentina’s top operators and key decision-makers in now, at the first Argentina Oil, Gas & Energy Summit on 10-11 July 2019 in Hilton Hotel, Buenos Aires, Argentina.