RE: A news article from today...24 Sep 2018 17:56
FAO Falkland investor
A few years ago, when the giant shale play of Vaca Muerta was starting to lure oil majors such as Chevron, ExxonMobil and Shell to Argentina’s south-west, a small company called Roch struck oil far away at the country’s southern tip.
The result surprised Ricardo Chacra, the company’s president. Roch had found oil in Tierra del Fuego, traditionally a source of natural gas, in a formation that had not been thought to hold much promise after more than a century of exploration in Argentina.
“We found something new,” Mr Chacra says. The find has fuelled optimism that Argentina’s mature conventional oil and gas reservoirs may have more to give. “When you drill into a mature field, you expect to drill into a squeezed lemon,” Mr Chacra says. “You take out what you can. But sometimes you find a virgin lemon.”
Argentina first struck oil early last century on the mainland of southern Patagonia, about 1,000km north of Tierra del Fuego, and exploration and production spread to the west and north-west. Argentina has the fourth-largest proven oil reserves in South America, trailing Venezuela, Brazil and Ecuador and equal with Colombia. But production and reserves sagged under the populist Peronist governments of 2003-15, as price controls and other regulation deterred exploration.
President Mauricio Macri has been removing such constraints to bring capital back to Argentina and his policies have attracted several oil majors. Most of them, however, are going to exploit Vaca Muerta’s shale, the source of unconventional oil and gas that is promising to make Argentina an energy powerhouse for the Americas as a whole.
While a handful of smaller companies has wanted to invest in Vaca Muerta, “it’s incredibly expensive”, says Fiona MacAulay, chief executive of London-based Echo Energy. Instead her company is exploring three conventional blocks in the south of the country at what she estimates to be a 100th of the cost of Vaca Muerta acreage.
Thanks to Argentina’s long history of oil activity, talent, services and infrastructure are available. Gas is delivered by pipeline to Buenos Aires and there are ports to handle oil storage and deliveries.
“The big conventional finds have already been made in Argentina,” says Hugo Giampaoli of local energy consultants GiGa. Even so, they have more to offer. Luciano Fucello, country manager for Houston-based services company NCS Multistage, estimates that only 20 per cent of Argentina’s oil has been recovered.
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