Activity levels are at all-time highs in Argentina’s prime region for oil and gas production, but equipment and transport bottlenecks are limiting its growth, energy executives said on Thursday at an energy conference.
The Vaca Muerta shale region in the Neuquen province needs more drilling rigs, hydraulic fracturing fleets, water and natural gas pipelines to continue growing, officials from YPF (YPFD.BA), Tecpetrol and PanAmerican Energy said.
“Frac fleet availability is a massive bottleneck,” said Alexandre Ramos, Rystad Energy’s vice president of shale research. “We are seeing historically high gas production in Neuquen, so upcoming expansions are critical to allow Vaca Muerta to satisfy demand,” he said.
The South American country’s gas production so far this year is running 132 million cubic meters per day (mmcmd), according to state-run oil company YPF, below 2004’s peak 142 mmcmd. Crude oil production this year is running at 559,000 barrels per day (bpd), below the peak 847,000 bpd in 1998.
There are 34 drilling rigs operating in Vaca Muerta and there is a need for 19 more, said Omar Gutierrez, governor of Neuquen province. The province hopes soon to match the region’s 308,000 bpd oil peak and hit 140 mmcmd of gas by 2030, he said.
Water recycling and other materials will be needed to increase shale output, added Marcelo Robles, a PanAmerican Energy manager.
Horacio Marin, oil producer Tecpetrol’s Exploration and Production chief, said the province could double its crude oil production and grow gas output through 2030 with an additional $7 billion devoted to drilling and completion, and $12 billion in infrastructure investments.
Construction this year will begin on a gas pipeline from Vaca Muerta to hubs in the North which in the next year will ease bottlenecks that have pipeline utilization rates at over 90%. Exports through another gasline to Chile could also help ease the transportation issues.
A second segment of the gas pipeline to the North has not yet been put to auction.