Roundup: Vaca Muerta forecast, mine pipeline project, acreage award, emissions work tender

Vaca Muerta production forecast

The Argentine office of professional services firm PwC estimates that the Vaca Muerta unconventional hydrocarbons formation could be producing 1Mb/d oil and more than 250Mm³/d gas in 2030.

Accumulated investment at Vaca Muerta stands at around US$200bn, PwC said in a report. Investment started flowing around 2010.

Vaca Muerta’s biggest players are YPF, Tecpetrol, Vista Energy, Total Austral, Pan American Energy, Shell and Pluspetrol. 

Vaca Muerta production was 403,000b/d oil and 83Mm³/d gas in August, up 35% year-on-year and 22%, respectively.

Upstream appetites are being whetted by current and planned investment in midstream infrastructure, such as state-controlled firm YPF’s US$2.5bn Vaca Muerta Sur oil pipeline and terminal. LNG production is also on the drawing board.

PwC referred to the potential impact of the government’s Rigi incentives regime, expected to help unlock investment in midstream projects and export-focused upstream gas projects.

ALSO READ: The 5 biggest Vaca Muerta oil and gas producers

PwC Argentina tax & legal partner Juan Manuel Magadan said: “The Rigi investment incentive regime (RIGI) will play a fundamental role in developing the infrastructure necessary for Vaca Muerta to reach its potential. This regulatory framework allows attracting strategic investments through tax incentives that facilitate key infrastructure projects to optimize their productive and export capacity.”

Pipeline project

Argentine midstream gas firm TGN reported a negative net cash flow of 12.2mn pesos (US$12,200) in January-September related to pipeline project Gasoducto Vicuñas.

The 304km pipeline is being designed to carry Vaca Muerta gas to lithium mines in northern provinces Catamarca, Salta and Jujuy.

In the studies and engineering phase, the infrastructure is due to be in service from January 2027, local media outlet El Tribuno reported, citing a presentation given by TGN CEO Daniel Ridelener at a US conference.  

Outlay is pegged at around US$370mn and initial demand at 1.5Mm³/d, Ridelener was reported as saying. Seventeen lithium projects have reportedly expressed interest in gas acquisition. Via the Norandino pipeline, which connects Argentina to Chile, Vicuñas would link to Gasoducto Norte, recently adapted to permit the flow north of Vaca Muerta gas.

Argentine generators have entered into talks with lithium miners surrounding power line and clean energy provision. 

ALSO READ: Lithium in Latin America

The South American country is one of the fastest moving in the development of lithium mining, with more than 40 companies present in the country and more than 60 projects including those in the identification phase.

Estimates by the consulting firm CRU Group suggest that Argentina's lithium production could grow at a rate of 50% per year until 2027. Argentine lithium exports could reach around US$8.7bn by 2030, according to the national mining directorate, 10 times as much as that recorded in 2023.

Acreage award

Argentine upstream firm Aconcagua Energía was awarded a 25-year extraction concession for Mendoza province hydrocarbons acreage Payún Este.

Aconcagua Energía is required to invest US$8mn in the area within a decade, of which US$7mn must be spent within the first five years.

In 2012, YPF said it had discovered unconventional crude at several blocks, among them Vaca Muerta acreage Payún Oeste. YPF never registered large-scale oil production at the license.

Planned work at Payún Oeste includes a horizontal well targeting Vaca Muerta.

Aconcagua executive director Diego Trabucco said in a provincial government statement: “Mendoza’s conventional [hydrocarbons] production is important, but unconventionals is the most important development vector and we’re willing to accompany this process that the province needs.”

The bulk of upstream investment is being channeled into Vaca Muerta, the majority of which is within neighboring Neuquén province. 

Covering 179km2, Payún Oeste joins Aconcagua’s existing four blocks in Mendoza: Chañares Herrados, Puesto Pozo Cercado Oriental, Atuel Norte Explotación and Confluencia Sur, which have associated investment commitments of more than US$130mn.

Traditionally conventionals-focused, the company participated in state-controlled oil firm YPF’s Proyecto Andes mature conventional asset divestment program but failed to secure acreage in the first phase, local media outlet Más Energía reported.  

Aconcagua aims to participate in future Proyecto Andes rounds, it added. YPF recently put seven more areas, in the Austral basin, up for grabs.

A key challenge in the conventionals segment is driving down extraction costs. 

Aconcagua’s top three producing assets are Entre Lomas, 25 de Mayo-Medanito Sur Este and Jagüel de los Machos (all Río Negro province), according to July data from local industry chamber IAPG. Entre Lomas produced 411m³/d oil and 402,000m³/d gas that month. The firm acquired the assets from Vista Energy, which is focused on shale. 

In the first half of the year, Aconcagua established a subsidiary known as Aconcagua Energía No Convencional. 

Emissions monitoring

Chilean state oil company Enap launched an emissions-related tender.

The winning party will be required to measure emissions from fixed sources at Enap’s Bio Bio refinery in Biobío region and conduct validation tests of continuous emissions-monitoring systems.

Bids will be received until January 13, according to tender documents.