Tierra del Fuego energy watch

A public hydrocarbons company in Argentina’s Tierra del Fuego province will be authorized to partner with other firms.

So reads the text of a recently promulgated law that approves the formation of the provincial venture, which will be called Terra Ignis.

The firm, the law states, will be able to “link with public, private or mixed companies, both national and international via all types of agreements of association and/or business collaborations provided by the laws of the Argentine Republic, as well as access sources of financing, both internal and external.”  

When awarding licenses for acreage where no permit has already been granted, the province is authorized to give priority to Terra Ignis over third parties. 

The first steps in the creation of Terra Ignis involve appointing a board, registering the company and injecting funds into it, the provincial government’s hydrocarbons chief, Alejandro Aguirre, said in a government statement.

“The approach we have for Terra Ignis is to build it out, creating business units,” Aguirre added. 

He added that a focus could be on wells that record low productivity and have not attracted interest from other companies.

“In these cases, with a small investment you can increase production, capitalizing on some consumables, such as oil,” Aguirre said.

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Tierra del Fuego officials presented findings of the province's study into the economic feasibility of green hydrogen production.

The research, produced by the provincial government and company Fractal ARG, also encompasses blue hydrogen and derivative products. 

Derivative product green ammonia, which can be used in fertilizer production and other applications, is highlighted as a key opportunity.

The estimated levelized cost of production of green ammonia in the province in 2030 is US$346-US$619/t, compared with the target market price of US$400. For 2050, local production costs could drop to US$254-US$376/t, with the market target price falling to US$300/t.  

“The levelized cost of production in Tierra del Fuego has a significant competitive advantage with respect to its principal component, green hydrogen, stemming from the low cost of wind power,” a presentation from company Fractal states.

The model plant for the report uses 2.55GW of wind capacity, 2GW of electrolyzers and a Haber-Bosch ammonia plant to produce 1.15Mt-1.28Mt/y. For all elements included, among them a water plant, the required outlay is US$6bn, the report states.

Argentina’s south has abundant wind power resources. Tierra del Fuego and its coastal waters also host conventional hydrocarbons, chiefly natural gas, used in the production of blue hydrogen. Nationally, output of conventional oil and gas has been trending down as upstream investors focus heavily on unconventionals at Vaca Muerta. 

Aguirre said Tierra del Fuego needed a green hydrogen roadmap, “so that when investors come, they know what the administrative requirements are to start to produce clean energy in our province.”

The report authors recommend that lawmakers introduce associated policies and coordinate with the federal government, adding that the province could see not only the birth of a green hydrogen production industry, but also an ecosystem of providers and new industrial activities. Over the longer term, companies looking to decarbonize their operations may even relocate to Tierra del Fuego to decarbonize their operations, it states.

US firm MMEX Resources recently said it was in partnership with German energy solutions firm Siemens to evaluate a US$500mn project to produce 55t of green hydrogen a day in the province, leveraging 155MW of windpower in the Río Grande area. 

Read the report here, in Spanish.