“Chevron decided to continue its partnership with YPF to advance in the stage of mass development of unconventional hydrocarbons in Vaca Muerta, having successfully completed the pilot project started last year,” the Argentinean oil company informed through an official statement on its site.
The CEO of the company, Miguel Galuccio, welcomed the decision of Chevron: “We are pleased they have chosen to continue this partnership; It is a great demonstration of confidence in the work of YPF and the potential of unconventional hydrocarbons from Argentina.”
This post-pilot phase, during which YPF will remain the operator, will include the drilling of 170 additional wells this year, with a combined investment of more than 1.600 million dollars in drilling, completion and construction of production facilities.
“Last year we said that it was a strategic and long-term partnership. This continuity of work and exploitation project launched only serve to confirm that we choose the right partner and to the extent that today need YPF and the country,” said Galuccio.
The oil company emphasizes that the agreement between YPF and Chevron is the most important achieved to date for the development of unconventional hydrocarbons in the country.
The pilot project developed until March 2014 involved an initial outlay of 1.240 billion dollars (fully funded by Chevron) that allowed the development of 20 km2 and the drilling of 161 wells.
“YPF is a reliable partner and operator, the project is moving in the right direction,” said Ali Moshiri, president of Chevron Africa and Latin America. “We are pleased with the progress and we hope to continue providing our technical expertise and investment to help Argentina to achieve the goal of energy self-sufficiency,” he said.
Each year will hold a budget projection until reach the total development of the area.
The cluster is committed to an area of 395 km2, with an estimated population of more than 1,500 wells to reach a production of more than 50 billion barrels of oil and 3 billion cubic meters of associated natural gas per day, making it the main productive asset of YPF and potentially of Argentina.
This first collaboration, enabled the company to identify the best places to drill (“sweet spots”), to significantly reduce the time and hence the cost of drilling. Regarding costs, the company achieved a significant improvement: in two years the cost for a vertical well down from 11 million dollars to the current average, which is around 7.5 million dollars.
The total area of ‘Vaca Muerta‘ is about 30,000 km2, of which YPF has a net equity equal to 12,000 km2. Today, YPF has 19 rigs in the area of ‘Loma Campana’ and over 20,000 equivalent barrels of oil are extracted.
The project in Chihuido of Sierra Negra
Additionally, it was announced today the expansion of the strategic agreement between the two companies with the aim of delineating a future cluster development of oil shale exploration program with 9 wells (7 vertical and 2 horizontal), which will begin in Narambuena, an area of 200 km2 in the province of Neuquén, in the Chihuido grant of Sierra Negra.
This exploratory project further comprises applying methods of geophysical prospecting and mapping of surface and subsurface, allowing locate environments for the accumulation of petroleum or natural gas and determine the best methods for removal.
The estimated investment for the exploratory project will be $140 million that will be provided entirely by Chevron. This phase, during which YPF will also be the operator, will be completed in an estimated four-year term, although times may be accelerated according to the results.
Chevron trusts in Vaca Muerta
The second largest U.S. oil company has strong expectations for the current year in relation to the favorable results expected to reach their exploration and production projects in Argentina and China.
The company glimpses that sooner or later it could reverse the trend of decline in the production that has been dragging for a decade. Between January and February there was an equivalent to 2.579 million barrels of oil per day compared to 2.645 million per day that produced in the first quarter of 2013.
When Chevron reports results for the entire three-month period on May 2, output is expected to come in at 2.61 million barrels, based on the average of three analysts’ estimates compiled by Bloomberg.
Reuters agency emphasized that Chevron’s production increase will come from the formation of unconventional oil and gas Vaca Muerta in Argentina. It is believed that the place has the largest oil reserves in the Western Hemisphere.
Almost 17 platforms will drill 140 new wells in Vaca Muerta this year, according to estimates by Chevron, which would help increase production by about 15,000 to 80,000 boe boe for 2017.
Chevron is scheduled to report its quarterly results on May 2 and will hold its annual shareholder meeting on May 28. Its shares closed on Wednesday up 1.1 percent to $ 119.1 on the New York Stock Exchange.