Argentina has officially launched a tender for the construction of a new 563-km natural gas pipeline designed to transport volumes from the country’s huge Vaca Muerta shale formation. The pipeline would connect the town of Tratayen in the Neuquen province with Salliquelo, west of Buenos Aires.
Companies have until 8 July to submit bids, which are scheduled to be opened the same day. The estimated cost of the project’s initial phase is $1.5 billion; the work is estimated to take about 18 months to complete.
The pipeline will have the capacity to transport 24 million m3/d, equal to just below 850 MMcf/D, expanding Argentina’s natural gas transport capacity by 25%.
Argentina's state-controlled oil company YPF, the largest producer in Vaca Muerta, will be given priority access to the pipeline.
Argentina aims to reverse a major energy deficit and bring in much-needed foreign currency through gas exports, according to Reuters.
The Vaca Muerta shale is a continuous tight-oil and shale-gas reservoir of Late Jurassic and Early Cretaceous age. The formation covers a total area of 30000 km2. The shale is at a depth of about 2900 m, where oil and gas have been found. The Vaca Muerta shale formation is the world’s fourth-largest shale-oil reserve and the second-largest for shale gas.
The Vaca Muerta play has becomethe principal energy resource for Argentinaafter a decade of large-scale studies and pilot and first projects. More than 1,200 wells were drilled by 25 operators and more than 18,000 hydraulic fractures were completed. The current production in the formation represents 23% of the gas and 27% of the country’s total oil production.
Analysis from Rystad Energy had production from the formation at around 145,000 B/D at year end 2021. Gas production from the shale was down to around 900 MMcf/D and was not expected to grow in the medium term.
Oil growth has been driven by companies like YPF, the discoverer of the play, Shell, and independent Vista Energy. Vista holds interest in more than 183,000 acres .
At the end of 2021, Vista Energy had produced almost 180 million BOE from the play, with almost all of the producing acreage operated and 81% of production being oil. The operator touts up to 850 newly identified well locations, of which 550 are in Bajada del Palo Oeste.
YPF recently unveiled plans to drill two new wells in a northern section of Vaca Muerta, aimed at widening development of the play. If the results are promising, the company said it will drill 150 wells in the region.
As activity in the Vaca Muerta ramps back up after COVID-19-related delays, Argentina’s Ministry of Energy is announcing a new production record from the formation every month. For 2022, production from the play is expected to be 226,000 B/D, 35% more than the previous year and 40% of the total production of Argentine crude.
