China Planning Railway To Transport Vaca Muerta Production

PowerChina said railway plans are moving forward under Argentina’s current administration and China could provide the financing for the $1.2–1.5 billion project.

Train in Argentina

PowerChina is planning to build a railway in Argentina to transport crude oil and natural gas from the Vaca Muerta region to the port city of Bahia Blanca. The state-owned company is engaged in discussions with Argentina’s state-owned rail ADIF, which would connect the Vaca Muerta shale region and the petrochemical and refinery hub.

The railway could also ship sand for fracturing operations.

“There is a concrete plan that we have been working on for almost two years,” PowerChina’s Argentina President Tu Shuiping told Reuters. “We were talking with people from ADIF to see how the project can be presented and then seek joint financing,”

Shuiping noted plans for the rail line stalled under Argentina’s previous administration due to a lack of financing options, but the project is moving forward under the current administration and China could provide the financing for the $1.2–1.5 billion project.

Argentina’s ministry of transportation did not confirm plans with PowerChina, but said it was in discussion with many companies for development of the Vaca Muerta infrastructure.

The Vaca Muerta shale formation has technically recoverable resources of 308 Tcf of natural gas and 16 billion bbl of oil and condensate within 8.6 million acres and is geologically comparable to the Eagle Ford shale play in southern Texas. Only 4% of Vaca Muerta’s acreage has entered the development phase so far.

The US Energy Information Administration (EIA) said in June 2019 that Argentina’s domestic natural gas production was rising steadily because of increasing production from the Neuquén Basin’s Vaca Muerta shale and tight gas play. Production from Vaca Muerta surpassed 1 Bcf/D in December 2018.

Natural gas from Vaca Muerta is already transported by an existing pipeline network to the port of Bahia Blanca, where it is liquefied at Tango FLNG. Argentina’s first LNG export cargo shipped June 2019 from the Tango FLNG.

ExxonMobil said in 2019 it was also moving forward with long-term oil development in the Vaca Muerta, expected to produce up to 55,000 BOE/D within 5 years.