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Petrogas spuds in Argentina’s shale frontier

Firm seeks to establish the viability of its acreage in the Vaca Muerta shale formation

Americas Petrogas (AP) has spudded the first well drilled under a farm-in agreement with ExxonMobil in Argentina’s Vaca Muerta shale formation, as it seeks to establish the viability of its acreage.

The Los Toldos Este well lies in one of the company’s four Los Toldos blocks, covering 660 square km of the Neuquén Basin, where Repsol recently discovered almost 1 billion barrels of unconventional oil and gas.

AP, as operator, plans to drill to a total depth of some 3,250 metres with the principal aim of gathering data from the Vaca Muerta shale, as well as analysing other conventional formations.

The Canada-based firm signed the $76 million farm-in agreement with ExxonMobil in August, enabling the supermajor to take a 45% stake in the four Los Toldos blocks, in exchange for a $53.9 million investment in initial exploration. ExxonMobil will spend another $22.4 million, if commercial reserves are discovered.

AP holds a 45% operating stake in the blocks, while Argentina’s state-run Gas y Petroleo del Neuquén holds the other 10% interest. AP also has other unconventional and conventional exploration Neuquén acreage.

The basin, which straddles the Argentina-Chile border, has been attracting growing interest, following a series of promising finds. In December 2010, YPF, Repsol’s local subsidiary, said it had discovered 4.5 trillion cubic feet of gas – Argentina’s biggest gas find in 35 years.

That was followed up in November with Repsol’s find of 927 million barrels of oil equivalent (boe) – 80% of that oil – in 428 square km of the Loma La Lata Norte formation, in its 12,000 sq km Neuquén basin concession. The discovery nearly doubled Repsol’s reserve base and added 40% to Argentina’s oil resources. The company is now testing a further area of 500 sq km.

A new frontier

Repsol chief executive Antonio Brufau told the World Petroleum Congress in Doha, Qatar, this week that Argentina was a “new frontier” that would provide long-term hydrocarbons production. He said his firm expected to spend about $30 for each barrel of oil it develops in the first section of its shale deposit.

Others are also preparing drilling programmes. US firm EOG Resources plans to begin drilling in its 400 square km concession in the Vaca Muerta “within weeks”, according to chief executive Mark Papa. He told an energy conference in Houston that it was too early to make any resource estimates.

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