Pan American Energy and Tecpetrol, two of the biggest gas producers in Argentina, plan to increase Vaca Muerta gas production to export more supplies to Brazil and Chile in the near term as two pipeline projects widen the sales potential from the shale play, executives said Sept. 10.
"We are considering selling to Brazil by using all the midstream capacity available to reach those markets," Alejandro López Angriman, vice president of reserves development at BP-backed Pan American Energy, said at an oil event organized by Shell Argentina on the outskirts of Buenos Aires.
He said there is potential to make up for a decline in Bolivian gas exports to Brazil, which he said have declined to 14 million cu m/d from 25 million cu m/d over the past five years.
"This is an opportunity for Argentina," López Angriman said. "We can capture these opportunities with gas from Vaca Muerta. We have the reserves and the resources."
By his estimate, Argentina can sell some 5 million cu m/d to Brazil in the short term from Vaca Muerta, a huge shale play in Patagonia that has some 300 Tcf of resources to make it a gas supplier to the global market.
Rising shale output
Neuquén province is producing some 110 million cu m/d, around 90% of this from Vaca Muerta and a few tight formations. That is up from a most recent low of 49.6 million cu m/d in 2013, according to data from the province's energy department. Gas output is expected to reach 180 million cu m/d by 2030 and 270 million cu m/d by 2031, when a proposed 120 million cu m/d LNG export terminal is expected to be operating at full capacity, according to estimates from the Neuquén government.
The production growth is fueling the search for new markets, given that Argentina consumes an average of 140 million cu m/d and national production is surpassing 150 million cu m/d this year.
At the event, Ricardo Markous, CEO of Tecpetrol, said Vaca Muerta is already showing its huge potential.
Vaca Muerta's surge in production has turned around Argentina's own decline, taking output to 150 million cu m/d this year from a low of 113.7 million cu m/d in 2014. That increase has cut LNG imports from a peak of 104 cargoes/year in 2014 to an estimated 31 this year and probably around 20 cargoes in 2025, Markous said.
Midstream projects
The next step is to complete infrastructure projects to increase exports to neighboring countries, he said.
The first 22 million cu m/d of a new backbone Néstor Kirchner pipeline from Vaca Muerta to Buenos Aires province is in operation, and a project should be completed in October to revert the flow of another backbone pipeline from Buenos Aires province to northern Argentina.
That reversion project will allow Argentina to halt gas imports from Bolivia in October and begin to export more gas over existing pipelines built in the 1990s to Brazil, Chile and Uruguay, Markous said.
"We have to increase these exports," he said.
Argentina was exporting some 20 million cu m/d of gas to the region in the late 1990s and early 2000s, with most of it going to Chile. Those exports fell to zero in the 2010s before starting up again over the past few years to reach 4 million cu m/d this year, according to data from the Argentinian Energy Secretariat.
Tecpetrol produces some 24 million cu m/d of gas, mostly from Vaca Muerta, while Pan American Energy produces 20 million cu m/d, with more than half coming from the shale play, according to the data.
Source: Platts