Argentina shale output rises on fewer wells
Wednesday, Jun 07, 2017
Argentina produced more oil and natural gas from fewer unconventional wells in the first quarter of 2017 than before, a report has found.

In the first quarter, companies drilled 66 wells in shale and tight plays, 24 less than in the same period last year, according to a study by Hub Energia, a consultancy in Buenos Aires, published last week by Austral University.

Even so, unconventional gas production rose 26%, while oil output was up 40% over the same period.

This came in a large part thanks to an increase in the number of horizontal wells, which have been found to be more productive than verticals, the study shows.

Another boost came from an improvement in the learning curve of how to develop plays like Vaca Muerta, the biggest for shale oil and gas in Argentina, Luciano Codeseira, co-author of the quarterly report with Roberto Carnicer, both of whom are oil and gas professors at the university.

Based on their findings, unconventional gas production averaged 28.9 mcm per day in the first quarter. Of this, shale gas production increased 31% to 5.65 mcm per day and tight gas by 25% to 23.3 mcm per day.

Unconventional oil production shot up 40% to 41,072 barrels per day in the first quarter from 29,436 bpd in the year earlier period, according to the report.

Despite this increase, the number of wells drilled fell 24% to 66 in the first quarter from 90 in the year-earlier period, with those for oil falling 20% to 20 from 25 and those for gas dropping 44% to 45 from 65.

The key for the increase in production stems from greater productivity.

With the shift to horizontal wells, with their longer lateral sections and greater number of frack stages, companies have found them to be “significantly more productive than vertical ones,” Codeseira said. This has marked “a change in the industry.”

YPF, the country’s state-run energy company and busiest shale driller, started developing Vaca Muerta in 2012-13 with a focus on vertical wells. However, it switched over the past few years to 1,500-metre horizontals, and is now doing them longer at 2,500 and 3,200 metres, allowing for more frack stages.

While this makes the wells more expensive, the productivity gains are driving down the cost per well in terms of barrels of oil equivalent, according to the company. YPF has said it aims to cut its well development costs in Vaca Muerta to US$10 per boe by the end of 2018 from US$13 million this year.

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