Milei’s Argentina is fast becoming the Texas of Latin America

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Many are loaded with specialist silica sand, the lifeblood of the fracking industry. There are too few trailers in Añelo to lodge the workers, so if you want to join the shale rush you take your chance.

Each well at Vaca Muerta needs some 15,000 tonnes of sand, 400 trucks of water, and a constant supply of diesel. Previous governments talked of upgrading the Norpatagónico railway to put an end to this daily ritual but the plans were overtaken by one debt crisis after another. The aqueduct bringing in water for the drilling rigs never got off the ground.

“Infrastructure is something we just don’t do in Argentina, everything has been crumbling for 70 years,” said Prof Alejandro Welbers from CEMA University.

But the needs are becoming more urgent and the stakes ever higher. Vaca Muerta is blessed with high-pressure seams of black marl at a depth of 3,000 metres, up to 450 metres thick, matching the richest layers of the Wolfberry shale in the Permian.

Rig crews from Halliburton, Schlumberger and Weatherford are already a feature of this strange moonscape, dotted with towering pillars of red sand.

McKinsey estimates that new fracking technology – smart drills, geonavigation, multi-drilling from the same pad – has cut production costs to $36 (£29) a barrel, an irresistible business in a world market with a structural price of $80-$90. It is the best low-sulphur light sweet crude. Gas comes in at circa $1.60 (MMBtu), low enough to produce liquefied natural gas (LNG) for export to Europe at competitive cost.

Shale oil output has quadrupled to 380,000 barrels a day (b/d) over the last three years, suddenly beating expectations, and tracking the Permian growth trajectory that so stunned Saudi Arabia, OPEC, and the old petroleum order.

The government target of 1m b/d already looks too modest, with wildcatters in Neuquén talking of Norwegian levels above 1.5m b/d as the potential peak.

“We think we can triple oil and double gas by 2028,” said Miguel Galuccio, founder of Argentina’s Vista Energy, which sank eight new wells here in March alone.

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Source link : https://www.telegraph.co.uk/business/2024/05/08/milei-argentina-shale-fracking-texas-of-latin-america/ Author : Publish date : 2024-05-08 03:00:00 Copyright for syndicated content belongs to the linked Source .