YPF, CGC begin drilling at Argentina’s Palermo Aike

Argentina’s YPF SA and Compañía General de Combustibles SA (CGC) have started drilling the first exploration well, MAYPA x1, in the Palermo Aike unconventional formation in Argentine Patagonia. Palermo Aike, in Austral basin, is the second-largest reserve of unconventional hydrocarbons in Argentina following Vaca Muerta.

The drilling rig is sited in Fracción II-El Cerrito block—which is part of the unconventional concession owned by CGC, a unit of holding company Corporación América—situated 80 km from El Calafate, Argentina. In the event of positive results, YPF said in a statement, both companies will develop a portion of the formation, investing in additional wells and associated infrastructure.

With an area extending more than 12,600 sq km, Palermo Aike holds an estimated 10 billion boe, roughly one-third of the reserves found in Neuquén basin's Vaca Muerta formation. Palermo Aike is geologically similar to Vaca Muerta, with parallel spatial extension, target depth (3,000-3,500 m), marine origin, and potential.

"Given the volume to be investigated, this exploratory project represents a strategic opportunity to expand the exploitation of unconventional resources to other regions of our country, leveraging the experience gained by YPF in Vaca Muerta over the past decade,” the company said. 

Hugo Eurnekian, CGC president, said the project is significant, “a milestone in the exploration of the Austral basin, which holds immense potential.”

Pablo Iuliano, chief executive officer of YPF, said anticipation is high for the project “since it involves light crude oil, which we have been testing in vertical wells, and it has the strategic advantage of existing infrastructure for rapid access to export ports.”