Total sanctions, increases interest in Vaca Muerta development

Total SA has sanctioned development of the first phase of its operated Aguada Pichana Este license in Neuquen on the northwestern tip of Patagonia, part of Argentina’s Vaca Muerta shale region. The group also will increase its interest in the license to 41% from 27.27%.

Total SA has sanctioned development of the first phase of its operated Aguada Pichana Este license in Neuquen on the northwestern tip of Patagonia, part of Argentina’s Vaca Muerta shale region. The group also will increase its interest in the license to 41% from 27.27%.

Gas production from the project will be treated at the existing Aguada Pichana gas plant, which will reach its full capacity of 16 million cu m/day, or 100,000 boe/d.

“The development will benefit from the use of existing facilities, enabling the production of shale gas at a very competitive cost,” said Arnaud Breuillac, Total president of exploration and production. “This is one of the 10 major projects that exploration and production plans to sanction in 2017-18, taking advantage of the favorable low-cost environment, which is now approved and will contribute to the group’s production growth beyond 2020.”

As part of the project, the Aguada Pichana partners—Total Austral SA 27.27%, YPF SA 27.27%, Wintershall Energia SA 27.27%, and Panamerican Energy LLC 18.18%—have entered into a memorandum of understanding that includes an increase of Total’s participation to 41% in the project. The agreement remains subject to the approval of Neuquen Province authorities.

Total’s decision to sanction the project follows the Argentine Ministry of Energy and Mines’ announcement of its “Program for Stimulation of Unconventional Gas Developments,” which guarantees gas prices until 2021. The program aims to attract investment into Vaca Muerta and, in addition to Total, involves international firms such as Chevron Corp., BP PLC, and Royal Dutch Shell PLC.

Earlier this year, Shell and YPF signed preliminary terms and conditions of an agreement to develop a gas pilot project in the 55,000-acre Bajada de Anelo northeast of Loma Campana, a strategic region in Vaca Muerta that has both oil and gas resources (OGJ Online, Feb. 24, 2017).

Total has been in the Argentina for nearly 40 years and operates around 30% of its domestic gas production. In 2016, the group’s share of production in Argentina was 78,000 boe/d.

On the CMA-1 concession in Tierra del Fuego, Total operates the onshore Ara and Canadon Alfa fields and the offshore Hidra, Carina, and Aries fields. In February 2016, Total started production at the offshore Vega Pleyade gas and condensate field situated on the concession. Total is also planning to sanction the Fenix development before yearend 2018.

In the onshore Neuquen basin, the group holds equity interests in 10 blocks spanning more than 300,000 net acres, of which six are operated, including the Aguada Pichana and San Roque producing fields.

Total is currently conducting a pilot project on its operated Rincon la Ceniza license in the Vaca Muerta wet gas window, which thus far has produced “very encouraging results,” the firm says. An appraisal well drilled in 2016 on the nearby operated La Escalonada block to test the oil window also has “shown excellent productivity,” it adds.

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