Repsol YPF SA said it has discovered 4.5 trillion cubic feet of shale gas reserves after drilling four exploratory wells in its Loma La Lata field, located in the Neuguen province of southern Argentina.
"Just with this discovery, YPF went from having 6 years expected reserves of gas to 16 years," said Repsol YPF SA vice president Sebastian Eskenazi, who added that the discovery "presents conditions similar to productive basins in the United States."
Eskenazi's claims could not be independently verified, and he provided no details of the types of wells drilled or the tests conducted to determine the extent of the reserves.
"In an initial stage, we estimate we will deliver 2 million cubic meters per day and in that field we estimate reaching a stable production of 4-5 million cubic meters per day," Eskenazi said, without explanation.
Eskenazi even suggested that the eventual find could be considerably larger as the initial exploration had been limited to a small section of the prospective area. He did not state the size of the prospective area or the section that had been explored.
Still, Eskenazi insisted that "huge volumes" of shale and tight gas had been identified that would guarantee the country's gas supplies for years.
If verified, the new Repsol discovery could eventually increase the country's proven gas reserves by 34% from the current 13.3 tcf, according to data of Argentina's Energy Secretariat.
Based on Eskenazi's figures, Argentina's President Cristina Fernandez said the discovery will save the country from having to import $500 million in fuel oil each year, and that it will "sustain the growth of the country."
Analyst BMI was likewise upbeat on the claimed Repsol discovery, saying that, "Just as the so-called shale boom has transformed the US energy market, so too could this discovery herald a step change in Argentina."
Even so, the analyst cautioned that "as the US shale story has taught us, this will be a lengthy process that will require a host of regulatory, market and corporate factors to fall in to place."
Argentine daily El Cronista, echoing Eskenazi, meanwhile reported that Brazilian mining giant Vale has agreed to partner with YPF to develop the tight gas deposit, with investment estimated at $150 million.
Vale has not issued a statement to confirm the El Cronista report, and the mining firm did not immediately return telephone enquiries.
The paper also said that the deposit is expected to be producing around 1.5 million cubic meters of gas a day by 2016, but it did not cite sources. It further reported that Vale will be entitled to 50% of the output which will be used to fuel its Rio Colorado potash project in Mendoza province.
Contact Eric Watkins at [email protected]