Argentina approves Apache's Gas Plus project

Argentina's Federal Energy Secretariat has approved Apache Argentina's Gas Plus project to supply 10 MMcfd from Guanaco and Ranquil-Co fields in Neuquen province to Compania Administradora del Mercado Mayorista Electrico.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Nov. 17 -- Argentina's Federal Energy Secretariat has approved Apache Argentina's Gas Plus project to supply 10 MMcfd from Guanaco and Ranquil-Co fields in Neuquen province to Compania Administradora del Mercado Mayorista Electrico.

The approval, which sets a price of $4.10/MMbtu for a year starting in January, is Apache's second under the government's Gas Plus program to bring on new supplies through development of tight sands and unconventional gas plays.

Apache said it is the only company with Gas Plus projects approved for gas marketing so far, and that it has three additional projects in line for approval.

The Federal Energy Secretariat earlier approved Apache's projects to supply 50 MMcfd of gas from two fields in Argentina's southern Neuquen and Rio Negro provinces at a price of $5/MMbtu starting in 2011.

Apache plans to drill four wells at Ranquil-Co and two at Guanaco to develop reserves in the Pre-Cuyo formation at 7,500-9,500 ft.

Apache said the wells will be completed with “multiple-stage fracture stimulation procedures to tap nonconventional, low-permeability and low-porosity reservoirs.”

Development of the fields, which lie 15 km from Cutral Co and Plaza Huincul, will also require investments in gas processing and transportation.

Apache said it will provide measurement and production facilities for the Gas Plus volumes separate from the rest of the fields' production facilities.

Apache said it produced 184 MMcfd of gas in Argentina during this year’s third quarter, at an average price of $1.89/Mcf, including sales to regulated residential and power generation markets as well as deregulated industrial markets.

News of the approval coincides with an announcement by Argentina’s gas regulator Ente Nacional Regulador del Gas (Enargas) that a group of international oil companies has started building a key gas pipeline to connect two areas near the Straits of Magellan in southern Argentina.

Enargas said the project will link Cabo Espiritu Santo in Tierra del Fuego Province and Cabo Virgenes in Santa Cruz Province with a 37.7-km, 24-in. pipeline able to transport as much as 24 million cu m/day of gas.

Enargas said the companies include Apache Corp., Pan American Energy, Petroleo Brasileiro SA, Occidental Petroleum Corp., Repsol’s local unit Tecpetrol, Total SA, and Wintershall AG.

“This project will not only allow us to reinforce Argentina's energy matrix by increasing supply, it also will allow for more local production, both offshore and onshore…,” Enargas said.

Analyst BMI appeared to support that view, saying, “The new pipeline, which will link up with the national trunk line system, will help to connect gas fields offshore Tierra del Fuego to large domestic markets further north, stimulating exploration and production in the southernmost province.”

Contact Eric Watkins at hippalus@yahoo.com.

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