The great shale and unconventional resource revolution that has swept through the United States over the last few years is about to a leap overseas to Argentina, as energy companies move to accelerate exploration and development here.
TUTORIAL: Commodity Investing 101
Shale Gas Potential
Argentina has 774 Tcf of technically recoverable shale gas reserves according to the Energy Information Administration and Advanced Resources International. This gives Argentina the third-largest amount of reserves, behind China and the United States. The Neuquén Basin holds more than 50% of these resources, and Argentina also has an undetermined amount of tight gas and shale oil resources as well.
Argentina Oil and Gas Players
Halliburton (NYSE:HAL) recently drilled and completed a well for Apache Corp (NYSE:APA) in the Neuquén basin in Argentina. The well targeted the Los Molles shale formation and was drilled to a depth of approximately 14,500 feet and completed with a 10-stage hydraulic fracturing operation. Halliburton touted the well as the first multi-stage horizontal well drilled into a shale formation in Argentina.
Apache Corp is increasing exploration and development in Argentina and operated six rigs and drilled seven wells here during the second quarter of 2011. The company has four exploration wells in various stage of drilling.
YPF SA (NYSE:YPF) reported a number of discoveries over the last year in Argentina, and found both natural gas and oil. In December 2010, the company reported 4.5 Tcf of natural gas in tight gas formations in the Neuquén basin. This was followed up in May 2011 by the discovery of 150 million barrels of oil equivalent (BOE) of shale oil in the same basin.
The latest well reported by YPF SA in the region was producing an average of 250 barrels of oil per day from the Vaca Muerta shale. YPF SA is majority owned by Repsol (Nasdaq:REPYY).
EOG Resources (NYSE:EOG) is also active in Argentina and added 100,000 net acres to the company's position in the Neuquén basin during the second quarter of 2011. The company is targeting the Vaca Muerta shale, which EOG Resources believes is mostly oil bearing. The company plans two exploratory wells in 2012. EOG Resources discussed the Vaca Muerta oil shale during the company's second quarter of 2011 conference call and said that the play "looked superior to the Eagle Ford Shale."
Another company involved with the exploration of unconventional resources in Argentina is Exxon Mobil (NYSE:XOM), which has 240,000 net acres in the Neuquén basin. The company plans to start drilling in the final quarter of 2011.
Gran Tierra Energy (NYSE:GTE) is focused exclusively in South America, and has interests in 12 properties in Argentina. The company estimates that production from its Argentina properties will average between 2,000 and 3,000 BOE per day in 2011.
One company not interested in Argentina is Occidental Petroleum (NYSE:OXY). The company sold its Argentinean oil and gas assets in early 2011 for $2.5 billion to China Petrochemical Corporation (NYSE:SNP).
The oil services industry will also benefit from more business in Argentina, if and when full scale development programs start up. Helmerich and Payne (NYSE:HP) has four rigs operating here and another five rigs stacked in Argentina.
The Bottom Line
The development of shale and other unconventional resources in Argentina is needed to meet growing demand for energy from the emerging economies of the world. The expertise and experience of the energy industry in developing similar assets over the last decade in North America makes it likely that this international effort will be successful as well. (For additional reading, also check out Peak Oil: What To Do When The Wells Run Dry.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!