Argentina unconventional gas update
Apache Corporation welcomes initiatives that will provide incentives for investment in Argentina's shale gas resources, said Jon Graham, vice president of Apache's Argentina region. "Increasing domestic production would be positive for Argentina on two levels – increased economic activity and reduced reliance on imported natural gas."
Apache was the first company to implement projects under the Gas Plus program, which permits producers to sign gas sales contracts at higher prices in order to encourage development of gas reserves from tight and unconventional formations that are more costly to extract.
"Gas Plus has provided an economic incentive to develop resources that would otherwise be undeveloped," Graham said. "Geological formations in the Neuquén are similar to those in the United States, where new technologies have allowed gas from tight sands and shale source rocks to revolutionize the industry. There is not a lot of difference between the source rocks in North America and here."
Including acreage to be awarded from Neuquén province's recent bid round, Apache has approximately 1.6 million gross acres (approximately 900,000 net acres) in the area of the Neuquén Basin that is considered prospective for shale gas.
Apache currently is drilling Latin America's first horizontal multi-fracture well to a shale gas target. The company also has performed three hydraulic fracture stimulation jobs in shale intervals and recovered cores of the source rock for lab analysis.
"It's very premature to quote recoverable reserve estimates," Graham said. "Apache will continue investing to prove up the economic viability of these formations."
Apache has partnered with YPF in the development of resources in several blocks in the prospective area. Through a joint bidding agreement, Apache and YPF submitted winning bids for three exploration blocks in the recent bid round.
In January 2010, Apache began selling 10 million cubic feet (MMcf) per day of gas to Cammesa, which oversees the electricity market at Gas Plus prices. In January 2011, Apache will begin selling 50 MMcf per day to power generator Pampa Energia SA, also at Gas Plus prices). Apache has drilled more than 60 wells under the Gas Plus Program – including 25 thus far in 2010 – for four Gas Plus projects, three in Neuquén and one in Rio Negro Province.