The oil manufacturing decline that the Covid-19 pandemic delivered to Argentina’s Vaca Muerta formation now looks like a distant reminiscence. The reserve’s oil output has not solely rebounded to pre-pandemic ranges but additionally reached a file excessive of 124,000 barrels per day (bpd) in December 2020, a Rystad Energy report reveals. The ascent can proceed in direction of the 145,000–150,000 bpd vary by the top of 2021 if present exercise ranges proceed.
Vaca Muerta, that means useless cow in Spanish, is holding shale gasoline and tight oil economically recoverable sources of world significance. The earlier oil manufacturing file earlier than December was set in March 2020, when output reached 123,000 bpd.
Contrary to grease manufacturing, Vaca Muerta’s gasoline output stored declining by means of the fourth quarter as a result of decrease seasonal consumption. Gross gasoline manufacturing fell under 900 million cubic toes per day (MMcfd) in December for the primary time since October 2018.
YPF accounted for about 95% of Vaca Muerta shale’s oil manufacturing 4 years in the past, with most volumes coming from Loma Campana, its three way partnership space with Chevron. In the previous 4 years, different producers similar to Shell, Pan American, Vista, ExxonMobil and PlusPetrol have stepped up their actions within the oil window of the play to step by step account for a bigger share of the play’s volumes.
As of December 2020, YPF is but to return to its pre-Covid-19 Vaca Muerta oil manufacturing file, and the play’s restoration was due to this fact primarily pushed by producers with aggressive capital applications deliberate for 2020. Specifically, Vista produced 15,000 bpd of oil and Shell adopted at 13,000 bpd in December, which ought to be seen as new all-time highs from the basin for each operators.
Both TecPetrol and YPF, the 2 largest gasoline producers in Vaca Muerta – needed to implement appreciable manufacturing curtailments within the fourth quarter, a apply that has grow to be widespread for the play to deal with seasonal consumption lows. In addition to infrastructure challenges, uncertainty surrounding the way forward for subsidies for unconventional gasoline manufacturing from the play has additionally weighed on operations.
While the gasoline window of Vaca Muerta provides ample potential for confirmed low-cost improvement, we stay conservative in regards to the probabilities of the gasoline portion of the play to develop considerably within the medium time period.
Well productiveness has improved additional. Contrary to main US unconventional basins, the place operators have largely reached an inflection level, Vaca Muerta’s oil improvement is simply now getting into a producing mode, although the downturn has induced a sure diploma of excessive grading too. We have seen a 6–7% enchancment in most effectively productiveness metrics for Vaca Muerta oil wells between 2019 and 2020.
While some value efficiencies are but to be realized, Vaca Muerta already competes with one of the best US tight oil basins in Texas and New Mexico from a effectively productiveness perspective. The two-stream estimated final restoration (EUR) vary for current Vaca Muerta completions is akin to what we’re seeing within the US Midland and Eagle Ford performs, whereas extraordinarily low gas-to-oil ratios – even decrease than the Bakken – assist Vaca Muerta obtain superior oil stream EURs on a per lateral foot foundation.
This emphasizes the truth that Vaca Muerta’s oil window producers have virtually no publicity to gasoline and pure gasoline liquids (NGL) economics, whereas producers within the US face a very excessive affect on their total economics throughout downturns within the gasoline and NGL markets. As a outcome, we argue that the PV10 wellhead breakeven oil costs in Vaca Muerta’s oil window are already on the identical degree as one of the best US tight oil performs.
(Source: Rystad Energy)


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