Pan American Energy (PAE) has discovered shale gas in southern Chubut Province and will invest US$250 million in a project to exploit it, says Governor Ignacio Torres.
The shale gas was found in the Cerro Dragón field of the Golfo San Jorge basin, an area of conventional oil exploitation that had previously been “in decline,” Torres said.
The type of hydrocarbons found is similar to that extracted in Vaca Muerta, said the provincial government.
The massive Vaca Muerta formation spans some 30,000 square kilometres across four provinces in south-central Argentina and is 10 times the size of the country's current reserves.
"There is a natural, geological question … which basically has to do with the maturity of the basin. At that moment, the possibility of exploring the non-conventional area was raised," Torres explained during comments to local radio station La Red.
Torres, who called the discovery “a blessing,” said the first of five planned exploratory wells had confirmed the existence of shale gas in the source rock, at a depth of less than 3,500 metres, below where conventional oil is found.
“The result in the first well is already a reality, although the other four are yet to be explored, and shale gas will be exploited at another province, in addition to Vaca Muerta,” he added.
The firm carried out seismic data analysis and drilling work to confirm the discovery.
The agreement with PAE includes the reduction of three percentage points of royalties received by Chubut, from 12 percent to nine percent, to "improve competitiveness," said the governor.
He confirmed that PAE had committed to investing US$250 million to ensure the conversion of the area for unconventional exploration and extraction.
Pan American Energy said in a statement that it had “confirmed the presence of shale gas in Cerro Dragón and obtained authorisation from the province of Chubut to convert the area into an unconventional hydrocarbon exploitation concession, while also being allowed to carry out complementary conventional activities."
– TIMES/AFP
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