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Vaca Muerta is not a site

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Business and Enterprises
Vaca Muerta es un yacimiento
19 July, 2019

For non-Neuquinos, Vaca Muerta is a site with enormous exploitation potential.

One of these two statements is erroneous and the other is overwhelmingly true.

Let’s start with the fake, which is not the important thing. Vaca Muerta is a saw. Geologically, this mountain range is a sedimentary formation, deposited in a sea in the Neuquine Basin. And its name is due to the American Charles Edwin Weaver, doctor of Geology and Paleontology, who in 1931 found it emerging in the whole area of the Sierra de Vaca Muerta. Where the name Vaca Muerta comes from, before 1931, only God knows. Just over a decade later, in 1946, the German Dr. Pablo Groeber found that all the fossils (ammonites) of the northwestern region of Zapala found in the sedimentites of the Vaca Muerta formation were of Jurassic age.

Only in 2011 confirmed its enormous potential. It’s about 36,000 square miles.

And here we go into what is important

The resources to be exploited could increase by 8 times the current reserves. Gas consumption would be guaranteed for 150 years and oil consumption for 85 years. That is, indeed, enormous potential. And very tempting for any investor with long-term vision.

But getting here wasn’t easy. Although oil exploitation was deregulated in the 1990s, during the K reign they became 20 lockers. Export duties were raised, low local market prices were set, tariffs were frozen, YPF expropriated. So production dropped significantly and we had to import oil and gas. It’s crazy. Or a malicious move.

Vaca Muerta

From this new government and the Argentina’s reintegration into the world, foreign investment was sought in many areas. Vaca Muerta and its enormous potential did not go unnoticed.

It is now known that Argentina is the 4th country with unconventional resources in oil and the 2nd in gas. This represents about 10% of each of these resources, worldwide.

Understanding this, the Government began to cooperate in the exploitation of Vaca Muerta. First, it guaranteed minimum prices for gas. Then, he signed an agreement with the province of Neuquén, the unions and the oil companies that were already producing, to reduce costs.

In addition, it lowered tariffs for the importation of operating machinery. Extended the exploration and concession deadlines. All this achieved a reduction of almost 50% in drilling costs and in the delay in finishing the well. And the reduction, of course, is increasing.

Infrastructure is also being invested and the product is being integrated into national trunk gas transportation. The Government and its new policies with Vaca Muerta, did a lot for the development of the area.

Vaca Muerta is not a site. It is a business

54% of Vaca Muerta is held by YPF and Gas y Petróleo del Neuquén. While the remaining 46% is in the hands of private companies.

The most attractive thing to invest in the area is that it has already passed from the exploration stage to the development stage. Now, it is the turn to produce. And the government expects a lot to happen. The goal is to export and the first export has already been made. The ship that used to bring gas now takes it.

Undoubtedly, it is a unique business opportunity. That still offers entry to new players. Through areas not awarded. Or through partnerships with companies that are already in business and seek funding to produce more.

It is estimated that Vaca Muerta will demand an investment of 120 billion dollars from 2020 until 2030. You still have time to enter what may be the most important business in the country in the last 30 years. Vaca Muerta is more alive than ever.

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