United efforts towards self-sufficiency

Argentina

TOGY talks to Jorge Rivera, country manager for Halliburton in Argentina, about how the country’s oilfield services sector has been developing, with a focus on hydraulic fracturing operations. He says Argentina must quickly move past its learning curve and that efficiencies in operations must be found. Halliburton celebrated its 60th anniversary of providing services in Argentina in August 2016.

How is the oilfield services sector structured in Argentina?
It is concentrated in the four major players. There are some medium-sized international companies offering a certain portfolio, but they are quite far from the biggest players.
There are also some local companies with a longstanding presence in the country. Local companies have competitive advantages in terms of manufacturing and low costs. They have earned their place and are strong competition.

Who are your main clients in the country?
We have a very diversified portfolio. We work for the main oil and gas production companies in Argentina such as YPF, Pan American Energy, Tecpetrol, Total, Pluspetrol and Shell.

What have been the latest developments for Halliburton in Argentina?
These are difficult times in the world and in Argentina. The country is slightly protected due to the subsidised barrel prices and government incentive programmes.
We see Argentina as a great place to replicate the developments made in the first shale fields in the USA. It involves technology, efficiency and paradigm changes in our corporate culture.
Since 2013, we have put in place an aggressive investment plan for Vaca Muerta that includes new equipment and local manufacturing. It is a solid long-term plan that includes assembling, manufacturing substitution, space and presence expansion in Vaca Muerta, and so on. It is an ambitious plan, but it is viable as long as the industry progresses.
We will invest in systems that help reduce costs. There is a strong commitment to invest in the country, expand and add local content.
We are the first company with a sand plant for bulk distribution. It was inaugurated in 2014. In 2016, we managed to finalise the first assembly of our HT-2000 fracking pump.

Other than the HT-2000 pump, what other types of technologies is Halliburton looking to manufacture in Argentina?
We already manufacture cementing equipment in Argentina and have even exported it under international standards. Argentina provides great quality, technology and suppliers for these types of goods. It was a good exercise and a great decision.
The HT-2000 is part of the company’s core business, but we have also invested heavily in other lines of business, such as nitrogen equipment for stimulation, coil tubing and workshops to repair directional drilling tools. We save time and money by manufacturing this equipment locally.

What local manufacturers has Halliburton partnered with?
These are third parties that have gone through a very strict selection process. The HT-2000 pump was never assembled anywhere else.
Due to the low oil price situation these past few years, there have been cuts in investment, but in the USA, we have seen a great response with regards to our initiative called Frack of the Future, which involves efficiency and equipment improvements, and an important change in operations.

What changes must be made for hydraulic fracturing operations to succeed?
We are in the learning curve that took about 10 years in the USA. Argentina needs to do it in a shorter period to reach competitive costs.
Moreover, infrastructure is very important for the movement of heavy equipment, products, access to remote areas and so on. With the current activity, in one month we should aim to do about six to 10 fractures per day. We are now at four or five, and our competitors are slightly below that number.
Education is also very important. If we want to tackle the national energy deficit, we will need at least four productive clusters such as the ones in Loma Campana. To increase that activity five times with regards to infrastructure, workforce, equipment and so on is a huge challenge.
The management of necessary natural resources, such as sand and water, is very important. Careful management is needed to mitigate and plan the impact of such exploitation. Argentina can become self-sufficient, but it will take time. The resources are there. People are not trained from one day to another. From the beginning of Vaca Muerta, there was a lot of competition with regards to human resources. At the end of the day, you need to train new people. A long-term plan that considers all these things has to be outlined.

What do you think of the current regulatory framework in place for these developments?
The economic and legal framework is oriented towards facilitating such developments. We have advanced a lot in the past three years with regards to the participation of the provinces, legal changes and operators.
The regulatory framework is in place. Now it is about trust and the players’ interest in investing here. The subsidised price of domestic oil helps, and YPF and Total, as leaders, show the potential for the future development of the oil and gas industry in the long term. The conditions are in place.

How can competition and progress in Argentina’s hydrocarbons industry be increased?
There is one situation with a barrel of oil at USD 100 and another with a barrel at USD 67. Everybody has to make an effort for activity to continue. Our clients want to reduce costs more and more each day. We need to win in competitiveness and productivity without necessarily reducing the cost per unit. We have to look for different and more creative solutions.
There is space for reducing time frames as well. We could do things in less time, with fewer people and different technologies. These solutions exist. It is necessary to discuss this with all players. We have to find the best benefit for everybody. It is not viable to only benefit certain sectors or players. The national and provincial governments, labour unions, services companies and operators have to find common ground to discuss the measures that will make things viable.

What are the most efficient technologies today in Vaca Muerta, and what else should be implemented to ensure development?
Since the first decision to develop Vaca Muerta, we have seen important progress. The start was abrupt due to the amount of drilling equipment available. For about a year, operators looked for the latest technologies. They brought walking rigs in 2014.
Applied technology has to bring specific benefits. There are some technologies that might work really well in some basins, but not in others. It is necessary to start developing and moving forward to find and choose the best technologies. Soluble caps are exclusive to Halliburton and were applied in 2015. These are examples of successful applications.
Efficient logistics are also important. We have a graph that shows hydraulic fracking 10 years ago and today in Vaca Muerta. The scale has changed completely.

What are the trends in secondary and tertiary recovery?
There is still space to improve the recovery factor. In Argentina, this figure is below the global average of 25%. It is about 19% in the country. If Argentina reached the global average, it could be self-sufficient.
Most of the basins are maturing. They have been exploited for more than 100 years. There have been important investments in secondary recovery and there are some projects for tertiary recovery in Comodoro Rivadavia and Neuquén. About 30 years ago, secondary recovery was already used.
This past year and a half, there have not been many incentives to invest in these types of projects. These are long-term projects and the barrel price does not help. The initial investments are huge.

What is Halliburton’s goal in Argentina for the next five years?
We want to be recognised as the favourite provider for upstream equipment, we want to be trustworthy technological leaders in the execution of our jobs and we want the greatest market share.

Read our latest insights on:

• Argentina