Vaca Muerta costs to compete with Permian by 2018

Argentina’s state-owned YPF aims to lower costs in Vaca Muerta to US Permian Basin levels by 2018, the company’s executive vice-president, Pablo Bizzotto, said at a conference in Neuquén on Wednesday.

Speaking at the Energy Days conference organised by national newspaper Río Negro, the NOC executive said that the company would bring per-barrel production costs for unconventional oil down from the current average of USD 13 to USD 10, making Argentina’s oil and gas industry internationally competitive.

Bizzotto also recounted YPF’s progress at Vaca Muerta, saying that the company had increased penetration rates by 27% and reduced drilling times for unconventional wells by 22 hours.

“We have put deposits in production in record time, and today we produce 17 mcm [600 mcf] of tight gas per day, we tendered the pipeline to Loma de la Lata where there was none and delimited the different windows of Vaca Muerta, thanks to an exploratory campaign that demanded about USD 1 billion,” Bizzotto said. “Since we started operating at Vaca Muerta in 2012, our learning curve has been impressive, much better than that of other players in the USA.”

Other industry stakeholders at the Energy Days event included Shell, Tecpetrol, the Neuquén provincial government and the Argentine Institute of Petroleum and Gas.

“For Vaca Muerta to be a giant, you have to lower costs, not cutting prices and wages, but with a management model that involves more efficiency,” Tecpetrol CEO Carlos Ormachea said. “We must continue the path of labour productivity.”

Ormachea also spoke about the necessity to address the high logistics costs involved in bringing “huge volumes of materials to the fields, and then to the centres of consumption.”