Argentina watch: La Pampa acreage, Neuquén output, Mendoza auction

Argentine province La Pampa awarded an exploration and production contract for hydrocarbons area Medanito Sur following two failed attempts to auction the 109km2 block.

The contract was won by refiner RefiPampa, local media outlet El Diario de la Pampa reported. 

The provincial government holds a 20% stake in the company, which recently invested to expand processing capacity to around 3,000m3/d from 740m3/d.

Acreage commitments during the first 24 months include drilling of four wells and five workovers.

Provincial energy company Pampetrol, currently the concession holder, will retain a 20% stake in the area, according to bidding rules.

One auction attempt was scrapped this year, and another in 2021.

Medanito Sur produced 49.6m3/d oil in March, according to data from the federal energy department. 

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Oil production in Neuquén province – home to the bulk of the Vaca Muerta formation – hit 303,040b/d in October, the highest in 23 years.

Production was up 32.2% year-on-year and 3.9% month-on-month, the provincial government said.

The month-on-month uptick was driven by areas Loma Campana (+5,202b/d), Bajada del Palo Oeste (+3,211b/d) Cruz de Lorena (+2,546b/d) and Bandurria Sur (+1,416b/d).

Provincial governor Omar Gutiérrez urged continued tax stability to ensure production investment keeps flowing. 

Midstream concessionaire Oldelval is carrying out a pipeline project to ease a dispatch bottleneck between the fast-growing Neuquén basin and export facilities in Buenos Aires province. A lack of access to dollars – needed to import equipment – is seen as a risk to the hydrocarbons value chain.  

State energy company YPF, Argentina’s biggest producer, has a pipeline project on the drawing board. The proposed duct would link the basin and a planned oil export terminal in Río Negro province. 

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Mendoza province plans to launch an auction for at least 12 blocks by year-end, economy and energy minister Enrique Vaquié said, adding that 11 of them are planned for Malargüe department. 

YPF is looking for unconventional hydrocarbons in the province’s slice of the Vaca Muerta formation, located chiefly in neighboring Neuquén province. As part of a US$17mn YPF plan, drilling will start by the end of the year, Vaquié said. The areas are CN7A and Paso de las Bardas Norte. 

“This is an exploration project and, if successful, large-scale development of unconventionals in Mendoza could follow,” he said.

In Mendoza, conventional gas production has been trending down as shale output has climbed. Conventionals account for around 22% of gas production, down from around 92% a decade ago. Shale (56%) and tight gas (22%) account for the balance of production, which stood at 1.81Mm3/d at the start of the year. In comparison, production in No. 1 hydrocarbons jurisdiction Neuquén was 80.7Mm3/d.

In terms of Mendoza oil output, which has also been trending down, conventionals have accounted for over 99% of production during the past decade. Overall output in early 2022 was 8,829m3/d (55,532b/d), compared with 39,296m3/d in Neuquén.