Hydrocarbons roundup: Sea Lion FID, Vaca Muerta drilling, Tierra del Fuego talks

British upstream firm Rockhopper said a final investment decision (FID) on the Falkland Islands project Sea Lion should be taken by end-2024 the latest.

Officials are working on a lower upfront cost project and seeking financing.

This month Israel’s Navitas Petroleum completed an associated farm-in, obtaining a 65% operating stake in five licenses in the North Falkland basin, including Sea Lion, a project that holds 530Mb (million barrels) of 2C recoverable resources. Rockhopper retains a 35% interest in the licenses.

Published Thursday, Rockhopper’s 1H22 report said: “We look forward to working with Navitas, with whom we have already developed a strong relationship, as they build on all our existing work and knowledge to engineer an appropriate development concept and put together a financing package which could allow FID to be taken at Sea Lion during late 2023 or 2024.”

Rockhopper chairman Keith Lough referred to opportunities presented in today’s geopolitical context. 

“Amidst continued global uncertainty and material domestic pressures, we continue to believe a responsibly developed Sea Lion oilfield could provide both a meaningful source of financial benefit to the Falkland Islands, and a strategically and financially important resource to the United Kingdom,” Lough said.

Last year the company said the British Overseas Territory’s government had agreed to extend each of its North Falkland basin petroleum licenses, including the Sea Lion discovery area, until November 2022, with no additional license commitments.

Various exploration campaigns have been carried out around the islands, but commercial production has not started.

In related upstream developments, this month a consortium of companies announced a final investment decision on a US$700mn natural gas project in the Austral basin, offshore Tierra del Fuego province, Argentina. Elsewhere on the E&P map, seismic and drilling work in the country’s Argentine Norte basin, offshore Buenos Aires province, would likely begin if an injunction – obtained over environmental concerns – is lifted. 

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The Argentine unit of US oil giant Chevron will accelerate its 2022-23 investment plan at Neuquén basin concession El Trapial.

Chevron, which cited positive pilot-phase results, is operator at the acreage. 

Officials have a 16-well campaign, with 12 of them forecast to be producing by end-2023, Neuquén province government said in a statement.

Above ground projects include separation facilities and a gas compression station. 

In April, Chevron was awarded a license to extract unconventional hydrocarbons from the area – its only operated concession, according to federal energy department data. The area also has conventional hydrocarbons potential.

Gas output from the El Trapial-Curamched concession began trending down in October 2021, according to federal energy department data. Production in March this year was 237,980m3/d, down from 372,320m3/d in October 2021. Oil output followed a similar pattern, with March production 811m3/d, down from 1,211m3/d in October last year.

Neuquén province reported record gas production of 91.6Mm3/d for August, up 13.0% year-on-year. Areas Aguada Pichana Este, Aguada Pichana Oeste, La Calera and La Ribera Bloque I were the main growth drivers.

Oil output for the month was 278,187b/d (44,228m3/d), up 40.1% year-on-year and the fastest rate in 21 years. Blocks leading the charge were Bajada del Palo Oeste, Sierras Blancas, Mata Mora Norte and Aguada Federal. 

Eighty-nine percent of the province’s oil production and 83% of gas was unconventional. 

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The hydrocarbons chief of Tierra del Fuego province, Alejandro Aguirre, said the jurisdiction was in talks with various countries over potential investment projects.

Talks are geared to initiatives in the sphere of hydrocarbons industrialization and green hydrogen, the provincial government said in a statement. 

Aguirre said the jurisdiction was liaising with officials from countries including China over proposed hydrocarbons sector projects, in areas such as urea. China talks have focused on a US$1.4bn hydrocarbons project, while green hydrogen talks have been conducted with officials from countries including the US, Canada, Japan and United Arab Emirates.

The province denied a local press report that China wants to build a naval base there because of its proximity to Antarctica.  

Tierra del Fuego recently announced the creation of a public hydrocarbons company, which will be authorized to partner with other firms.

The province also recently published the results of a study into the economic feasibility of producing green hydrogen there. 

Argentina’s south has abundant wind power resources. Tierra del Fuego and its coastal waters host conventional hydrocarbons, chiefly natural gas.

US firm MMEX Resources has said it was in partnership with German energy solutions firm Siemens to evaluate a US$500mn project to produce 55t of green hydrogen a day in the province, leveraging 155MW of wind power in the Río Grande area.