IEASA authorised to build pipeline for Vaca Muerta gas

Argentina’s government has authorised Integración Energética SA (IEASA), a state-owned oil, gas and power company, to build a new pipeline that will serve unconventional gas fields in the Vaca Muerta shale formation.

Buenos Aires gave IEASA a green light for the project last week, when it issued a decree granting the company a concession for the project. Under the decree, IEASA has the authority to establish a trust that will be responsible for building, maintaining and operating the link, which will be known as the Néstor Kirchner pipeline.

According to press reports, IEASA has already utilised that authority to call a tender to obtain pipes for the project and will soon launch another bidding contest to select a construction contractor.

When finished, the conduit will pump gas from Vaca Muerta fields to key demand centres in Argentina. IEASA will be obligated to give the national oil company (NOC) YPF priority access to the pipeline’s capacity and make any remaining capacity available to other producers on a non-discriminatory basis.

According to information published by Natural Gas Intelligence (NGI), IEASA is carrying out the project in multiple phases. The first phase, which is expected to cost around $1.5bn, will involve laying pipe along a 656-km route from Tratayen, a site in Neuquén Province, to Salliqueló, a town in Buenos Aires Province. It is due to begin operating in the winter of 2023 and will have a capacity of 24mn cubic metres per day.

The second phase, meanwhile, will cost another $2.0bn. It will involve extending the pipeline to San Jeronimo, expanding the capacity of the system to 44 mcm per day and making upgrades to Argentina’s existing Gasoducto Norte pipeline system, including compression stations in the northern part of the country and flow reversal operations.

As of press time, IEASA had not said when it expected to launch construction. However, Ignacio Rooney, a principal at Wood Mackenzie in Buenos Aires, told NGI last week that he anticipated the company calling a tender for engineering, procurement and construction (EPC) services in the near future. He also said that the EPC contract was likely to be awarded to an Argentinian firm.

“A local firm will probably be involved,” he said. “There is ample experience in building gas pipelines in Argentina. I would expect them to work in a consortium with other firms, possibly international.”

Rooney did not name any potential contractors.

Vaca Muerta is one of the largest shale basins in the world. The formation is around the size of Belgium and contains around 308 trillion cubic feet (8.722 trillion cubic metres) of shale gas, according to the US Energy Information Administration (EIA).