Vaca Muerta recoverable oil estimate is doubled

This is while investment in the formation is ramping up.

WHAT The Vaca Muerta’s estimated recoverable oil in the Vaca Muerta shale formation has been nearly doubled to 30.17bn barrels

WHY Current technology has advanced since a 2013 estimate

WHAT NEXT This comes as investment continues to ramp up

Argentina has nearly doubled its estimate of recoverable oil in the Vaca Muerta shale formation to 30.17bn barrels, up from 16.22bn barrels in 2013, strengthening the government’s plans to expand crude exports and attract foreign currency, according to a new study, Reuters reported.

The revised estimate does not represent the discovery of additional oil deposits, but reflects improved knowledge of the formation after more than a decade of drilling and advances in technology that have increased the amount of crude that companies can recover from existing resources.

The study found that the area considered suitable for drilling has expanded by 22%, reaching parts of the provinces of Mendoza and Río Negro. Researchers also identified additional layers of rock as productive, contributing to the higher overall estimate.

The proportion of oil considered technically recoverable using current technology increased by 54%, according to the study. Improvements in well design, drilling techniques and hydraulic fracturing have allowed producers to extract a greater share of the oil contained in the formation.

The assessment was produced by the Argentine Institute of Oil and Gas (IAPG) at the request of the government’s energy secretariat. Major producers including YPF, Chevron, Vista and Pan American Energy contributed to the work, alongside specialists from universities and government institutions.

Vaca Muerta is one of the world’s largest shale oil and gas formations and has become a central element of Argentina’s strategy to expand energy exports. The government is relying on increased production from the formation to generate foreign currency and strengthen the country’s role as an energy supplier.

The revised resource estimate provides a larger basis for the country’s plans to increase oil production and exports as companies gain access to a broader drilling area and improve the proportion of crude that can be recovered from existing wells and geological layers.

Argentina is also developing infrastructure intended to support that strategy, including expanded pipeline capacity, export terminals and LNG projects.

Investment steps up

This comes as developers of the Argentina LNG project – to use gas from the Vaca Muerta as feedstock- has applied to join Argentina's Incentive Regime for Large Investments (RIGI) for a $51bn integrated liquefied natural gas (LNG) project backed by state-owned YPF, Italy's Eni and Abu Dhabi-based XRG. The development is expected to start operating in 2031 and generate around $10bn in annual export revenue.

Meanwhile energy companies TGS and Vista Energy are stepping up investment in the shale formation, announcing plans covering more than $3.8bn in spending by TGS, $1.8bn a year by Vista and a new drilling rig for 2027 as producers seek to expand output and improve infrastructure, Bloomberg Línea reported.

TGS is advancing a project worth more than $3bn to recover and export natural gas liquids (NGLs), including propane, butane and gasoline. About 93% of the project’s capacity has already been contracted and the company expects to complete the remaining commitments in the coming weeks.

“We are talking about a $3bn project, slightly more than $3bn, whose particular feature is the recovery of liquefiable elements from natural gas,” TGS chief executive Oscar Sardi said.

The company has issued purchase orders for all critical equipment, allowing manufacturers to begin producing turbines and modules. Construction is expected to take between 45 and 46 months and generate about 4,000 direct jobs and up to 16,000 indirect positions.

Once operational, the project is expected to produce 3mn tonnes a year of NGLs and potentially generate more than $1.2bn in annual foreign currency earnings. It will include about 100 km of new gas pipelines near Tratayén, an expansion of processing capacity to 43mn cubic metres per day and a liquids pipeline linking Vaca Muerta with Bahía Blanca.

TGS is also expanding the Perito Moreno Gas Pipeline, which was about 30% complete and is scheduled for completion by May 1, 2027. The company expects the two projects together to require more than $3.8bn in investment.

Vista investment of $1.8bn a year

Vista, in which Silicon Valley billionaire Peter Thiel recently took a roughly 1% stake, is preparing a separate expansion programme following its acquisition of assets previously owned by Equinor in Argentina. Its operations director, Matías Weissel, said the company had reached production of about 156,000 barrels of oil equivalent per day and planned to invest about $1.8bn annually in 2027 and 2028.

“Looking at 2027 and 2028, we have a plan to continue investing around $1.8bn per year, with around 100 or 110 wells drilled annually,” Weissel said.

Vista aims to reach about 185,000 barrels of oil equivalent per day in 2027, 208,000 in 2028 and close to 250,000 barrels per day by 2030. The company is also seeking to lower development costs, including through a system that uses wet sand directly from local deposits, reducing logistics costs associated with sand by almost half.

Vista has expanded its export destinations to Singapore, Australia and Malaysia and expects the Vaca Muerta Sur pipeline to improve its access to overseas markets. The infrastructure will be capable of loading very large crude carriers (VLCCs) carrying about 2mn barrels.

“Vaca Muerta Sur provides a competitive advantage in terms of infrastructure. It allows you to load VLCC-type vessels, carrying two million barrels, giving you the ability to enter markets such as an Indian refinery,” Weissel said.