HOUSTON – Chevron will spend more than $1.6 billion to develop shale resources in Argentina with state-owned oil company YPF S.A., as the South American country leaps past China to become the most active foreign shale-well driller this year.
The San Ramon, Calif. energy giant renewed its joint venture with YPF to drill into shale oil and gas deposits in the Vaca Muerta, the formation that makes Argentina’s unconventional gas resources the second largest in the world after China, according to the Energy Information Administration.
Chevron and Buenos Aires-based YPF finished a $1.2 billion pilot program last year to drill 161 wells in the northeastern corner of Argentina, a project that identified several sweet spots in the shale formation and allowed YPF to reduce its drilling costs. The companies aim to drill 170 more wells as part of their new pact. After years of development, the Vaca Muerta could eventually produce 50,000 barrels per day and 3 billion cubic meters of gas per day, making it the largest energy resource in Argentina.
Vaca Muerta: Argentina’s ‘shale capital’ basks in new riches
The renewed deal “is a great demonstration of confidence in the work of YPF and the potential of unconventional hydrocarbons of Argentina,” YPF President and CEO Miguel Galuccio said in a written statement.
This year is slated to be the most active in shale drilling outside of North America yet, with Argentina planning at least 200 new wells in 2014, according to a report from Wood Mackenzie released this week.
YPF said Thursday that Chevron is also planning to spend $140 million in a new four-year exploratory venture in the eastern province of Neuquén. Chevron will drill nine wells in the region and examine subsurface environments.
Chevron shares fell $2.35 in mid-day trading Thursday to $116.75 on the New York Stock Exchange.
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