Argentina's Vaca Muerta Could Reach 1MMbpd Output by 2030

One of the major shale plays globally, Argentina’s Vaca Muerta is projected to reach an output of one million barrels per day (bpd) of crude oil by 2030, provided that takeaway capacity and rig availability do not limit its growth, research company Rystad Energy said in a press release Thursday.

According to modeling by Rystad Energy, if production is “relatively unimpeded,” oil production could grow from 291,000 bpd in February 2023 to more than one million bpd in the second half of 2030.

The forecast growth could lift Vaca Muerta’s profile as a leading source of shale production, making it comparable to the likes of the Bakken or Eagle Ford developments, two of the USA’s prominent shale basins, Rystad Energy said. It would also help the Neuquen region become a net oil exporter, “potentially contributing $20 billion in total revenue by 2030” as the projected increased crude exports are transported to South American neighbors Brazil, Chile and Peru, as well as the USA and Europe, according to the press release.

According to Alexandre Ramos Peon, Rystad Energy head of shale research, Vaca Muerta “could hold the key to Argentina’s future energy economy following more than a decade of oil production declines.”

However, major challenges pose a risk and could alter the long-term outlook of the shale play. “Takeaway capacity constraints linger, and rig availability remains an ongoing concern. The learning curve for operators in the basin has been steep, and they will need to continue this trend to maximize their production potential,” Rystad Energy said.

“While major challenges lie ahead, reaching the important 1 million barrels-per-day threshold would change the country’s narrative, reduce its reliance on imports and become a key regional and global oil market player,” Peon said.

Recent Production

As of February 2023, Vaca Muerta’s gross oil production reached 291,000 bpd, an annual addition of 76,000 bpd, the report said. Oil output from major players Shell, Chevron, ExxonMobil, and TotalEnergies rose 62 percent in 2022 compared to 2021. Gas production from other local and international players, excluding Tecpetrol, grew 63 percent, while gas output from state-owned YPF increased 43 percent. In February, daily gas output rose to 1.84 billion cubic feet per day, a 15 percent boost year over year.

According to the press release, Vaca Muerta's production growth is “impressive but not extraordinary, considering it remains a relatively young development.”

“Significant regional developments started just a few years ago and accelerated in 2021 as the industry recovered from the Covid-19 pandemic,” it said.

“While concerns around growth persist, there are no issues with the quality of Vaca Muerta’s shale oil or its capacity to produce hydrocarbons at scale (after proper stimulation). Its shale is distinguished by its high pressures and substantial thickness. Its oil yield per foot is demonstrably superior to similar horizontal wells in major US shale plays,” the energy research firm said.

Model Assumptions

In its projection of one million bpd, Rystad Energy modeled a theoretical scenario based on existing trends and technologies to forecast total oil production from the shale patch until the end of 2030. The assumptions of the model include: new wells that start production from now onwards have the same performance per foot as the average completed and put-on-production in 2021-2022; oil production from gas wells is negligible; capital re-investment is assured until 2030; linear growth in POP activity in 2023 and onwards.

Rystad Energy assumed that the operators will gradually adopt two-mile laterals in the next three years. Also assumed were no downturns in the oil industry, global pandemics, significant macroeconomic changes or political unrest in Argentina until 2030.

“With about 30 active rigs and an average drilling speed of 1.1 wells per rig per month, Neuquen’s Vaca Muerta could expect up to 400 new drilled wells in a year. Assuming the 70-30 oil-gas well completions ratio of 2022, the maximum possible number of oil wells drilled per year will, therefore, be 280,” the firm said.

“If no new rigs are brought into the region, Vaca Muerta’s growth rate is set to slow in the next couple of years. Bringing in high-spec rigs could improve drilling rates to less than 20 days per well, like in the Permian Delaware and Bakken,” Rystad Energy said.

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