BUENOS AIRES – YPF, a unit of Spanish oil company Repsol YPF, said it was investing $10 million in the drilling of the first shale-gas well in Argentina.
The drilling work began Tuesday in Loma La Lata, which is located in the southwestern province of Neuquen and is the country’s largest gas deposit.
“Now that YPF has taken this step, the doors to non-conventional gas exploration in Argentina have opened,” Neuquen Gov. Jorge Sapag said.
The project makes Argentina the first country in South America to apply this technology, Sapag said.
Shale gas is a type of unconventional gas that is found in reservoirs of compact clay and which is produced using a technique known as hydraulic fracturing.
These types of reservoirs are of growing importance due to the large volumes of gas contained inside them, YPF said.
The United States has led the global push toward shale-gas production, which began in the late 1980s. Canada launched production of this type of non-conventional gas in 2005, while China began drilling for shale gas last year.
YPF’s search for shale gas is part of the company’s 2010-2014 exploratory development program, which it announced at the end of 2009.
“It’s a decision that’s been taken: YPF does not base its investment (decisions) on prices. For us, it’s part of our conviction to explore more and more every day and expand our country’s reserves horizon,” YPF executive vice president Sebastian Eskenazi said.
Argentina launched a policy framework in late 2008 – known as Gas-Plus – that is aimed at boosting natural gas production by allowing companies to charge more for gas found in “tight,” or difficult-to-explore, areas, including shale gas.
Companies have complained that the freezing of utility rates following a historic debt crisis and currency devaluation in 2002 has reduced their investment returns.
YPF, Argentina’s largest hydrocarbons producer, is controlled by Spain’s Repsol YPF, while Argentina’s Grupo Petersen has a 15.4 percent stake. EFE