Argentina’s Vaca Muerta Shale Play Hits New Oil Production Record

Argentina’s Vaca Muerta shale play reached a new oil production record of 400,000 barrels per day in the third quarter and is on track to hit one million barrels per day by 2030, according to Rystad Energy’s latest analysis.

That’s what Rystad stated in a release sent to Rigzone by the Rystad team recently, adding that the 35 percent year-on-year surge in third-quarter production was driven by improved productivity and expanded takeaway capacity, “led by flagship operator Yacimientos Petrolíferos Fiscales (YPF) and bolstered by local independent producers.”

Rystad highlighted in the release that YPF accounted for nearly 55 percent of Vaca Muerta’s oil production last quarter and pointed out that the company “saw its revenue rise seven percent quarter on quarter and 18 percent year on year to exceed $5.3 billion.”

“Independent producer Vista Energy also played a significant role, with its Bajada del Palo Oeste field contributing over 20 percent of the oil output growth, followed by YPF-operated Bandurria Sur and Loma Campana-Loma La Lata fields,” Rystad added.

The company noted in the release that this growth is also reflected in the increasing number of horizontal wells put into production. Rystad outlined that this averaged 40 wells per month in the third quarter. It stood at 33 in the first quarter and 34 in the second, the company highlighted.

“A record 46 new wells were brought online in September alone, of which 39 were in the oil zone and the remainder in the gas zone, underscoring the continued operational efficiency and momentum of Argentina’s flagship shale play,” Rystad said in the release.

The company stated that to sustain this growth, Argentina is investing heavily in energy infrastructure to address bottlenecks.

“The $2.5 billion Vaca Muerta Sur pipeline, developed under the Large Investment Incentive Regime (RIGI), is a cornerstone of these efforts, aiming to expand takeaway capacity and facilitate smoother oil transportation from Vaca Muerta to global markets,” it said.

“In parallel, Argentina has significantly enhanced its transportation network, boosting domestic supply and export potential,” it added.

Radhika Bansal, Rystad Energy’s Vice President of Upstream Research, said in the release, “it can’t be overstated how crucial Vaca Muerta is to Argentina’s energy independence and efforts to reduce imports.”

“Alongside state-owned players, independent producers have a growing influence in the play, contributing 35 percent of oil production and 23 percent of gas production,” Bansal added.

“There is every reason to view Vaca Muerta as a central pillar of Argentina’s long-term energy strategy and economic resilience, with a real possibility of reaching the one million barrel per day mark by 2030,” Bansal said.

In a release sent to Rigzone by the Rystad team in May last year, Rystad said crude oil production from Vaca Muerta “could surge in the coming years and top one million barrels per day by the end of the decade, but only if takeaway capacity and rig availability do not limit growth.”

“Rystad Energy’s modeling shows that if production is relatively unimpeded, oil output could realistically grow from 291,000 barrels per day in February 2023 to more than one million barrels per day in the second half of 2030,” Rystad added in its May 2023 release.

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

“While major challenges lie ahead, reaching the important one million barrels per day threshold would change the country’s narrative,” Peon said.

The U.S. Energy Information Administration’s (EIA) latest short-term energy outlook (STEO), which was released last month, projected that Argentina’s petroleum and other liquid fuels production will average 0.88 million barrels per day in 2024 and 0.92 million barrels per day in 2025. This figure came in at 0.82 million barrels per day in 2023, the STEO highlighted.

In its latest statistical review of world energy, which was released earlier this year, the Energy Institute (EI) showed that Argentina’s oil production was 1.074 million barrels per day in 2023. That figure marked a 12.5 percent year-on-year increase and 1.1 percent of global oil production in 2023, the EI review outlined.

Argentina’s crude oil and condensate production was 0.946 million barrels per day in 2023, according to the EI review, which highlighted that this represented a 13.8 percent year-on-year growth rate and 1.1 percent of global crude oil and condensate output that year.

The STEO outlined that the EIA’s petroleum and other liquid fuels production figure includes crude oil, lease condensate, natural gas plant liquids, other liquids, refinery processing gain, and other unaccounted-for liquids.

The EI’s oil production figure includes crude oil, shale oil, oil sands, condensates (lease condensate or gas condensates that require further refining), and NGLs (natural gas liquids – ethane, LPG and naphtha separated from the production of natural gas), the review highlights. It excludes liquid fuels from other sources such as biofuels and synthetic derivatives of coal and natural gas. It also excludes liquid fuel adjustment factors, such as refinery processing gain, and oil shales/kerogen extracted in solid form.

The review shows that the EI’s crude oil and condensate figure includes crude oil, shale/tight oil, oil sands, and lease condensate or gas condensate that require further refining. It excludes liquid fuels from other sources such as biomass and synthetic derivatives of coal and natural gas.