The Dead Cow
Many, many years ago when I first starting to blog about the Bakken I misunderstood the name and location of a new shale oil play. If nothing else, I won't ever forget Argentina's Vaca Muerta shale play. And, now, surprise, surprise, the "dead cow" is back in the news. The Wall Street Journal is reporting:
From North Dakota to Texas and beyond, oil and gas companies have sharply reined in drilling and thousands of workers are being laid off.
But here, where the oil and gas industry operates inside a government-made, subsidized bubble, taxpayers and drivers spend billions of dollars to try to keep that from happening. A barrel of oil fetches more than twice what it does in the U.S., and prices for natural gas can be nearly four times higher.
That is helping shield producers and their workers developing the vast shale oil-and-gas deposits buried under a desolate swath of western Patagonia called Vaca Muerta, or Dead Cow, from the vagaries of world markets.
Since taking office in December, Argentina’s president, Mauricio Macri, has been reversing the populist policies of his predecessor, Cristina Kirchner, undoing everything from currency controls to export taxes. But he is expanding the expensive programs she used to decouple energy prices from global markets.
“This is so important, strategically,” said Miguel Galuccio, chief executive of Argentina’s state-run oil company, YPF SA.
With the price of light crude set at $67 a barrel and natural gas at $7.50 per million British Thermal Units—compared with less than $2 in the U.S.—the policy has made Argentina one of the few places on Earth where energy companies are looking to expand their operations.
Some energy analysts say the country’s high production costs make the system sustainable. But proponents here note that since December, Dow Chemical Co. and American Energy Partners LP—which had been run by Aubrey McClendon, the shale-drilling pioneer who died earlier this month—have said they plan to invest in a partnership with YPF to develop shale oil and gas. YPF also has said it plans soon to form a joint venture with Russia’s PAO Gazprom.Much, much more at the link.
I track the Vaca Muerta here.