Exxon, Shell To Delay Vaca Muerta Production

(Seeking Alpha, Carl Surran, 20.Nov.2019) — Exxon Mobil and Royal Dutch Shell say they want to ramp up oil and natural gas production in Argentina’s Vaca Muerta shale play but are holding back awaiting clarity on the incoming government’s economic and energy policies.

“The resource has great quality… the same or better quality than wells in the U.S.,” says Daniel De Nigris, head of XOM’s operations in Argentina, but the country’s financial crisis combined with regulatory uncertainty, capital controls, high taxes and price caps have made it harder to plan business and make a profit.

Tight access to financing is a major challenge which already has slowed a project to build a new 40M cm/day pipeline for increasing gas deliveries out of Vaca Muerta, says Sean Rooney, head of Shell’s operations in Argentina.

Despite the problems, Rooney says Vaca Muerta is benefiting as a second mover after the development of shale plays in the U.S. and Canada, meaning companies can learn from previous experience to avoid costly mistakes and use the latest technology to develop Vaca Muerta at a faster pace.

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