The shale gas bandwagon is now truly rolling and countries all across the globe are scrambling to catch up. The wide-spread reserves mean that, more than any other energy source, shale gas has the potential of making concerns about energy security and reliance on foreign sources a thing of the past. South America also has its share of gas bearing shale. Argentina and Brazil have substantial shale deposits which the EIA estimates could give 774 and 226 trillion cubic feet of gas respectively. Even Chile and Bolivia have substantial deposits. The Argentinian deposits are only smaller than those in the US and China.
Shale Gas deposits South America SOURCE: USGS
In April last year Argentina nationalised the YPF unit of Spanish Grupo Repsol which in turn had been acquired by Repsol on privatisation of YPF in 1999. There is a dispute ongoing between Repsol and the Argentinian government regarding the compensation for the nationalisation. One of the reasons for the nationalisation was a perceived reluctance from Repsol to invest in Argentina. While Repsol acquired YPF in 1999 for $15 billion, the nationalised assets of YPF are now valued at only around $9 billion.
OilPrice: Argentina shale gas reserves exceed its 13.4 trillion cubic feet (tcf) conventional proven gas reserves. The largest shale play is the Neuquen basin with more than 250 TCF. YPF discovered 4.5 TCF of shale gas in the Loma de la Lata Field of Neuquen in December 2010. Gas transportation and field services infrastructure are already in place making it attractive for further development. There are also additional Argentine shale deposit reserves in Chubut and Santa Cruz provinces near the Golfo San Jorge in the Atlantic southeast part of the country. The U.S. Energy Information Administration (EIA) says Argentina’s technically recoverable shale gas reserves are the third largest in the world after the United States and China at 774 trillion cubic feet (Tcf) with more than half of that in the Neuquén Basin on the western side of the country. ….
To exploit its shale potential Argentina needs the active participation and assistance from large international oil field services companies and deep pocket investors. … Argentina’s shale resource potential is large enough to attract the biggest companies. But in the rapidly changing world of global shale development there are many places where investors can participate in the growth of shales without the risk Argentina presents.
In any event Argentina is looking to make YPF a flagship for the country in the Oil & Gas space (with Petrobras across the border as an example to follow). And YPF will need both fracking technology and investment if they are to make something of their vast gas shale reserves in the Neuquén basin. There are a number of potential suitors from the US and even from China who may be prepared to take on the perceived country risks of Argentina, but Dow Chemical seems to be the first:
Chemical & Engineering News: With eyes on what could be the first shale gas project in Argentina, Dow Chemical has signed a memorandum of understanding with the Argentinian oil company YPF to develop a gas-rich area of the country.
The memorandum envisages YPF ceding Dow a 50% stake in a shale formation in Neuquén province. Dow and YPF also would explore expanding petrochemical capacity in the country on the basis of additional raw material supply. The firms are still negotiating the terms of the deal.
In the U.S., abundant shale-based feedstocks are leading to a renaissance in the petrochemical industry. According to the U.S. Energy Information Administration and consulting firm Advanced Resources International, Argentina has 774 trillion cu ft of recoverable shale gas reserves, the third-largest amount after the U.S. and China. But energy companies are so far only drilling exploratory wells in Argentina.
Dow already operates an ethylene cracker and polyethylene plants in Bahia Blanca, Argentina. In 2001, the company completed $720 million in expansion projects at the site.
And Dow is involved in chemical feedstocks in the country. In Bahia Blanca, it has a 28% interest in Compañía Mega, a natural gas liquids fractionation joint venture with YPF and Brazil’s Petrobras. The venture takes in natural gas liquids from Neuquén and supplies the ethane to Dow to feed its ethylene cracker.
The U.S. firm has been keen to expand its polyethylene business in the region but has been stymied by feedstock supply. Dow recently delayed a plant in Brazil that would get its ethylene from sugarcane-derived ethanol.
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