PRODUCTION FROM ARGENTINA’S VACA MUERTA
TO REACH 113 KBOED BY 2018
Production from the seven most advanced developments in
the Vaca Muerta play (covering only 8% of play acreage), is
expected to increase by 43% in 2017 to 77 kboed, and to double
2016 levels by 2018 to 113 kboed, according to a new Vaca
Muerta Development Study by Wood Mackenzie.
“Our scenarios from the study demonstrate that production
could peak between 0.7 and 1. 25 mboe/d by 2031,” said Elena
Nikolova, Latin America Upstream Oil and Gas Research Analyst
for Wood Mackenzie.
Since January 2017, new pilot and development agreements
in the Vaca Muerta have been announced with increased fre-
quency, demonstrating a significant uptick in interest in the
play, especially in the gas window. Companies with gas acreage
are exposed to the greatest upside by capitalizing on gas price
incentives and attractive well performance. While still in the
early days of development, Vaca Muerta well performance is
already on par with some US shale plays that have thousands
of producing wells.
Commitments since January 2017 total over US$3.5 billion,
marking an inflection point in the play’s ramp up. The largest
announcement this year has been from Tecpetrol at Fortin de
Piedra where US$2.3 billion has been committed to drill gas
wells and build infrastructure. To fund play-wide development,
Wood Mackenzie estimates that at least 15 times current annual
capital levels are needed. Nikolova asserts that the government
is taking steps to address several above ground concerns. The
labor union and price agreements finalized earlier in the year
have provided enough flexibility and pricing predictability to
encourage operators to commit to new pilots.
In terms of drilling activity, the Vaca Muerta has transitioned
to horizontal mode, according to the study. Nearly 100 wells
were completed through October 2016 and 80% were horizontal.
Wood Mackenzie expects future development to be through
horizontal wells with laterals up to 2,500 meters. “Cost reduc-
tions are a key focus for operators and our type curves heavily
reflect YPF’s cost achievements,” said Nikolova. “YPF has
significantly brought down costs to US$8.2 million in Q4 2016.
New entrants may be challenged to match YPF’s cost structure,
but logistics and proppant improvements can help bring costs
down across the basin.”
The study also examines how the Vaca Muerta can compete
with the best US shale plays. Findings show that as Argentinian
operators continue to move up the learning curve, strong well
performance and lower costs can unlock scale comparable to
that of US shale plays. “Vaca Muerta operators are still in the
early stages of the learning curve. Production gains driven by
drilling speed and completion intensity in the US will materialize
in Argentina, as more and more operators enter the play,”
HURRICANE DETAILS AGENDA FOR PHASED
LANCASTER PROJECT WEST OF SHETLAND
Hurricane Energy has issued details of its planned Lancaster
oil field early production system (EPS) west of Shetland in its
latest results statement.
The aims are:
• To provide long-term production data to confirm the pro-
ductivity and extent of the Lancaster fractured basement
reservoir to optimize full-field development (FFD) planning
• Start development of the field’s resources of the field in a
phased manner, to enhance the understanding of the sub-
surface ahead of FFD
• Deliver an acceptable return on capital invested.
Last August the company appointed Bluewater to provide
the FPSO Aoka Mizu for the EPS and TechnipFMC for front-end
engineering and design (FEED) studies.
Bluewater’s program is focused on repair and life extension
of the FPSO, which has served elsewhere in the North Sea; a
new mooring system and turret buoy; vessel and topsides
TechnipFMC’s FEED work concerns provision of the subsea,
umbilical, riser, and flowlines and subsea production system
elements with Petrofac Facilities Management working on the
The EPS concept is based on production from the existing
Lancaster 6 horizontal well (205/21a- 6) and horizontal side track
well (205/21a-7Z) being completed and tied back to the tur-ret-moored FPSO via individual flowlines.
The design, allowing for topsides metering of the individual
wells, employs dual-pod electrical submersible pumps in each
well to provide artificial lift with additional well data provided
from downhole gauges.
The main tasks are the re-entry and completion of the two
horizontal wells; procurement, fabrication, installation, and
commissioning of subsea infrastructure comprising twin 6-in.
flowlines, a power and control umbilical, risers and subsea
manifold; procurement, fabrication and installation of a new
turret buoy and mooring systems; and recommissioning of the
Future oil export will be by shuttle tanker, with produced
gas during the EPS phase used on the FPSO for either power
generation and/or utilities, with surplus gas likely flared.
After the initial EPS period, Hurricane will assess the feasibility
for tiebacks and future gas export as part of the FFD concept
plans based on the long-term productivity testing of the initial
two EPS wells.
Hurricane aims for first oil in 1H 2019 subject to engineering,
procurement, and construction progress post FID in mid-2017.
The latter remains subject to required funding being in place
and the regulators’ approval of the Lancaster EPS FDP and the