Americas Petrogas Inc.
As one of the largest landholders in Argentina’s most prolific hydrocarbon basin, Americas Petrogas Inc. (API) is well on its way to becoming a leader in South American natural resources, says Guimar Vaca Coca, managing director – Argentina. The Calgary-based company owns more than 2 million acres in Argentina’s Neuquen Basin, which are spread across 16 blocks, 15 of which it currently operates. These blocks are located in the western shale corridor of the basin where the Vaca Muerta and Los Molles shales are extraordinarily thick.
The Neuquen Basin is said to be geologically similar to the Western Canadian Sedimentary Basin. Although Argentina has a long history of oil and gas exploration with oil well discoveries dating back to the late 19th century, the Neuquen Basin has a lower density of drilling and is relatively under explored. API’s land positioning in the Neuquen Basin provides a variety of opportunities for conventional and unconventional oil and gas production, and its proximity to infrastructure offers lower development expenses, Vaca Coca explains.
Instant Success
Initially, API’s focus was on conventional oil and gas plays in its eastern properties, particularly the Medanito Sur block, where it drilled six wells. Each well yielded an oil discovery and was placed into production in 2010. “The activity of the wells was in the range of 300 to 500 barrels of crude oil per day, ranging from 34 to 36 degrees (in reference to the American Petroleum Institute gravity rating), which is the best quality of crude,” Vaca Coca notes.
In 2010, large concession blocks of the Vaca Muerta and the Los Molles shales were made available by the provincial governments. Oil majors, including Exxon Mobil, Apache, Total, EOG, Repsol YPF and Chevron, acquired large blocks, offsetting API’s acreage. As a result, it switched its exploration focus to its western properties.
“We drilled three wells in another block on the western side of the northwest part of the basin, but the production was not enough to be economical,” Vaca Coca recalls. “Later, we drilled another five wells jointly with another small Canadian company. Out of the five wells drilled, three were discovers with mostly gas. Two wells produced gas anywhere from 1 [million] to 2 million cubic feet per day, and one produced oil and gas. So, we ended up with three discoveries out of five wells drilled. We have found a very high success rate in our exploration efforts so far, and we are very happy with the results.”
Future Goals
Today, API is embarking on a series of short-term, mid-term and long-term goals to advance its success rate, Vaca Coca says. “We are planning to drill about 22 to 23 wells in the eastern side of the basin where we have seven blocks,” he states. “And we plan to drill at least three or four wells in the western blocks where we have potential for unconventional oil and gas.”
Looking forward, API intends to develop its low-risk, shallow wells in the east side of the basin, which range from 11,000 to 15,000 meters in depth. “We have possibilities to drill another 200 to 300 wells, assuming we find success in some of the exploration wells we are planning to drill,” Vaca Coca says. “This will allow us to grow our production of oil and gas in the eastern side of the basin, where we are hoping to reach levels of productivity of 10,000 to 15,000 barrels of oil per day.”
Meanwhile, API is working to increase its ownership interest in existing blocks. “We will have our eyes and ears open for further opportunities to increase our position in the basin,” Vaca Coca says. “However, we have a wonderful set of assets and believe we are the third-largest company in the Neuquen Basin [in terms of acreage]. So, we already have a very strong position in the country. Argentina is becoming the focus of interest for oil and gas companies at this moment, and we think we have the potential to grow the company to a very large size.”
Increased activity in the Neuquen Basin will bring new infrastructure, new technologies and new competition.
“We are not afraid of the competition at this stage because we have a very large position of land acreage,” Vaca Coca says. “We think it will bring more value to our current assets. Our blocks have become of great interest to new companies coming to Argentina. We are open to partnering with larger companies to develop the assets because the capital required to bring them on stream is enormous. It will be advantageous to escalate those processes, and we will need some agents to implement those projects efficiently.”