Shale Oil and Gas in the Neuquén Basin, Argentina
We are exploring and appraising light tight oil (LTO) and shale gas in the prospective Vaca Muerta shale project in the Neuquén Basin in Argentina.
Shell is the operator in four license blocks in the Neuquén Basin in the western Neuquén province:
- Cruz de Lorena (Shell 90%)
- Sierras Blancas (Shell 90%)
- Coirón Amargo Suroeste (CASO) (Shell 80%)
- Bajada de Añelo (Shell 50%)
We are currently in ‘harvest mode’ – the sequence of drilling, completing and putting wells into production – for the first three of these blocks.
In addition, Shell has a working interest in three other blocks:
- Two operated by Total Austral S.A.:
- La Escalonada (Shell 45%)
- Rincon La Ceniza (Shell 45%)
- One operated by YPF S.A.: Bandurria Sur (Shell 24.5%)
The government has awarded 35-year development licenses to Shell for Sierras Blancas, Cruz de Lorena, La Escalonada and Rincon La Ceniza. In September 2017, Shell was awarded 50% working interest and operatorship of the Bajada de Añelo concession in partnership with YPF (50%). In January 2020, Shell acquired 24.5% working interest in the Bandurria Sur block.
Shell continues to consolidate and develop its existing acreage in the Neuquén Basin as well as look for new acreage. We bring in expertise from our other shale projects in North America to help us drill faster and more efficiently while ensuring the safety of people and the environment. This expertise has enabled us to drill industry-leading best-in-basin wells from both cost and production perspectives.
Shell is also investing in supporting oil and natural gas infrastructure in Argentina. In December 2016, we commissioned an early production facility, which has the capacity to process up to 10,000 barrels per day. The facility was upgraded to 12,000 barrels of oil equivalent per day (boe/d) in 2019 to process additional oil from the from the Sierras Blancas, Cruz de Lorena and CASO blocks.
|Type of Asset||LTO and gas|
Shell puts the safety of its staff, contractors and communities first, and will not pursue operations in the Neuquén Basin if they cannot be conducted in a safe and environmentally responsible manner. In our operations, we are committed to Goal Zero – no harm and no leaks. We have stringent safety standards in place covering personal, process and transport safety and expect all our employees and contractors to meet these standards. We work to share best practices, train our staff and strengthen our safety culture. We thoroughly investigate any safety incidents or near-miss events, identify lessons, communicate to staff/contractors and, as appropriate, put in place additional mitigations. Along with commercial and production indicators, Shell’s leadership constantly monitors safety performance across our sites in Argentina.
Shell implements its Onshore Operating Principles, which cover safety and well integrity, air quality, water protection and use, land use and engagement with local communities. These principles are designed to manage or mitigate impacts related to our operations. Shell is investigating innovative waste treatment and disposal options in its Vaca Muerta project. Due to limited local waste treatment and disposal options, drilling cuttings must be transported long distances. To reduce transport-related costs and to ensure the sustainability of our shale operations, Shell has launched a project with the University of Neuquén to investigate biotreatment options.
Over the past five years, Shell has invested around $1.5 MM in social investment projects in Argentina, focusing on community development, road safety, education and entrepreneurship programs. Shell has sponsored three six-month training programs for unemployed workers in San Patricio del Chañar (Neuquén), an underdeveloped rural area. These programs focus on skills that are relevant to the oil and gas sector. To date, 424 workers have graduated, of which 35% have secured employment; 25% in the energy sector. We have also implemented entrepreneurial and agricultural training programs. Shell works closely with local communities to design its social investment programs and to ensure our projects, executed with expert help from relevant NGOs or academia, meet their needs.
Building and maintaining a relationship of mutual trust with indigenous people, rural settlers, local farmers, and nearby communities is important to Shell.
Through an open and transparent dialogue we managed to reach various agreements with landowners, including legal recognition by the Province, and achieved the first signed agreement between an oil company and Campo Maripe Indigenous Community representatives. Together with Campo Maripe community we design and execute a broad social program with livestock production and farming as main themes.
Shell has developed several engagement programs with fenceline communities in the Añelo and San Patricio del Chañar areas, near the Vaca Muerta play. For example, we lead an Agricultural Technical Assistance program with rural settlers to share best practices and sanitary controls for livestock in order to achieve productive growth and stability. To help revegetate arid areas where no vegetation could previously grow, Shell has partnered to develop an Unconventional Tree project. We also support the Institute for Technical-Professional Education, along with other operators and the Neuquén and Añelo governments.