Shell Prepares to Inaugurate New Oil Pipeline in Argentina

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Shell plc (NYSE:SHEL) (London, England) and the Argentine government met last week to discuss the company's operations and investments in the South American country. As part of the conversation, Shell's president in Argentina, Ricardo Rodriguez, and Argentina's hydrocarbons secretary, Federico Bernal, highlighted that the company expects to open its new oil pipeline in Vaca Muerta by February 14.

The oil pipeline will connect Shell's Sierras Blancas oil processing unit, which can process 42,000 barrels per day (BBL/d), with the Allen storage station, from where the oil can be transported to Puerto Rosales through the Oldelval pipeline network. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipelines Project Database can click here for the related project reports.

The 125,000-BBL/d pipeline is owned by a consortium, with Panamerican Energy holding a 25% stake and Pluspetrol a 15% stake. Oldelval, which already operates Vaca Muerta's major pipeline network, will operate the new pipeline, according to the government statement.

Rodriguez said in the meeting that the pipeline represents the "first private investment by a company in the construction of a midstream pipeline in Vaca Muerta, and Shell Argentina's first investment in midstream in 108 years in the country."

According to the statement, Shell is Argentina's largest private shale oil producer in Neuquen, with an output of 45,000 BBL/d.

Vaca Muerta is the world's second-largest shale reservoir and the fourth-largest non-conventional oil formation. Developments in this area have helped Argentina, especially its Neuquen province, increase oil output over the last few years.

Shell has been a steadfast supporter of developments in Vaca Muerta by holding 50% or higher stakes in the Sierras Blancas, Cruz de Lorena, Coiron Amargo Sur Oeste and Bajada de Añelo blocks. Additionally, the company has minority stakes in another three blocks.

Last year, Shell invested US$500 million in energy developments in Vaca Muerta and more than US$2 billion in the shale reservoir over the last few years.

Vaca Muerta is attracting significant investments from Shell and other companies, given its potential to scale up Argentina's oil production. According to the government of the Neuquen province, where most of the shale reservoir is located, oil production in the province is expected to reach 700,000 BBL/d by 2030, surpassing Argentina's entire current output.

According to Bernal, "Now the Argentine Republic is really experiencing a rain of investments. For this 2023, we expect investments on a national scale in exploration and exploitation for 9,500 million dollars. This implies a year-on-year jump of 20%; it is 36% more than in 2019 and the highest figure since 2015."

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