Vaca Muerta's Neuquen Province Hits Record Oil Output in February

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Argentina's Neuquen province, home of the Vaca Muerta Formation, reported it hit a new oil production record of 381,570 barrels per day (BBL/d) in February, representing an increase of 17.59% year over year and 1.78% more than in January. In the first two months of the year, the province's oil output was 20.29% higher than the same period in 2023.

Vaca Muerta is the world's second-largest shale gas formation, and the fourth-largest oil reservoir. The shale formation spreads across the provinces of Neuquen, La Pampa, Mendoza and Rio Negro, though the vast majority is in Neuquen.

The higher February volumes were the outcome of production gains at Shell plc's (NYSE:SHEL) (London, England) Cruz de Lorena, Kilwer's Mata Mora Norte, Pan American's Coiron Amargo Sureste, and YPF's La Amarga Chica operations.

Over the last few years, international and local companies have moved to Vaca Muerta, investing in the reservoir and developing its infrastructure. In February 2019, the Neuquen province produced only about 128,000 BBL/d compared to today's volumes, according to Argentina's Ministry of Energy.

On the natural gas front, Neuquen registered an output of 89.35 million cubic meters per day, about 9.13% more than in January and 8.55% year over year.

Shale production represented 93% of the province's oil output and 86% of natural gas.

Given the current investments in Vaca Muerta, especially in Neuquen, the shale play is expected to see exponential production growth. Some estimates suggest that Argentina could soon produce more than 1 million BBL/d.

Though it faces certain challenges, midstream capacity will be among the bottlenecks that needs to be addresssed if shale production is to increase in the next few years.

Recently, YPF reactivated an oil pipeline that transports crude from Vaca Muerta to Chile after 17 years of inactivity to increase the evacuation of hydrocarbons.

Additionally, the previous Argentine government finished the first section of the Nestor Kirchner pipeline, which transports natural gas from Neuquen to the heart of Argentina. Currently, there are projects such as the reversion of the northern gas pipeline, which, together with the Kirchner pipeline, will allow Argentina to transport natural gas from Vaca Muerta to the north of the country.

Additionally, YPF is seeking the construction of Vaca Muerta Sur, a 600-kilometer pipeline (372 miles) that would connect Neuquen with a future port in Punta Colorada.

Neuquen and Vaca Muerta's development will depend on the construction and completion of midstream capacity to allow the transport of hydrocarbons from the area.

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