Argentine exploration slow; operators continue the search

Confidence offshore Argentina has been dented by a series of seemingly sterile wells around The Falklands (Malvinas). However, the search for a new hydrocarbons province is far from stalled, according to a new report on Argentina's upstream prospects from Scottish Enterprise. Argentina enjoys a very large continental shelf that extends far to the east.

Argentine drilling operations began in 1886 in the Cacheuta area, near the city of Mendoza. This century, five of the country's 20 potential basins have been brought into production, with the Neuquen and San Jorge basins the most prolific in oil terms.

Offshore exploration started in 1976, with four rigs active at one point.

Discoveries were reported in the Austral Marine basin off southern Argentina, but drilling in other offshore basins drew blanks. Subsequently, Esso drilled 13 wells in the Malvinas basin in 1981-82, three of which tested non-commercial oil. In the mid to late 1980s, drilling activity tailed off, although sporadic offshore seismic surveys were maintained.

From 1991, the nation's oil industry has transformed, following deregulation and privatization of state-owned companies. The "Plan Argentina," instituted in 1992, opened 560,000 sq km of offshore acreage to international bidders. Unlicensed blocks are currently re-offered on a rollover basis every six months. As of end-1998, Scottish Enterprise reports, 50 offshore exploration permits were out to bid. The tax system is fairly lenient - on a par with the UK's, according to Matthew Shaw, an analyst with Wood Mackenzie.

Offshore programs


Offshore permits allocated to date are all off southern Argentina.
Click here to enlarge image

Virtually all wildcat exploration this decade has been onshore, with only Shell and Total drilling wells offshore in the Salado and Austral basins. Total's campaigns included nearshore exploration and delineation drilling in the CAM-1 licence off Tierra del Fuego, using the jackup Glomar Labrador 1. Semisubmersible Borgny Dolphin was also contracted by Total for its Dorado-1 well in the North Falklands basin (co-financed by partners YPF, Agip, and Amerada Hess).

Among the other operators in the Austral and Malvinas basins, few are conducting serious work programs. A big exception is YPF in Malvinas basin blocks CAA-39 and CAA-40. Here, Horizon Exploration conducted an extensive seismic acquisition in 1998-99. YPF has been processing the seismic with a view to drilling in 2001, most likely in the CAA-40 block.

To the north, in the recently signed CAA-38 licence, Argentine independent Pluspetrol has an obligation well to drill (in theory) by 2001. These are deeper, more hostile waters, where wells could average around $15 million each, not including rig mobilization costs. YPF/Unocal may also drill in the shallow water, nearshore extension of the San Jorge basin into the Gulf of San Jorge (CGJSM Blocks 1 and 2).

Repsol-YPF impact


Argentina's offshore basins.
Click here to enlarge image

The impact of Repsol's takeover of YPF may be negligible. "For YPF itself, offshore Argentina is relatively minor," says Matthew Shaw, "And, it probably won't register at all in Repsol's head office in Madrid. The combined company does, however, have a stake in the ENAP offshore operation."

Total has completed its exploration and appraisal work in its Austral basin acreage, having proven up 5 tcf of gas. But with no accessible market for this gas, no major exploration is anticipated. No new discoveries have been reported since the big headline gas finds of the mid-1980s, according to Shaw.

Directional wells

Development drilling is a different story. Sipetrol, the international division of Chilean state oil company ENAP, has so far installed five platforms with around 40 deviated wells in the Magallanes Field close to the entrance to the Straits of Magellan.

Total operates two platforms with deviated development wells on the Hidra Field off Tierra del Fuego, and recently completed Argentina's first subsea development, Argo, a single-well tieback to Hidra Central.

Total has also drilled a series of ever-lengthening extended reach wells from the shore including an 11,000-meter stepout this year. The company may now have proved up around 170 bcm of gas from its numerous discoveries in this area, claims Scottish Enterprise.

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