Etcheverry Presentation Final
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Transcript of Etcheverry Presentation Final
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The Future of Unconventional Fields
in Neuquen BasinNew Horizons Plan 4th Round
Province of Neuquen Argentina
HOUSTON, MARCH 2011
Rubn Etcheverry. President Gas y Petrleo del Neuqun S.A.
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Summary
Brief overview ofHydrocarbon history in
Argentina
A gas dependent
country
The role of imports
Need to underpingrowth
Response to new market signals
Unconventional fields:Neuqun's potential
The creation of the ProvincialOil & Gas Company: G&P
New Horizons Plan Unconventional Fields
Technology Center
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Brief overview ofhydrocarbon industry inArgentina
Argentina needs to increase itsinternal energy supply,especially gas and oil, whichconcentrate 90% of the energymatrix.
Gas infrastructure developedthroughout 100 years of gasIndustry
Oil
Hydroelectric
Biomass Other
NaturalGas
Argentina Energy Mix
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A gas-dependant country
Aos
800.000
700.000
600.000
500.000
400.000
300.000
200.000
100.000
Millonesm
3
0
5
10
15
20
25
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Reservas probadas de gas y horizonte de produccin
Aos
Volumen de reservas
NeuquinaSan JorgeAustralCuyana
NoroesteTotal
19.5523.9517.92544
4.14635.618
20.6923.8927.35944
4.72136.708
-5,51,57,7-1,1
-12,2-3,0
Cuenca Ene/oct 2010 Ene/oct 2009 Var. %
Produccin de gas por cuenca (en millones de m3)
Source: Secretariat of Energy
Fuente: IAPG
Argentina is one of the few
countries where natural gas has asignificant share in manyconsumption segments:residential, commercial, industrial,power generation, GNCandtransportation.
However, its reserves havedropped by 50% in the last 10years
Gas production by basin (Mm3)
Gas proved reserves and production (Mm3)
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NeuquinaSan JorgeAustralCuyana
NoroesteTotal
11.27612.1981.4361.412
54426.866
11.65211.9041.4981.438
61127.103
-3,22,5-4,1-1,8
-10,9-0,9
Cuenca Ene/oct 2010 Ene/oct 2009 Var. %
Produccin de petrleo por cuenca (en miles de m3)
100.000
200.000
300.000
400.000
500.000
600.000
Miles
m3
2
4
6
8
10
12
Aos
Reservas de petrleo y horizonte de produccin
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
AosVolum en de reservas
Fuente: Secretara de Energa
Fuente: IAPGIn 2010, oil production was downin four of the five producingbasins. Also, for the first time in20 years, in 2010 the countrybecame a net fuel importer.
Oil production by basin (Km3)
Oil proved reserves and production forecast (Km3)
Net importer country
A gas-dependant country
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12
10
8
6
4
20
U
S$porMMBTU
2Tr 3Tr 4Tr 1Tr/08
2Tr 3Tr 4Tr 1Tr/09
2Tr 3Tr 4Tr 1Tr/10
2Tr 3Tr 4Tr
Precio del gas natural local Vs. importado desde Bolivia
Impor. Bolivia Promedio cuencas argentinas
Fuente: M&A con datos de mercado.
Importaciones de hidrocarburos y derivados (9 meses 2009 Vs 2010)
Combustible
Nafta elaborada
Gasoil + cortes
Fueloil
Gas natural
miles m3
miles m3
miles ton.milln m3.
Unidades Ene/set 2010 Ene/set 2009 Var. %
109,81638,7
820,02.772,8
42,0
374,1
700,01.125,1
161,7
338,1
17,1
146,4
Fuente: IAPG
The role of imports
The growing supply-demand imbalance hasforced the increase inimports of liquid fuels(fuel oil & gas oil),
natural gas, LNG, LPGand power.
Natural Gas Price comparison Domestic vs Bolivian import
HC and derivatives imports (9 months 2009 vs 2010)
Source: IAPG
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Millones de m3/da
0 2 4 6 8 10. 12
Mayo-junio/09
Julio/09
Agosto/09
Set/09
Mayo-junio/10Julio/10
Agosto/10
Argentina: importaciones de gas (Agosto/noviembre 2010)
2
4
0
6
8
10
12
Millonesdem3/da
5,1
5,1
5,5
4,9
5,1
2,3
4,7
5,9
Agos. Set. Oct. Nov.GNL Bolivia
Source: Enargas
Nevertheless, in spite ofthe imports growth,
consumption restrictionshave increased, mainlyaffecting industrial activity.In August 2010, 5,800 MWof power were inoperativedue to lack of fuel (naturalgas)
(Besides the curtailments toChile export contracts)
Argentina gas imports (August/November 2010) MM m3/d
Argentina gas supply cuts for large consumers MM m3/d
Restrictions
The role of imports
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During 2011, shipments ofimported LNG will go from 20 in
2010 to over 45, as the new YPFregasification facility iscommissioned.
Government and private analystshave estimated around 330million dollars per month ($ 3.4billion in the year) will be spent
importing gas, fuel oil and gas oil
The role of imports
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The price of gas, as well asimported liquid fuel, isdictated by internationalcrude oil prices.
Where will unconventionalgas be situated?
0 5 10 15
Local usinas (mx = Gas Plus)Local residencial
Local industrias (mx = Gas Plus)
Importacin Bolivia / GNL*
Importacin gasoil / fuel oil**
Gas no convencional (tight, shale)
* Incluye transporte a GBA y/o costo de regasificacin
* * Paridad de importacin para 80 US$ el barril.
US$ MM/BTU
?
Rangos de precios del gas natural y sustitutosPrice range for Natural Gas and Alternate Fuels
Domestic residential
Domestic thermal plants (max = Gas Plus)
Domestic Industries (max = Gas Plus)
Bolivian imports / LNG *
Gas Oil/Fuel Oil Imports**
Unconventional Gas (tight/shale)
* Includes transportation to GBA and/or re-gas cost** Import parity for 80 US$/bbl
Just to compare
The role of imports
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In mid February 2011, the Argentine government announcedthe 2011-2020 Strategic Industrial Plan (Plan EstrategicoIndustrial), aimed at reducing imports by 45%. The goals areto achieve an average annual GDP growth of 5% and 7% in
the industrial sector.
To support this growth pace, some 6 billion dollars/yearshould be invested in the energy sector, not countingthe recovery for the recent years under investment.
Need to underpin growth
The majority of these investments will have to originate
in the private sector and include the oil and gasexploration and production.
Without these investments, not only the announced Planobjectives will be at risk, but paradoxically thedependency on imports will increase, as much in energyas in other industrial sectors.
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The increase in activityobserved lately is aresponse to price signalsand shows trust in thefuture
19941.1
19991.1
20001.1
20011.2
20020.4
20030.5
20040.7
20051
20061.8
20072.1
20082.83.2
20092.93.2
20103.63.9
20114.54.8
6
5
4
4
2
1
0US$porMMBTU
Price
Price + Gas Specific Charge
Gas: price for individual purchase users
*
*Decreto PEN 2068/08
Fuente: M&A con datos de MEG SA y de mercado
Cantidad de equipos de perforacin en actividad (ago.2009/nov.2010)
Ago./09
Set. Oct. Nov. Dic. Ene./10
Feb. Mar. Abr. May.Jun. Jul. Ago.Set. Oct. Nov.
0
10
30
20
40
50
60
7080
90
100
Equipos
Fuente: Weatherford
Response tonew market signals
Drilling equipment and activity (Aug 2009/Nov 2010)
Source: Weatherford
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Although the specific gas drillingactivity showed caution in 2010(less wells than in 2009), asubstantial reactivation isexpected as prices tied to GasPlus and unconventional fieldsare strengthened.
(Investment commitments for the 3rounds of New Horizons Plan)
181614
1210
86420
Total Austral Capsa YPF SA P.A.E Apache Otros
Pozos gasferos perforados (Ene/set 2009 vs.2010)
2010 2009
Precio de las distintas franjas de consumo de gasGas prices for consumer tranches
Drilled gas wells (Jan/Sept 2009 vs 2010)
TrendsAverage Price
Residential & Commercial
Industrial by utilities
Industrial by producers
Response tonew market signals
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Basin limit
Mendoza
La Pampa
Areas of greatestconventional oiland gas production
Unconventional fields:Neuqun's potential
The Province of Neuqun continues beingthe main gas producer in the country(48%) and second oil producer (22%), dueto a complete infrastructure in support ofproduction, as well as main and regionalgas pipelines, power transmission lines,etc.
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MENDOZALA PAMPA
NEUQUN
Deep marine depositsin center basin
External platformShales and turbidites
Fm. Los Molles
Precuyo: Proven Gas and oilgeneration at China Muerta andLoma Negra depocenters, witha surface of 2.050 Km2.Average thickness of 150-290m. at 3.500-4.000 m. depth.
Los Molles: Shale gasand tight gas field. Coversan area of 18.000 Km2.Average thickness of 150-200 m. at 1.500-3.500 m.depth.
Vaca Muerta: The mostextensive formation in thebasin, covering a surface of25,000 Km2. Averagethickness over 200 m ofshales,3-5% TOC.
The Neuqun Basin containsthree main formations withexploratory interest for shaleand tight gas & oil reservoirs:
PrecuyoLos MollesVaca Muerta
KEROGENTYPEI & II
Neuqun Basin Characteristics
Unconventional fields:Neuqun's potential
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The geological features of the Neuqun Basin are similar to the shale gas fields in North America. Inparticular, the Vaca Muerta (Neuqun) is most similar to the Eagleford and Haynesville formations.
Chert
3 to 6%
125 to 4501.6 to 2.7
10.6 to 13.5
4 to 10%
100 to 1000
5 to 8
175 to 250
4 to 10
Horn River
Lithology
Average Mature TOC (%)
Net Thickness (Ft)Maturity (Ro)
Pressure Gradient (ppg)
Porosity (%)
Permeability (nD)
Well IP (mcfd peak month)
GIP*/Sq Mi (GCF)
EUR**/Well (GCF)
Siliceous Marl
3 to 4%
225 to 3001.7 to 2.8
13.5 to 17.3
7 to 9%
100 to 500
8 to 25
150 to 250
8 to 12
Haynesville
Siliceous Shale
4 to 5%
150 to 2501.3 to 2.1
9.6 to 10.6
4 to 8%
50 to 200
3 to 7
100 to 150
3 to 4.5
Barnett Marcellus
Siliceous Shale
4 to 7%
75 to 1501.3 to 2.4
11.6 to 13.5
7 to 9%
100 to 200
4 to 10
75 to 125
3 to 6
Chert
4 to 8%
75 to 1501.2 to 2.8
9.6 to 10.6
5 to 6%
40 to 70
2 to 6
75 to 150
2.5 to 5
Woodford
Siliceous Marl
3 to 5%
300 to 13001.4 to 1.8
9.4 to 17.3
7 to 12%
50 to 200
2 to 12
300 to 800 (BBN)
8 to 20
Vaca Muerta
Shale gas world class targets
* Gas in place** Estimated Ultimate Recovery
Calcareus Shale
4 to 8%
120 to 2800.7 to 1.8
9.6 to 14.5
4 to 10%
100 to 1500
2 to 17
80 to 250
2 to 6
Eagleford
Unconventional fields:Neuqun's potential
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Created in late 2008 by the government of the Neuqun
as a provincial oil company, after the enactment of the finalnatural resource provincialization law.
Its goal is to participate by itself or associated with thirdparties in the exploration and development of hydrocarbonfields within and outside the Province of Neuqun
The creation of the ProvincialOil & Gas Company: G&P
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Success at Aguada del Chaar
In 2009, federal state owned ENARSA, andG&P, agreed to jointly explore and exploit theAguada del Chaarblock.
In February 2011 results indicates apreliminary estimate of 3.5 million barrels of
oil and 4.100 million cubic meters ofnatural gas.
The first time in the last 20 years that a state(federal/provincial) owned companyundertakes as operator E&P activities.
Aguada delChaar Well X-2
Flowing Gas
The creation of the ProvincialOil & Gas Company: G&P
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The New Horizons Plan is Neuqun's Government strategicresponse to the fall in the reservoir and production of
hydrocarbons.
The Plan, launched by the provincial oil company G&P, invitesand encourages companies, capital and leading technologies totake part of a paradigm shiftin Neuqun Basin aimed at pursuing-in the medium term- high volumes of gas and oil fromunconventional reservoirs.
The Plan was launched in 2009. Three bid rounds have beencompleted to date, with 33 areas awarded out of 37, and aninvestment commitment of more than USD 165 millions.
The Provinces call on the private sector
Neuqun's New Horizons Plan
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G&P will retain exploration and concession rights.
G&Ps minimum 10% participating interest in the joint venture.
4-year-exploration term for conventional resources; and a 6-yearterm for exploration of unconventional and high risk reservoirs.
Issuance of a performance bond agreement covering 100% of theWork and Investment Plan in US dollars
The evaluation of bids will be based on: a) Work and InvestmentPlan Offer; b) percentage of participating interest offered to G&P; c)Access Fee granted to G&P.
The other party of the joint venture will be liable for explorationrisks. G&Ps carried portion provided by the other parties duringexploration and production periods will only be recovered ifhydrocarbons are produced during exploitation.
The following will be given priority: more investment in less time;more percentage of participating interest and Access Fee offered toG&P.
For more information: www.gypnqn.com.ar www.energiadelsur.blogspot.com
Key bid terms and conditions
Neuqun's New Horizons Plan
http://www.gypnqn.com.ar/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/ -
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1st, 2nd and 3rd Round Results
INVESTMENTS
Round km2 Investment ($) $/km2
3rd Round
year 2010)3.827
(13 blocks)84,907,800 22,187
1st and 2nd Round
(year 2009)16.567(18 blocks)
82,838,000 5,001
Transferred to
Hidenesa13.306 68,900,000 5,179
TOTAL 33.700 236,645,800 7,023
Neuqun's New Horizons Plan
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The 4th Bid Round of the New
Horizons Plan will be opened by theend of the first semester of 2011 for oiland gas Exploration, Development andProduction. 17 medium and high riskareas (located most of them in thewestern area of the Province) and atotal surface area of 33,000 Km2 willbe offered.Due to the increasing interest shownby companies in the previous rounds,work offers of around USD 80 millionare expected.
2011 4th Bid Round
Neuqun's New Horizons Plan
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As exploitation of unconventional gasreservoirs is relatively new worldwide, but
especially in Argentina, transfer of knowledgebecomes a key aspect in order toimprove cost and production performance,and, in particular, toprevent any potential environmental risksthat new practices and technologies maycause. Thus, the Government of Neuquen has
decided to create the Unconventional FieldsTechnology Center: Alejandria Center.
Neuqun: Unconventional FieldsTechnology Center
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The Alejandria Center is the result of anew understanding of the size andavailability of tightandshale oil and gasresources in Neuquen Basin. It has beencreated with the aim of providingeducation, training and special services notonly at a national level but also throughoutLatin America. It will serve as a hub for thelocal technology business community.
The Center is governed by a multilateralnon profit association created accordingly.
Optimizing expenses andavoiding risks
Neuqun: Unconventional FieldsTechnology Center
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Main functions
Unconventional Fields Technology Center
Education and Training Special services Data Processing
Provided by companies,universities andresearch centers.Training labs, lab facilities,special equipment, and 3Drooms.
Special testing lab: tests not yetcarried out in Latin America.Shale and tight gas data processing.Reservoir simulations.Geomechanical servicesHydraulic fracture simulation andmodeling.
Main shale gas fields of Argentinaand Latin America.It will enable to compare formations,improve extraction capacity andreduce production costs.
Neuqun: Unconventional FieldsTechnology Center
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The Province of Neuquen produceshydrocarbons since 1918. Given thepotential of Neuquens unconventional
fields, the Province can become thelargest producer of most of the energythe country needs for the next decades.However, it is essential that governments
create and maintain conditions forinvestment; and that companies invest ona long term basis.
That is, there is a need for a jointstrategic approach, based on mutualcooperation and trust.
A strategic approach basedonconfidence and cooperation
Conclusions
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The success of the previous bid rounds launched by
G&Pwithin the private sectorand your presence heretoday show that we are on the right track.
THANK YOU
Conclusions