Argentina likely will continue to import natural gas supplies to meet peak demand, even as its production from large shale and tight gas resources grows in the next two decades, the Argentine Institute of Oil and Gas (IAPG) said.
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This is because it would not be economically viable to install production and transport infrastructure to meet peak demand in winter, due to the high cost of maintaining excess capacity simply to have it available for up to 90 days of the year, the industry group said in its gas demand forecast for 2015-2035.
"It is cheaper to import LNG, than to build infrastructure and drill wells to meet peak demand," said IAPG president Ernesto Lopez Anadon.
IAPG forecast that gas demand would rise to 260 million cubic meters/d in 2035, with peaks of 290 million cu m/d in the May-September cold season. That compares with average gas demand of approximately 130 million cu m/d this year and peaks of 180 million cu m/d.
To meet the forecast demand, IAPG said that other than ramping up production, huge investments would be needed in transport capacity. It estimated that $1.1 billion/year must be spent to expand pipelines and related infrastructure through 2035 to get more domestic and imported gas to market, while another $620 million/year must go to expanding distribution networks.
This would expand pipeline capacity to up to 270 million cu m/d in 2035, from a current 149 million cu m/d, IAPG said.
With more pipeline capacity, producers could deliver increasing amounts of gas from the tight and shale plays in the southwestern Neuquen Basin.
But while there is enough unconventional gas potential in the country to eliminate gas imports, but "it is not economically convenient," Lopez Anadon said.
Argentina has been importing gas since 2004, now at about 30 million cu m/d, of which some 17 million cu m/d comes from Bolivia, with the rest as LNG.
The country plans to expand Bolivian gas imports to 27.7 million cu m/d in 2017, feeding most of it to the north, where it is not economically viable to take supplies from the unconventional plays in the south, Lopez Anadon said.
The LNG is imported to terminals in Bahia Blanca and Escobar, both in Buenos Aires province.
Future options for increasing gas imports to meet demand include buying from LNG terminals in Chile and from the one under construction in Uruguay, Lopez Anadon said.
Uruguay already has agreed to sell about half of the sendout capacity from its future terminal to Argentina, while Chile is negotiating sales to Argentina. The hurdle is to equip existing pipelines that Argentina used to sell up to 20 million cu m/d of gas to Chile so that they can deliver the supplies in the opposite direction, Lopez Anadon said.