Buenos Aires — Argentina's YPF has drilled the longest horizontal well to date in the oil window of Vaca Muerta, where the state-backed energy company is focusing its investment for oil and natural gas production growth.
The well was drilled with a lateral of 3,890 meters (12,762 feet) in the shale play, a person close to the company said Monday.
The well is on Bandurria Sur, which YPF is developing in a joint venture with US-based Schlumberger, the source said on the condition of not being named.
The company plans next to drill an even longer well -- most of the laterals are being drilled to 2,500 meters in the play -- in Loma Campana, a development with Chevron, the source added.
YPF declined to comment on the plans.
The longest lateral before this had been drilled by ExxonMobil in Los Toldos Sur 1, at 3,346 meters.
With longer laterals, the idea is to boost productivity from the play, helping to increase production while keeping down costs, the source said. This is key for eventually competing in export markets with output from US plays like the Permian, where the costs are some 30% less, the source added.
YPF, the biggest oil and gas producer in Argentina, is focusing its investment on a cluster of three blocks in Vaca Muerta's oil window: Bandurria Sur, Loma Campana and La Amarga Chica, the latter of which it is developing with Malaysia's Petronas, a company source said.
"Next year we are going to invest more in these three blocks than we invested this year," the source said.
In a conference call with investors last month, YPF said it had cut its production target for this year to a 3% decline as economic, political and pricing volatility in Argentina weighs on its capacity to invest. This included a 90-day freeze on diesel and gasoline prices that drove down the price of crude to 20% less than Brent, the international benchmark followed in Argentina, from mid-August to mid-November.
While the freeze has been lifted, prices are still lagging Brent -- and access to capital remains tight in Argentina, reducing the company's capacity to invest to its cash flow. This has restricted its investment to its core blocks in Vaca Muerta, one of the world's biggest shale plays.
The three blocks in the cluster it is focusing its investment on led a 77% surge in its shale oil and gas production to a record 102,100 boe/d in the third quarter from 57,700 boe/d a year earlier, according to company data.
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