Every oil analyst is suddenly a bit more focused on Argentina than they were a week or two ago. I just want to correct a couple little mis-impressions about Argentina’s shales in these two generally quite good pieces.
One, expressed by the FT’s John Gapper, is that it’s all the Vaca Muerta shale. There are a bunch of shale areas. Indeed, below the Vaca Muerta you can find the Los Molles formation, which is much thicker. Argentina’s shales, combined, have the world’s third-biggest likely unproved reserves, according to US Geological Survey methodology, but Vaca Muerta alone is not even half of that.
Second, in Raul Gallegos’s piece on the same page says that the shale could offer “four centuries of the country’s consumption.” This reminds me that most people see the shales as primarily a source of natural gas. Yes, shales offer gas, but what’s exciting about Repsol’s discoveries in Argentina is that these rocks also yield oil. In the Argentine context, that makes these rocks more valuable, as gas prices are generally controlled at a low level, and exports are strictly controlled. I understand that pumping oil is more profitable, as the sales price is higher with respect to production costs.