International Shale Plays Move Slowly Forward
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The exploration and development of international shale oil and natural gas plays are starting to gain momentum as many countries look with envy at the boom under way in the United States and hope to reduce dependence on energy imports. These resources will be exploited using similar techniques employed by operators active in domestic plays.
Argentina is often mentioned as one of the more promising places outside North America to develop shale formations, with oil and gas companies focused on the Vaca Muerta shale in the Neuquen Basin. The Energy Information Administration estimates that Argentina holds 774 Tcf of potentially recoverable shale gas resources.
Chevron (NYSE: CVX) plans to drill 120 exploratory wells targeting the Vaca Muerta play over the next three years. The company didn’t disclose the cost of this program but said that wells will cost about $15 million each, according to Platt’s.
Analysts estimate that a full scale program to develop the Vaca Muerta shale will cost tens of billions of dollars. Chevron has significant financial resources available to conduct this program as the company reported cash and cash equivalents of $21.2 billion compared to total debt of $10.1 billion as of June 30.
YPF SA (NYSE: YPF) is the state-controlled Argentina oil company and has been engaged in talks with Chevron to form a strategic partnership to help develop the Vaca Muerta Shale and other unconventional resource plays in Argentina. YPF SA also plans to negotiate with ExxonMobil (NYSE: XOM) and Apache Corp. (NYSE: APA) on a similar partnership.
YPF recently announced plans to drill 250 exploration wells in various parts of Argentina through 2016 as it looks to arrest recent declines in oil production.
Apache is already involved in Argentina and operates three rigs here and expects to grow production from Argentina by a 5% compound annual growth rate through 2016. The company spud its first exploration well into the Vaca Muerta Shale in August 2012 and estimates that its acreage may hold as much as 800 million barrels of potential oil and gas resources.
Talisman Energy (NYSE: TLM) is active in Poland and reported the company’s third exploration well here in July 2012. The Szymkowo-1 well drilled in the Baltic Basin and Talisman Energy found more than 2,000 feet of continuous natural gas pay. The company believes that some of the hydrocarbon bearing formations may contain natural gas liquids as well.
Talisman Energy obtained core samples from the well and plans an extensive analysis of these samples and others found in the first two wells. This study period is expected to last six months and the company plans to drill a horizontal well in early 2013.
ExxonMobil is partnering with Rosneft, a Russian oil company, to develop tight oil resource plays in Western Siberia. One of these formations is the Bazhenov Shale, which some observers have compared to the Bakken play in the Williston Basin. The two companies are engaged in a geological study and plan to start drilling in 2013.
The industry is also exploring for oil and gas in various non-shale plays across the globe. Bulgaria recently signed a five-year agreement with Total (NYSE: TOT) and Repsol S.A. (OTC: REPYY) to explore in the Black Sea. The targeted area is close to a natural gas discovery made in Romanian waters by another operator.
While the exploration and development of international shale resources seems to move at a glacial pace relative to North America, efforts are advancing and will eventually unlock these hydrocarbons to help supply energy later in the decade.
shaleplays has no positions in the stocks mentioned above. The Motley Fool owns shares of Apache and ExxonMobil. Motley Fool newsletter services recommend Chevron and Total SA. (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.