Argentina Hopes for A Big Payoff in Its Shale Oil Field Discovery

Just east of Argentina’s Andean foothills， an oil field called the Vaca Muerta， “dead cow” in English， has finally come to life.In May， the Argentine oil company YPF announced that it had found 150 million barrels of oil in the Patagonian field， and President Cristina Fernández de Kirchner rushed onto national television to praise the discovery as something that could give new impetus to the country’s long-stagnant economy.“The importance of this discovery goes well beyond the volume，” said Sebastián Eskenazi， YPF’s chief executive， as he announced the find. “The important thing is it is something new: new energy， a new future， new expectations.”Although there are significant hurdles， geologists say that the Vaca Muerta is a harbinger of a possible major expansion of global petroleum supplies over the next two decades as the industry uses advanced techniques to extract oil from shale and other tightly packed rocks.Exploration of similar shale fields has already begun in Australia， Canada， Poland and France. Indian and Chinese oil companies are investing in pilot projects that， if successful， could make their countries significant oil producers， possibly reshaping energy geopolitics and stemming future price rises. Ukraine and Russia are also thought to have sizable shale fields of oil and gas， as do many North African and Middle Eastern countries.“The potential is huge， on the order of hundreds of billions of barrels of recoverable reserves，” said Michael C. Lynch， president of Strategic Energy and Economic Research， a consulting firm， who is preparing a report on global shale oil.Similar fields in North Dakota and Texas are already beginning to gush oil. The techniques used to extract it include hydraulic fracturing， in which high-pressure fluids are used to break up shale rock to release the oil， and horizontal drilling， which allows drillers to tap thin layers of oil-filled shale that are sandwiched between layers of other rock.Oil experts caution that geologists have only just begun to study shale fields in much of the world， and thus can only guess at their potential. Little seismic work has been completed， and core samples need to be retrieved from thousands of feet below the surface to judge how much oil or gas can be retrieved.Skeptics also say that even if oil is found in many of these fields， some may not be recoverable using current technology.Hydraulic fracturing， known as fracking， has drawn significant opposition in the United States and France because of concerns that the fluids used can pollute groundwater. Also， the process requires vast amounts of water， a problem since many of the fields are in dry regions.Another barrier to widespread exploitation of oil shale is that few companies have the expertise and experience to do the work. Chinese and Indian oil companies are investing in joint shale ventures in the United States and other countries in part so they can learn the new exploration and drilling techniques.The search for oil in tight rocks began in the United States about three years ago， and the potential for oil has been found from Texas to Michigan， California to Ohio. Domestic oil production from shale has grown to more than half a million barrels a day since 2009 and could reach three million barrels a day by 2020.Oil companies are speculating that the early successes in the United States can be duplicated around the world. Exploration for gas from shale began a couple of years ago in China and around Europe， particularly Poland， and experts say some of those fields have oil potential as well.Argentina certainly has high hopes for shale oil from the southern Patagonian province of Neuquén. The 150 million barrels of recoverable shale oil found in the Vaca Muerta represents an increase of 8 percent in Argentina’s reserves， and the find was the biggest discovery of oil in the country since the late 1980s.Oil experts say the Vaca Muerta is probably just a start for Argentina， long a middle-ranked oil producer. Mr. Lynch noted that YPF had explored only 100 square miles out of 5，000 square miles in the whole shale deposit， and other oil companies working in the area had not announced any discoveries yet.Argentina has long struggled to meet its own oil and gas needs， and energy price controls and other economic policies have dissuaded oil companies from making major investments there. That is now changing， with the French oil company Total and the American companies Apache， Exxon Mobil and EOG Resources making major investments in Argentine shale fields. (New York Times)