Etcheverry Presentation Final

8/3/2019 Etcheverry Presentation Final

1/26

The Future of Unconventional Fields

in Neuquen BasinNew Horizons Plan 4th Round

Province of Neuquen Argentina

HOUSTON, MARCH 2011

Rubn Etcheverry. President Gas y Petrleo del Neuqun S.A.


2/26

Summary

Brief overview ofHydrocarbon history in

Argentina

A gas dependent

country

The role of imports

Need to underpingrowth

Response to new market signals

Unconventional fields:Neuqun's potential

The creation of the ProvincialOil & Gas Company: G&P

New Horizons Plan Unconventional Fields

Technology Center


3/26

Brief overview ofhydrocarbon industry inArgentina

Argentina needs to increase itsinternal energy supply,especially gas and oil, whichconcentrate 90% of the energymatrix.

Gas infrastructure developedthroughout 100 years of gasIndustry

Oil

Hydroelectric

Biomass Other

NaturalGas

Argentina Energy Mix


4/26

A gas-dependant country

Aos

800.000

700.000

600.000

500.000

400.000

300.000

200.000

100.000

Millonesm

3

0

5

10

15

20

25

'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09

Reservas probadas de gas y horizonte de produccin

Aos

Volumen de reservas

NeuquinaSan JorgeAustralCuyana

NoroesteTotal

19.5523.9517.92544

4.14635.618

20.6923.8927.35944

4.72136.708

-5,51,57,7-1,1

-12,2-3,0

Cuenca Ene/oct 2010 Ene/oct 2009 Var. %

Produccin de gas por cuenca (en millones de m3)

Source: Secretariat of Energy

Fuente: IAPG

Argentina is one of the few

countries where natural gas has asignificant share in manyconsumption segments:residential, commercial, industrial,power generation, GNCandtransportation.

However, its reserves havedropped by 50% in the last 10years

Gas production by basin (Mm3)

Gas proved reserves and production (Mm3)


5/26

NeuquinaSan JorgeAustralCuyana

NoroesteTotal

11.27612.1981.4361.412

54426.866

11.65211.9041.4981.438

61127.103

-3,22,5-4,1-1,8

-10,9-0,9

Cuenca Ene/oct 2010 Ene/oct 2009 Var. %

Produccin de petrleo por cuenca (en miles de m3)

100.000

200.000

300.000

400.000

500.000

600.000

Miles

m3

2

4

6

8

10

12

Aos

Reservas de petrleo y horizonte de produccin

'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09

AosVolum en de reservas

Fuente: Secretara de Energa

Fuente: IAPGIn 2010, oil production was downin four of the five producingbasins. Also, for the first time in20 years, in 2010 the countrybecame a net fuel importer.

Oil production by basin (Km3)

Oil proved reserves and production forecast (Km3)

Net importer country

A gas-dependant country


6/26

12

10

8

6

4

20

U

S$porMMBTU

2Tr 3Tr 4Tr 1Tr/08

2Tr 3Tr 4Tr 1Tr/09

2Tr 3Tr 4Tr 1Tr/10

2Tr 3Tr 4Tr

Precio del gas natural local Vs. importado desde Bolivia

Impor. Bolivia Promedio cuencas argentinas

Fuente: M&A con datos de mercado.

Importaciones de hidrocarburos y derivados (9 meses 2009 Vs 2010)

Combustible

Nafta elaborada

Gasoil + cortes

Fueloil

Gas natural

miles m3

miles m3

miles ton.milln m3.

Unidades Ene/set 2010 Ene/set 2009 Var. %

109,81638,7

820,02.772,8

42,0

374,1

700,01.125,1

161,7

338,1

17,1

146,4

Fuente: IAPG

The role of imports

The growing supply-demand imbalance hasforced the increase inimports of liquid fuels(fuel oil & gas oil),

natural gas, LNG, LPGand power.

Natural Gas Price comparison Domestic vs Bolivian import

HC and derivatives imports (9 months 2009 vs 2010)

Source: IAPG


7/26

Millones de m3/da

0 2 4 6 8 10. 12

Mayo-junio/09

Julio/09

Agosto/09

Set/09

Mayo-junio/10Julio/10

Agosto/10

Argentina: importaciones de gas (Agosto/noviembre 2010)

2

4

0

6

8

10

12

Millonesdem3/da

5,1

5,1

5,5

4,9

5,1

2,3

4,7

5,9

Agos. Set. Oct. Nov.GNL Bolivia

Source: Enargas

Nevertheless, in spite ofthe imports growth,

consumption restrictionshave increased, mainlyaffecting industrial activity.In August 2010, 5,800 MWof power were inoperativedue to lack of fuel (naturalgas)

(Besides the curtailments toChile export contracts)

Argentina gas imports (August/November 2010) MM m3/d

Argentina gas supply cuts for large consumers MM m3/d

Restrictions

The role of imports


8/26

During 2011, shipments ofimported LNG will go from 20 in

2010 to over 45, as the new YPFregasification facility iscommissioned.

Government and private analystshave estimated around 330million dollars per month ($ 3.4billion in the year) will be spent

importing gas, fuel oil and gas oil

The role of imports


9/26

The price of gas, as well asimported liquid fuel, isdictated by internationalcrude oil prices.

Where will unconventionalgas be situated?

0 5 10 15

Local usinas (mx = Gas Plus)Local residencial

Local industrias (mx = Gas Plus)

Importacin Bolivia / GNL*

Importacin gasoil / fuel oil**

Gas no convencional (tight, shale)

* Incluye transporte a GBA y/o costo de regasificacin

* * Paridad de importacin para 80 US$ el barril.

US$ MM/BTU

?

Rangos de precios del gas natural y sustitutosPrice range for Natural Gas and Alternate Fuels

Domestic residential

Domestic thermal plants (max = Gas Plus)

Domestic Industries (max = Gas Plus)

Bolivian imports / LNG *

Gas Oil/Fuel Oil Imports**

Unconventional Gas (tight/shale)

* Includes transportation to GBA and/or re-gas cost** Import parity for 80 US$/bbl

Just to compare

The role of imports


10/26

In mid February 2011, the Argentine government announcedthe 2011-2020 Strategic Industrial Plan (Plan EstrategicoIndustrial), aimed at reducing imports by 45%. The goals areto achieve an average annual GDP growth of 5% and 7% in

the industrial sector.

To support this growth pace, some 6 billion dollars/yearshould be invested in the energy sector, not countingthe recovery for the recent years under investment.

Need to underpin growth

The majority of these investments will have to originate

in the private sector and include the oil and gasexploration and production.

Without these investments, not only the announced Planobjectives will be at risk, but paradoxically thedependency on imports will increase, as much in energyas in other industrial sectors.


11/26

The increase in activityobserved lately is aresponse to price signalsand shows trust in thefuture

19941.1

19991.1

20001.1

20011.2

20020.4

20030.5

20040.7

20051

20061.8

20072.1

20082.83.2

20092.93.2

20103.63.9

20114.54.8

6

5

4

4

2

1

0US$porMMBTU

Price

Price + Gas Specific Charge

Gas: price for individual purchase users

*

*Decreto PEN 2068/08

Fuente: M&A con datos de MEG SA y de mercado

Cantidad de equipos de perforacin en actividad (ago.2009/nov.2010)

Ago./09

Set. Oct. Nov. Dic. Ene./10

Feb. Mar. Abr. May.Jun. Jul. Ago.Set. Oct. Nov.

0

10

30

20

40

50

60

7080

90

100

Equipos

Fuente: Weatherford

Response tonew market signals

Drilling equipment and activity (Aug 2009/Nov 2010)

Source: Weatherford


12/26

Although the specific gas drillingactivity showed caution in 2010(less wells than in 2009), asubstantial reactivation isexpected as prices tied to GasPlus and unconventional fieldsare strengthened.

(Investment commitments for the 3rounds of New Horizons Plan)

181614

1210

86420

Total Austral Capsa YPF SA P.A.E Apache Otros

Pozos gasferos perforados (Ene/set 2009 vs.2010)

2010 2009

Precio de las distintas franjas de consumo de gasGas prices for consumer tranches

Drilled gas wells (Jan/Sept 2009 vs 2010)

TrendsAverage Price

Residential & Commercial

Industrial by utilities

Industrial by producers

Response tonew market signals


13/26

Basin limit

Mendoza

La Pampa

Areas of greatestconventional oiland gas production


The Province of Neuqun continues beingthe main gas producer in the country(48%) and second oil producer (22%), dueto a complete infrastructure in support ofproduction, as well as main and regionalgas pipelines, power transmission lines,etc.


14/26

MENDOZALA PAMPA

NEUQUN

Deep marine depositsin center basin

External platformShales and turbidites

Fm. Los Molles

Precuyo: Proven Gas and oilgeneration at China Muerta andLoma Negra depocenters, witha surface of 2.050 Km2.Average thickness of 150-290m. at 3.500-4.000 m. depth.

Los Molles: Shale gasand tight gas field. Coversan area of 18.000 Km2.Average thickness of 150-200 m. at 1.500-3.500 m.depth.

Vaca Muerta: The mostextensive formation in thebasin, covering a surface of25,000 Km2. Averagethickness over 200 m ofshales,3-5% TOC.

The Neuqun Basin containsthree main formations withexploratory interest for shaleand tight gas & oil reservoirs:

PrecuyoLos MollesVaca Muerta

KEROGENTYPEI & II

Neuqun Basin Characteristics



15/26

The geological features of the Neuqun Basin are similar to the shale gas fields in North America. Inparticular, the Vaca Muerta (Neuqun) is most similar to the Eagleford and Haynesville formations.

Chert

3 to 6%

125 to 4501.6 to 2.7

10.6 to 13.5

4 to 10%

100 to 1000

5 to 8

175 to 250

4 to 10

Horn River

Lithology

Average Mature TOC (%)

Net Thickness (Ft)Maturity (Ro)

Pressure Gradient (ppg)

Porosity (%)

Permeability (nD)

Well IP (mcfd peak month)

GIP*/Sq Mi (GCF)

EUR**/Well (GCF)

Siliceous Marl

3 to 4%

225 to 3001.7 to 2.8

13.5 to 17.3

7 to 9%

100 to 500

8 to 25

150 to 250

8 to 12

Haynesville

Siliceous Shale

4 to 5%

150 to 2501.3 to 2.1

9.6 to 10.6

4 to 8%

50 to 200

3 to 7

100 to 150

3 to 4.5

Barnett Marcellus

Siliceous Shale

4 to 7%

75 to 1501.3 to 2.4

11.6 to 13.5

7 to 9%

100 to 200

4 to 10

75 to 125

3 to 6

Chert

4 to 8%

75 to 1501.2 to 2.8

9.6 to 10.6

5 to 6%

40 to 70

2 to 6

75 to 150

2.5 to 5

Woodford

Siliceous Marl

3 to 5%

300 to 13001.4 to 1.8

9.4 to 17.3

7 to 12%

50 to 200

2 to 12

300 to 800 (BBN)

8 to 20

Vaca Muerta

Shale gas world class targets

* Gas in place** Estimated Ultimate Recovery

Calcareus Shale

4 to 8%

120 to 2800.7 to 1.8

9.6 to 14.5

4 to 10%

100 to 1500

2 to 17

80 to 250

2 to 6

Eagleford



16/26

Created in late 2008 by the government of the Neuqun

as a provincial oil company, after the enactment of the finalnatural resource provincialization law.

Its goal is to participate by itself or associated with thirdparties in the exploration and development of hydrocarbonfields within and outside the Province of Neuqun



17/26

Success at Aguada del Chaar

In 2009, federal state owned ENARSA, andG&P, agreed to jointly explore and exploit theAguada del Chaarblock.

In February 2011 results indicates apreliminary estimate of 3.5 million barrels of

oil and 4.100 million cubic meters ofnatural gas.

The first time in the last 20 years that a state(federal/provincial) owned companyundertakes as operator E&P activities.

Aguada delChaar Well X-2

Flowing Gas



18/26

The New Horizons Plan is Neuqun's Government strategicresponse to the fall in the reservoir and production of

hydrocarbons.

The Plan, launched by the provincial oil company G&P, invitesand encourages companies, capital and leading technologies totake part of a paradigm shiftin Neuqun Basin aimed at pursuing-in the medium term- high volumes of gas and oil fromunconventional reservoirs.

The Plan was launched in 2009. Three bid rounds have beencompleted to date, with 33 areas awarded out of 37, and aninvestment commitment of more than USD 165 millions.

The Provinces call on the private sector

Neuqun's New Horizons Plan


19/26

G&P will retain exploration and concession rights.

G&Ps minimum 10% participating interest in the joint venture.

4-year-exploration term for conventional resources; and a 6-yearterm for exploration of unconventional and high risk reservoirs.

Issuance of a performance bond agreement covering 100% of theWork and Investment Plan in US dollars

The evaluation of bids will be based on: a) Work and InvestmentPlan Offer; b) percentage of participating interest offered to G&P; c)Access Fee granted to G&P.

The other party of the joint venture will be liable for explorationrisks. G&Ps carried portion provided by the other parties duringexploration and production periods will only be recovered ifhydrocarbons are produced during exploitation.

The following will be given priority: more investment in less time;more percentage of participating interest and Access Fee offered toG&P.

For more information: www.gypnqn.com.ar www.energiadelsur.blogspot.com

Key bid terms and conditions

http://www.gypnqn.com.ar/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.energiadelsur.blogspot.com/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/http://www.gypnqn.com.ar/


20/26

1st, 2nd and 3rd Round Results

INVESTMENTS

Round km2 Investment ($) $/km2

3rd Round

year 2010)3.827

(13 blocks)84,907,800 22,187

1st and 2nd Round

(year 2009)16.567(18 blocks)

82,838,000 5,001

Transferred to

Hidenesa13.306 68,900,000 5,179

TOTAL 33.700 236,645,800 7,023



21/26

The 4th Bid Round of the New

Horizons Plan will be opened by theend of the first semester of 2011 for oiland gas Exploration, Development andProduction. 17 medium and high riskareas (located most of them in thewestern area of the Province) and atotal surface area of 33,000 Km2 willbe offered.Due to the increasing interest shownby companies in the previous rounds,work offers of around USD 80 millionare expected.

2011 4th Bid Round



22/26

As exploitation of unconventional gasreservoirs is relatively new worldwide, but

especially in Argentina, transfer of knowledgebecomes a key aspect in order toimprove cost and production performance,and, in particular, toprevent any potential environmental risksthat new practices and technologies maycause. Thus, the Government of Neuquen has

decided to create the Unconventional FieldsTechnology Center: Alejandria Center.

Neuqun: Unconventional FieldsTechnology Center


23/26

The Alejandria Center is the result of anew understanding of the size andavailability of tightandshale oil and gasresources in Neuquen Basin. It has beencreated with the aim of providingeducation, training and special services notonly at a national level but also throughoutLatin America. It will serve as a hub for thelocal technology business community.

The Center is governed by a multilateralnon profit association created accordingly.

Optimizing expenses andavoiding risks



24/26

Main functions

Unconventional Fields Technology Center

Education and Training Special services Data Processing

Provided by companies,universities andresearch centers.Training labs, lab facilities,special equipment, and 3Drooms.

Special testing lab: tests not yetcarried out in Latin America.Shale and tight gas data processing.Reservoir simulations.Geomechanical servicesHydraulic fracture simulation andmodeling.

Main shale gas fields of Argentinaand Latin America.It will enable to compare formations,improve extraction capacity andreduce production costs.



25/26

The Province of Neuquen produceshydrocarbons since 1918. Given thepotential of Neuquens unconventional

fields, the Province can become thelargest producer of most of the energythe country needs for the next decades.However, it is essential that governments

create and maintain conditions forinvestment; and that companies invest ona long term basis.

That is, there is a need for a jointstrategic approach, based on mutualcooperation and trust.

A strategic approach basedonconfidence and cooperation

Conclusions


26/26

The success of the previous bid rounds launched by

G&Pwithin the private sectorand your presence heretoday show that we are on the right track.

THANK YOU

Conclusions

Date post:	06-Apr-2018
Category:	Documents
Upload:	migueltoledo
View:	220 times
Download:	0 times

Etcheverry Presentation Final

Documents