Vaca Muerta: Shell, PAE and Pluspetrol inaugurated a key oil pipeline to boost refining and exports

Shell Argentina and its partners Pan American Energy (PAE) and Pluspetrol announced the launch of a key oil pipeline of more than 100 kilometers to Vaca Muerta, in an act that took place this Tuesday in Neuquén, and was attended by managers and officials of the oil company.

The pipeline will increase transportation shale oil to refineries and terminals dand export, with transmission capacity of up to 125,000 barrels of oil per day (bpd)a volume that represents a third of Vaca Muerta's current production, close to 450,000 bpd.

That way, seeks to alleviate the bottleneck in the evacuation of crude oil faced by the southern zone of the basin, with the aim of decompressing the northern area -where production is usually transferred-, achieving greater efficiency and thereby expanding the infrastructureafter the strong increase in production recorded by the Neuquén formation.

With the inauguration of the pipeline, it was learned this Tuesday that Shell will be able to access the benefits of Regulation 929/2013, as foreseen Minister of National Economy Sergio Massawho planned to participate in the event but was unable to attend.

According to industry sources, the pipeline required an investment of close to 100 million dollars. Shell leads the consortiumas an award-winning project, with a majority share of 60%. While, PAE participated with 25%, and Pluspetrol, another 15%.

In 109 years of operation in the country, is the first investment midstream which Shell operates in Argentina and its first development which includes another province (Río Negro), along Neuquén: passes through 10 municipalities, with innovations to measure and mitigate project impacts in real time.

The construction was carried out by the company Techint in cooperation with the local company Ingeniería Sima, and it was implemented in a record time of nine months, within the stipulated time. More than 650 people and about 50 contractors and suppliers were engaged in the work, mostly from the region, with 80% local components.

for his part, Valley Pipelines (Oldelval) was in charge of supervision and will be the technical operator. This company has a 'Duplicate Project' in progress, with which it intends to increase its transport capacity by 100%, thereby complementing the operation of a completely new pipeline.

Vaca Muerta: what is the pipeline opened by Shell, PAE and Pluspetrol

The line, which was officially opened this Tuesday, has been in operation since November and currently transmits around 30,000 bps per day, which is equivalent to a quarter of its highest installed power. It is 105 kilometers long and 16 inches in diameter.

Connect productive area of ​​the Sierras Blancas -where Shell has its operational center in Vaca Muerta, with three blocks: Sierras Blancas, Cruz de Lorena and Coirón Amargo Sur Oeste- with the Oldelval pumping station located in the town of Allen in Río Negro.

The work took place in two parts: the first, of more than 60 kilometers, it starts at the forehead center from Shell to the Sierras Blancas and arrives at Lago Pellegrini; while the second, more than 40 kilometers long, extending from that point to Allen.

From there, Oldelval transfers the production in its own main pipeline to Puerto Rosales and Bahía Blanca, from there it is sent to refineries and export destinations, such as Latin America and Europe.

Although it is the first pipeline that Shell has in Argentina, not only will the company transport its production, but as is the case with the 30,000 bpd the pipeline is moving today.

Your partners will also use it, in a ratio equal to your share of the investment. In other words, Shell will be able to transport 60% of its production, while PAE and Pluspetrol will be able to do so with 25% and 15%, respectively.

Shell, PAE and Pluspetrol will use the pipeline, in addition to offering this option to other operators in Vaca Muerta.

The intention is also to offer the evacuation route to other operators who wish to contract its use, such as Vista, Total and Transportadora de Gas del Sur (TGS). In that sense, the three owners of the oil pipeline will be able to sell part of their shares for this purpose.

"The biggest challenge is the evacuation of production. For this reason, this project, the first of its kind with private investment, is not only important for us and for our partners. We strive to make a concrete contribution to the development of Vaca Muerta", pointed out the president of Shell Argentina, Ricardo Rodriguezat the opening ceremony that took place in center Anglo-Dutch companies in the Sierras Blancas.

for his part, Mark Bulgheroni, CEO of the group PAE, held that "It is an example of the coordination of national and provincial policies, the product of a commensurate investment effort by the industry". "Beyond fear, the competitive drive, size or weight of each of our companies, there was and continues to be a good dynamic of joint work for the joint development of the basin", he assured.

"We need this evacuation to continue investing in wells and increase production. Project I will add 20,000 cubic meters per day of transport capacity for the three companies of the consortium i is framed in Vaca Muerta, which grows by leaps and bounds. We recognize the importance of your reservations. In 10 years, we have tripled the investment in the swimming pool. We at PAE support this effort. In the last five years, we have invested 400 million US dollars per year", he showed.

"Participation in this project is important, considering Pluspetrol's plans in Vaca Muerta. This gives us the possibility to have more capacity and contribute to growth. In 2022, the formation reached a record: 299 wells were drilled out of 1,800. But you need this kind of infrastructure, it reflects the potential of the resource," he commented German Macchi, manager of the country company Pluspetrol.

On the government side, National Secretary for Energy, Flavia Royon; and the Governor of Río Negra, Arabela Carreras; and from Neuquén, Omar Gutiérrez, among other national, provincial and municipal authorities.

"This work leads us to balance in the balance of the energy sector. The country faces opportunities in the world for exports. In 2022, Vaca Muerta generated revenue of USD 2 billionRoyon said.

Shell will be able to access the benefits of Decree 929

Massa's presence at the event was expectedwho finally did not attend, but announced it a few minutes before portfolio is "promoting Shell's return to the 929 regime."

"Today is a very important day for the energy sector. The opening of the Sierras Blancas-Allen pipeline will increase production evacuation capacity operators, which today limits the scale growth in projects. In addition, it will allow Vaca Muerta to be connected to the main Oldelval pipeline and its 'Duplicar' project, and to strengthen the basin's export routes," he tweeted.

This is the current regulation that encourages the development of Vaca Muerta with economic and tax benefits for companies, but that it was not implemented until this year. It is currently reaching Chevron and Petrobras, and will now be joined by Shell, after your request.

Last week, company representatives met with the undersecretary for hydrocarbons, Federico Bernalto find out the status of the order. That's how it is after entering the regime Shell will be able to export 20% of its oil and gas production without retention and dispose of the foreign currency generated by these sales abroad.

In that sense, It didn't take long for the claims of his partners, as Bulgheroni said, between laughs"I also want the benefits of the 929"he stated in his address.

Since Shell began operations in Vaca Muerta in 2013, it has drilled more than 100 wells and is the second largest producer of unconventional crude oil in the basin.

Since Shell began operations in Vaca Muerta in 2013. it has drilled more than 100 wells and is the second largest producer of unconventional crude oil in the basin. to wear invested a total of USD 2 billion, of which USD 500 million was committed in 2022.. For this year, A payout similar to last year is expected.

With 3,000 direct and indirect jobs, its Sierras Blancas operation It has two plants with a total processing capacity of 42,000 bpd per day: First, Early production facility (EPF) opened in 2016, with a capacity of 12,000 bpd; while the other Central processing plant (CPF) came online in 2020, with a capacity of 30,000 bpd.