Argentina the Next Shale Hotspot?

Shale gas deposit estimated at 257 trillion cubic feet

Argentine energy firm YPF, the local unit of Spain's Repsol, has reportedly discovered a massive shale gas reserve that could help that country reduce its imports of the fuel, local media reported Monday.

The deposit, which the company is expected to announce formally on Tuesday, could hold 257 trillion cubic feet (TCF) of natural gas, a technician involved in the exploration was quoted as telling daily newspaper La Nacion.

The South American country currently has proven natural gas reserves of 16 TCF, according to a 2009 estimate by the U.S. Energy Information Administration (EIA), and demand has risen strongly in recent years due to robust economic growth.

Argentina imports natural gas from neighboring Bolivia, which has South America's second-biggest natural has reserves after Venezuela and also exports to Brazil. It also imports diesel and liquefied natural gas (LNG).

Argentina has significant undeveloped hydrocarbon resources but also some of the lowest gas prices in the world, in large part because of governmental controls designed to curb inflation and bolster the competitive edge for manufacturers.

The controls, which began after a 2001-02 economic crash, have led to a cutback in exploration and production.  This has led to shortages, prompting the federal government to offer incentives under the Gas Plus program, which allows higher gas prices to help stimulate the exploration and development of natural gas resources in challenging geological scenarios.

According to Monday's reports, the  shale gas find was discovered at the YPF's Loma de la Lata conventional natural gas field in the Patagonian province of Neuquen.

Apache Corporation has earlier announced plans to drill its first natural gas well into a shale formation in Argentina by the end of the year.

At La Calera, near Loma La Lata and Total's Aguada Pichana fields, Apache will be conducting preliminary work is designed to identify the future potential of unconventional gas reserves at the field, which has been producing small volumes of oil and traditional gas.