Abstract

Argentina and Chile host the southernmost effective source rock in the world, the Palermo Aike Formation, actively generating gas and oil in the Austral-Magallanes Basin depocenter. The basin is producing gaseous and liquid hydrocarbons since 1945, from conventional and more recently tight reservoirs. Unconventional shale resources estimates exceed 10 BBOE recoverable in the Argentinian side hosted by the Palermo Aike Formation, being the third largest unconventional resources of South America. In 2021 and 2022 first two vertical wells were fracked proving oil flowing production with similar ranges than early Vaca Muerta and Eagle Ford shales vertical wells. This paper summarizes the characteristics of this new emerging shale play, preliminary sweet spots identified, first vertical completions results and sweet spots identifications for first horizontal pilot wells. Next two years exploration program involves horizontal drilling pilots aiming to test productivity and fluids over an area of more than 3,5 million acres extent. During 2024, a third vertical well is planned to be fracked and the first horizontal well will be completed. Argentinian Vaca Muerta shale production will leverage and accelerates learnings in Palermo Aike Shale exploration. In the event of starting developments in a "second shale play" in the country, synergies and cost impacts are expected with Vaca Muerta developments, as it happened in simultaneous shale plays in the US. Palermo Aike oil market is independent from Vaca Muerta. Coastal position of the basin towards two oceans considerably lowers transport and infrastructure cost. Gas market will be locally satisfied from Vaca Muerta northwards from Neuquén-Bahía Blanca latitude. But, southward residential, industrial and generation demand could be covered with Palermo Aike, including Chilenean existing infrastructure highly gas dependent.

Introduction

The Austral-Magallanes Basin is in the southernmost tip of South America. It extends from onshore Argentina in Santa Cruz Province to onshore Chile and Tierra del Fuego Island towards the south, and offshore Argentina and Chile to the East (Figure 1). It has accumulated 20 TCFG and 1.1 BBO sourced by Lower Palermo Aike Shale, an Early Cretaceous marine mudstone. The study spans along the onshore Argentina where estimated prospective area is 3.5 million Ac and 25 TCFG and 5 BBO oil & gas.

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