Fracking the Vaca Muerta on Argentina

Описание: Argentina Wants a Fracking Boom. The US Offers a Cautionary Tale

Argentina’s President Alberto Fernandez takes office in the midst of an economic crisis. Like his predecessor, he has made fracking a centerpiece of the country’s economic revival.

Argentina has some of the largest natural gas and oil reserves in the world and “possibly the most prospective outside of North America,” according to the U.S. Energy Information Administration. If some other country is going to successfully replicate the U.S. shale revolution, most experts put Argentina pretty high on that list. While the U.S. shale industry is showing its age, Argentina’s Vaca Muerta shale is in its early stages, with only 4 percent of the acreage developed thus far.

The country feels a sense of urgency. Declining conventional production from older oil and gas fields has meant that Argentina has become a net importer of fuels over the past decade. Meanwhile, Argentina’s economy has deteriorated badly due to a toxic cocktail of debt, austerity, inflation, and an unstable currency.

For these reasons — a growing energy deficit, a worsening economic situation, and large oil and gas reserves trapped underground — there is enormous political support for kick-starting an American-style fracking boom in Argentina.

It has taken on a level of political significance that outstrips its immediate economic potential. In Argentina, Vaca Muerta is treated as the country’s chance at salvation, with fracking seen as doing everything at once — creating jobs, reducing the debt burden, plugging the energy deficit and turning Argentina into a major player on the global oil and gas stage.

The sense of importance is noticeable on the ground as well. Entering the heart of Vaca Muerta in Neuquén, one is greeted by convoys of trucks, drilling rigs, and flares belching thick plumes of black smoke. Lining the roads are billboards linking fracking to future prosperity and greatness, evoking a sense of national pride.

The town of Añelo, which was a small agricultural village not too long ago, has become the industry’s staging ground because of its location less than four miles from Vaca Muerta’s most important drilling operation. Its population has tripled in the last decade, and by 2023, Añelo, currently at 8,000 people, is planning to balloon to a city of 25,000.

Today, there are new grocery stores, restaurants, a casino, and rows of provincially constructed housing for oil workers. Man camps sit on the outskirts. Some roads remain unpaved, and the incessant traffic and dust have become defining features of Añelo. It resembles any oil boomtown, buckling under the weight of rapid growth.

U.S. Government Pushes Fracking Expansion

During the Obama administration, the U.S. State Department tried to spread the gospel of fracking around the world. In many countries, the efforts fizzled due to a combination of high costs, falling oil prices, and local resistance. Fracking bans proliferated, particularly in Europe, and after some initial excitement, the industry largely abandoned far-flung locales and doubled-down on the U.S.

Even as the aggressive State Department campaign to export fracking abroad largely fell by the wayside, the U.S. government has not entirely given up on the effort. In September, the U.S. Overseas Private Investment Corporation (OPIC), an agency of the U.S. government that offers international financing, approved a $300 million loan to Vista Oil & Gas, an Argentina-focused oil company, to help it expand drilling, along with another $150 million to Aleph Midstream, a company aiming to build gathering lines and processing facilities to carry the oil and gas to market.

Vista is headed up by a man named Miguel Galuccio, who is the former CEO of the state-controlled Argentine oil company, YPF. Galuccio has been a regular fixture on Bloomberg News in the last year, wooing American investors and talking up the massive potential of the Vaca Muerta shale. He is charismatic and disarming, often smiling while convincingly making the case that Argentina is sitting on the next Permian basin.

Read more: https://www.desmogblog.com/2019/12/12...

Click here to subscribe to the DeSmog Youtube channel:

https://www.youtube.com/user/DesmogBl...