Mar del Plata offshore drilling expected to generate investments of US$40 bn

Studies show that the North Basin of the Argentine Sea has a higher oil potential than Vaca Muerta

Offshore oil rig. Credit: Pexels

The Mar del Plata Energy Cluster estimated that the drilling of the first offshore hydrocarbon well in the North Basin of the Argentine Sea and the discovery of conventional oil will open the opportunity to generate investments of US$40 billion in national parts and the hiring of 125,000 workers for the sector over the next three decades.

“The well, which will cost about US$100 million, is set to start between next December and June of next year, but the works in the Mar del Plata port have already begun. Offshore is already happening; it is not something that is coming in 30 years,” said Cluster president Marcelo Guiscardo during a presentation at the AOG 2023 Expo at La Rural. 

“This is going to keep growing, and it’s going to require a lot of people,” he added.

Studies on one of the 10 blocks suitable for exploration indicate that the offshore potential 300 kilometers off the coast of Buenos Aires is bigger than Vaca Muerta’s potential. Following the models of Brazil and Norway, if the discovery is proven, four floating production storage and offloading (FPSO) units could be installed in a first stage until reaching 24 FPSO at the peak of activity, which will allow a production of up to the equivalent of 2 million barrels of oil.

According to Guiscardo, Vaca Muerta required close to U$S780 million since 2009 to explore 87 wells and detect reserves of 29,100 MBOE. The total Argentine offshore could reach 31,000 MBOE. Brazil, with close to 2,200 offshore wells, managed to double its crude oil production from 2 to 4 million barrels. Argentina currently produces an estimated 620,000 barrels.

One of the challenges will be complying with the projected schedule. As explained during the presentation, it takes between 8 and 10 years from the moment an exploration permit is issued following a tender of the areas until the start of production. The operation stage starts after that, and can take up to 30 or 40 years more. 

“Only Exxon managed to lower production time to five years, but that’s currently not possible,” said Diego Lamacchia, Vice President of Operations for Liviticus Subsea, another of the speakers. According to Lamacchia, investments in this first period will account for US$4 billion until the time comes to define the project’s feasibility (FID) to extract the first drop of crude oil, which could not happen until 2030.

Mexican Alex Reyna, from the deep water drilling company Valaris, said that with the current international price of an oil barrel between 69 and 78 dollars, the projects have an 83% feasibility rate.

“These are long-term investments, and we all have high hopes. Talking with Argentine friends, I said that I already have lit several candles at home so that this well is successful and oil is found, but we must be patient for a while, because if it is all we want it to be, the development will take time,” he warned.

Lamacchia said that the Mar del Plata offshore project can have up to 50% of locally made components, cautioning nonetheless that it would not be easy. “In Brazil’s case, it’s no more than 18%. Here we can manufacture jumpers — underwater structures that join pipes — and suction piles, which is another kind of welded steel structure that will be buried in the seabed”, the expert explained. 

He also estimated that the national government would receive between 58% and 62% of the total profits from this project.

Guiscardo celebrated the National Energy Secretariat’s backing of offshore drilling and the support of multiple actors: the General Pueyrredón municipality, the Prefecture, the Navy, the Port Consortium, more than 60 unions of the General Confederation of Labor (CGT, for its Spanish acronym), the five universities and Mar del Plata research institutes involved in the project, as well as 70 local companies that want to participate in the initiative. 

But above all, he celebrated the recent ruling that rejected a precautionary measure of the Environment and National Resources Foundation (FARN, for its Spanish acronym) to stop offshore hydrocarbon exploration and exploitation.

Originally published in Ámbito


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