The Vaca Muerta Formation: How a Source Became a Reservoir
Argentina has the second-largest shale gas and fourth-largest shale oil reserves in the world, almost all reservoired in the Vaca Muerta Formation in the vast Neuquén Basin. This black shale has been known and exploited as a source rock for over 100 years, but in a potentially game-changing event, the first exports from the Vaca Muerta itself were delivered in June this year.
None other than the famous naturalist and geologist Charles Darwin was the first scientist to make observations about the black shales he found in the High Cordillera of Mendoza, from which he collected a number of fossils back in the 1830s.
It was not until towards the end of the 19th century, however, that the significance of the color of these shales was realized, when Guillermo Bodenbender, who geologically mapped much of Argentina and can be considered one of the ‘fathers of Argentinian geology’, realized that the shales contained oil. In 1892 he reported that rocks he had found in the Salado River Valley were “very bituminous and almost completely impregnated by kerosen, which has been found in liquid state in the central cavity of an ammonite…”
A source rock had been identified.
In 1931 American geologist Charles Weaver officially defined the Vaca Muerta Formation and described it as comprising black shales, marls and lime mudstones. It was he who named it the Vaca Muerta (Dead Cow), after the mountains (the Sierra de la Vaca Muerta), where these rocks are outcropping.
The Dead Cow Formation
The Vaca Muerta Formation underlies much of the Argentinian Neuquén Basin, which contains a near-continuous Upper Triassic-Lower Cenozoic succession covering about 100,000 km2 with a total sedimentary thickness of over 7 km. It developed as a back-arc basin in Mesozoic times in the western margin of South America. In the Early Jurassic there was a widespread shallow marine incursion over the basin area and broad depocenters filled with continental and marine siliciclastic, carbonate, and evaporitic sediments.
This was followed by a widespread transgressive-regressive sedimentary cycle during the Tithonian-Berriasian with the deposition of dark organic-rich mudstones, marlstones and limestones, including the Vaca Muerta Formation. This is overlain by the Lower Cretaceous Quintuco-Loma Montosa Formation, which forms the largest oil-producing carbonate depositional system in the Neuquén Basin.
Source Becomes Reservoir
The first oil field in the Neuquén Basin, Plaza Huincul, was discovered in 1918. Over 4,500 exploratory wells have been drilled since then and about 14.4 Bboe of conventional resources have been discovered in the basin, including the giant Loma La Lata Field, found in 1977, which has 10.5 Tcf of gas reserves.
The Vaca Muerta has been known for many years to be the very effective source rock for most of these fields in the Neuquén Basin, feeding into reservoirs that range in age from Late Triassic to Late Cretaceous, with seals in the Jurassic and Cretaceous. Due to the formation’s vast areal extent – over 30,000 km2 – and variable thickness and overburden, the Vaca Muerta has produced a range of hydrocarbons, including low GOR liquid hydrocarbons, volatile oils, gas/condensate and dry gas. Three distinct hydrocarbon generation windows can be geographically identified in the basin: the north-western part of the basin contains mostly dry gas, while wet gas and oil appear further south and east.
However, when researchers looked again at the Vaca Muerta Formation, with its wide areal extent and ideal burial depth at between 2,000 and 3,500m, they realized that it must have generated a much larger volume of oil than the amount which appeared to have been expelled to overlying reservoirs – so where was the rest? In fact, it has been calculated that only about 20% of hydrocarbons generated in the formation have been expelled, primarily because the overpressure barrier (0.75 to 0.85 psi/ft) formed by the overlying Quintuco Formation has helped to retain the hydrocarbons within the Vaca Muerta.
The Vaca Muerta Formation has thick, organically-rich sections between 30 and 400m thick, allowing multiple navigation horizons; plus excellent porosities, ranging from 4 to 16%; and TOCs as high as 17%, particularly towards the base of the unit, which represents the maximum flooding level of the basin. In addition, the unit is overpressured and has a relatively low percentage of clay, making this rock ideal for hydraulic stimulation. These are all excellent properties for an unconventional shale reservoir. The formation has therefore now become the primary target for hydrocarbon exploration in the Neuquén Basin, which is, it is interesting to note, three times the size of the Permian Basin in the USA.
In addition, the long history of conventional exploration means the infrastructure is in place to rapidly assess and exploit this region for shale development.
Vaca Muerta Formation as a Hydrocarbon Reservoir
Although not officially targeted, there were hints of the Vaca Muerta’s potential in some conventional legacy wells. Over the years more than 130 wells had been drilled which had tests or cores in the formation, and the first conventional well to produce oil from the Vaca Muerta was Filo Morado 25, which delivered 533,000 barrels from fractured Quintuco-Vaca Muerta rocks between 1991 and 1995.
The EIA had also pointed out the unconventional resource potential of the Vaca Muerta in its 2013 World Shale Gas and Oil Resource Assessment. In this it suggests that the risked recoverable amount of gas in the formation could be 307 Tcf, with resources of 16.2 Bb oil and oil condensate.
Work by Repsol YPF in the giant Loma La Lata gas field first brought attention to the unconventional possibilities in the Vaca Muerta. In 2009 the company drilled PSG.x-2, which was the first well in Loma La Lata designed to test for shale gas in the Vaca Muerta, but it discovered oil in the overlying Upper and Lower Quintuco. In 2010 Repsol YPF had gas traces in LLLK.x-1, which targeted karstic features in Lower Quintuco, but after poor results the well was deepened to the Vaca Muerta where it found shale gas. LLL-479, in the northern area of the Loma La Lata field later the same year, similarly targeted the Lower Quintuco but when that proved dry the well was re-entered and found oil in the Vaca Muerta; this was the first discovery of shale oil in Argentina.
Exploration of the Vaca Muerta as a reservoir really started in 2011 with Soil.x-1, the first well drilled to actively evaluate shale oil potential. It successfully produced from the formation after five fractures, which was hailed throughout Argentina as a major breakthrough for the country.
After initially drilling predominantly vertical wells, since 2016 the majority of wells in the Vaca Muerta have been horizontal (190 out of 194 in 2018), with the average lateral length increasing from 1,000m in 2014 to 2,200m in 2018, while the average estimated ultimate recovery per horizontal well has also increased considerably, from 218 in 2013 to 872 Mboe in 2019 (GiGa Consulting, 2019).
It is now thought that the unconventional resource potential of the Vaca Muerta is 91 Tcfg and 14.3 Bbo.
First Exports Achieved from the Vaca Muerta Formation
Operators in the Neuquén Basin undertook several pilot projects and brought five projects into development, before production ramped up dramatically at the beginning of 2018 as activity increased into full development.
Initially, YPF was the main company involved in the Neuquén Basin unconventional play, but from 2012 it was joined first by Chevron and then by other major exploration companies including Total, Shell, and Exxon Mobil. They were later followed by local companies such as Tecpetrol, PAE, Pluspetrol, Pampa and Vista. In particular, Tecpetrol led the way in showing the tremendous gas potential of the Vaca Muerta, when in a single year the company managed to drill over 60 wells in its Fortin de Piedra Block, building extensive facilities to ramp up production from zero to 550 MMcfpd, making it the largest gas field in Argentina. This represents 10% of the gas produced in the country and was due to a large extent to the incorporation of industrial management know-how and a ‘factory’ mode approach to production. Today, a total of 82,000 bopd and over 1 Bcfpd is being produced from Vaca Muerta wells, which has dramatically changed the energy spectrum of the country.
All production from the Vaca Muerta unconventional reservoirs was used locally until recently, but production has been increasing enough that, in June 2019, two cargoes from the formation, one of light oil, the other of liquefied natural gas, were exported, foreshadowing what officials say will be a steady flow of shipments by the end of the year.
Changing the Energy Spectrum in Argentina
The start of oil and LNG exports and the increasing volumes of gas available for domestic use, all stemming from the unconventional reservoirs of the Vaca Muerta Formation, mean that Argentina is the only country to have full scale shale production outside North America. It has yet to become as efficient as the North American shale plays, but can take advantage of the great technological advances which have been made in those fields to short-cut the learning curve.
Considering the recent announcements of future developments by most operators, it is clear that this upward trend will continue, heralding an important shift in the energy balance and economy of Argentina.
Cover photo credit: Olivier Galland
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