BUENOS AIRES – State-controlled energy company YPF said it has expanded its cooperation agreement with another Argentine crude and gas producer, Petrolera Pampa, with a view to developing the Rincon del Mangrullo shale-gas block in the southwestern province of Neuquen.
The accord, signed Wednesday, ensures the two companies will continue to develop the “tight-gas” project they launched in early 2014.
A total of 49 wells had been drilled in that area through the end of the first quarter of this year, yielding average daily gas production of 1.4 million cubic meters (49 million cubic feet), YPF said in a statement.
This new agreement calls for additional investment totaling $150 million for surface infrastructure development, with each company accounting for a 50 percent share.
These projects, highlighted by the planned construction of a new treatment plant and pipelines, will double gas-treatment capacity and enable the companies to boost daily production to 4 million cubic meters (140 million cubic feet).
Petrolera Pampa also pledged to invest $22.5 million to launch the third phase of new well drilling, a project aimed at increasing tight-gas production at the block.
“Once that phase is completed, both companies will be able to continue” developing the block and dividing up the investment cost equally, the statement read.
Tight gas is developed using a controversial method known as fracking, which involves pumping a pressurized fluid – usually composed of water, sand and chemicals – into a shale formation to create a fracture in the rock layer.
The agreement also encompasses an up to $40 million exploratory program in the nearby Lajas Formation for the 2015-2016 period, with Pampa Energia, the parent company of Petrolera Pampa, accounting for 85 percent of the total investment outlay.
The expanded cooperation accord calls for YPF and Petrolera Pampa to invest $350 million this year, said the state-controlled energy company, Argentina’s largest hydrocarbons producer.