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Argentina: only the best tight gas wells break even at current gas prices

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Report summary

Operators in Argentina are successfully reversing the Neuquén basin's gas production decline by targeting low-permeability,tight gas reservoirs.Tight gas production has ramped up considerably, reaching 565 mmcfd or 16 million cubic meters per day (Mm3/d) in Q1 2016, representing a quarter of Neuquén basin's output. The large variability in results indicates that tight gas resources in Neuquén will continue to require a statistical development approach. Using type wells and current development costs, we determine the formations with the highest well performance and lowest breakevens.

What's included

This report contains

  • Document

    Tight gas developments in Argentina.xls

    XLS 569.50 KB

  • Document

    Argentina: only the best tight gas wells break even at current gas prices

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Table of contents

  • Summary
    • Tight gas well productivity is far from uniform
      • Mulichinco horizontal well rates are now four times higher than vertical rates
      • The best Lajas wells achieve IP90 rates over 200 km3/d, but most stay below 75 km3/d
      • Limited well sample in Punta Rosada, but early results are encouraging
      • Well costs and EURs are positively correlated
      • Higher EURs are more achievable than lower costs in the short term
      • Conclusion

Tables and charts

This report includes 24 images and tables including:

Images

  • Estimated wellhead breakeven gas prices at 12.5% discount rate for two EUR levels
  • Neuquén basin tight gas formations
  • Neuquén basin tight gas production
  • Neuquén basin tight gas well count
  • Argentina: only the best tight gas wells break even at current gas prices: Image 5
  • Tight gas wells drilled 2006 – 2015 by IP90 rate
  • A box and whisker diagram gives a sense of performance distribution
  • Distribution of tight gas well IP90 rates by formation
  • Distribution of tight gas well IP90 rates by operator
  • Total's Mulichinco wells IP90 rates
  • YPF and Petrobras Mulichinco wells IP90 rates
  • Lajas vertical well IP90 rates
  • Punta Rosada vertical wells IP90 rates
  • Well cost as a function of formation depth
  • Well cost versus IP90
  • Well cost versus EUR
  • IP90 capital efficiency: well cost relative to production rates
  • EUR capital efficiency: well cost relative to total well recovery
  • Estimated breakeven gas prices at 12.5% discount rate for two EUR levels
  • Type-well breakeven well cost at 12.5%
  • Upper-quartile well breakeven well cost at 12.5%

Tables

  • Argentina: only the best tight gas wells break even at current gas prices: Table 1
  • Estimated well ultimate recovery based on IP90 rates
  • Formation depth and well cost estimates

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