Argentina's Neuquen province has approved a $229mn pilot project by ExxonMobil Exploration Argentina to explore and produce unconventional oil and natural gas in the Vaca Muerta shale formation.
ExxonMobil plans to drill five horizontal wells with 25 fracture stages in the newly created La Invernada – Bajo el Choique block. Drilling is expected to start in mid-2016, the company says.
ExxonMobil holds a 90pc stake in the block while provincially owned Gas y Petroleo de Neuquen has the balance.
In the decree approving ExxonMobil's plans, the Neuquen government joined two previously separate blocks into one. The company made significant discoveries in both of the areas in 2014.
If the exploration results are promising, ExxonMobil could step up to full development entailing $13.8bn in investment to drill 556 horizontal wells, according to the provincial government.
The US company was more cautious. "The initial results from the two wells in the Vaca Muerta formation have exceeded our expectations, and are yielding some of the best productivity in the region. But full development will depend on the results of this pilot project," ExxonMobil told Argus.
The project will be supported by ExxonMobil unit XTO Energy, which the company acquired in 2010. The Argentina project is XTO´s first foray outside of North America, ExxonMobil says.
The ExxonMobil project came to light at the same time that US Dow Chemical announced a separate $500mn shale plan with its Argentinian state-controlled partner YPF.
The two projects suggest newfound investor enthusiasm for Argentina after market-oriented president Mauricio Macri was sworn into office on 10 December, pledging to make policy changes to stimulate the anemic economy.
Date: Dec 15, 2015