Dec. 27 (UPI) -- Shell Argentina, which two months ago sold a refinery and fuel stations, said Thursday it will move to develop unconventional oil fields in the Vaca Muerta basin, aiming at 70,000 barrels of oil equivalent per day by 2025.
The decision includes developing the Sierras Blancas, Cruz de Lorena and Coiron Amargo southwest blocks, the company told UPI in a statement sent by email on Thursday.
"Vaca Muerta makes up an important part of our global shale portfolio and we see substantial long-term growth potential there," said Andy Brown, Shell Global Upstream Director.
"The first phase of development will consist of drilling and infrastructure expansion to increase production and processing capacity" from the current 12,000 barrels of oil equivalent per day to over 40,000 barrels of oil equivalent per day in 2021, the statement said.
"Full development of more than 70,000 barrels per day of oil capacity will follow by the mid 2020's," the statement said.
"The preliminary results from our early production (pilot wells) in Vaca Muerta have been positive and compare favorably with our shale benchmarks," said Shell Argentina's President, Sean Rooney.
Partners in these blocks are Gas y Petroleo de Neuquen (GyP) with a 10 percent interest in Sierras Blancas, Cruz de Lorena and Coiron Amargo Sur Oeste, and Vista Oil and Gas, with a 10 percent interest in Coiron Amargo Sur Oeste.
Shell Argentina holds a 90 percent interest in Sierras Blancas and Cruz de Lorena and 80 percent in Coiron Amargo Sur Oeste.
Shell Argentina in 2012 launched exploration and subsequent exploitation of unconventional oil and gas deposits in the Neuquen basin. Vaca Muerta plays an important role in the portfolio of future opportunities, Shell said.
According to private reports from earlier this year by Kallanish Energy, Argentina holds the second largest shale gas reserves and fourth largest shale oil reserves in the world.
"The South American nation is estimated to hold 27 billion barrels of technically recoverable shale oil reserves, and 802 trillion cubic feet of shale gas reserves," the report said.
In addition, the government-owned oil company is also investing to increase overall production, including conventional.
"Argentina's state-run YPF, the country's largest oil and gas producer, will invest over $30 billion between 2018 and 2022, the report said. "It plans to increase hydrocarbons production by 5 percent per year, reaching 700,000 barrels of oil-equivalent per day in 2022."
The decision by Shell to increase its upstream investment follows an announcement two months ago to sell downstream assets in the country.
Royal Dutch Shell completed in October the sale of its downstream business in Argentina to Brazil-based Raizen for $916 million in cash, subject to final price adjustments.
The sale included a Buenos Aires refinery, around 665 retail stations, liquefied petroleum gas, marine fuels, aviation fuels, bitumen, chemicals and lubricants businesses, as well as supply and distribution activities in the country.
Raizen is Brazil's third biggest energy company.