Argentina Has High Hopes for a Shale Payoff

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"An oil field called Vaca Muerta—'dead cow' in English—has finally come to life."

New York Times, Clifford Krauss

Just east of Argentina's Andean foothills, an oil field called the Vaca Muerta—"dead cow" in English—has finally come to life.

In May, the Argentine oil company YPF announced that it had found 150 million barrels of oil in the Patagonian field. Although there are significant hurdles, geologists say that the Vaca Muerta is a harbinger of a possible major expansion of global petroleum supplies over the next two decades as the industry uses advanced fracking techniques.

Exploration of similar shale fields has already begun in Australia, Canada, Poland and France. Indian and Chinese oil companies are investing in pilot projects that, if successful, could make their countries significant oil producers, possibly reshaping energy geopolitics and stemming future price rises. Ukraine and Russia are also thought to have sizable shale fields of oil and gas, as do many North African and Middle Eastern countries.

"The potential is huge, on the order of hundreds of billions of barrels of recoverable reserves," said Michael C. Lynch, president of Strategic Energy and Economic Research.

Similar fields in North Dakota and Texas are already beginning to gush oil.

Oil experts caution that geologists have only just begun to study shale fields in much of the world, and thus can only guess at their potential. Another barrier to widespread exploitation of oil shale is that few companies have the expertise and experience to do the work. Chinese and Indian oil companies are investing in joint shale ventures in the U.S. and other countries in part so they can learn the new exploration and drilling techniques.

Oil companies are speculating that the early successes in the United States can be duplicated around the world.

"It could potentially be a game changer," said Fadel Gheit, a managing director and senior oil analyst at Oppenheimer & Company.

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