Blog search results for Tag: argentina

Energy

 Patagonia

Patagonia, Argentina, is the site of Vaca Muerta, a geological formation known for its oil and gas reserves. Image: Gervacio Rosales  

Since taking office in late 2015, Argentinean president Mauricio Macri has prioritised investment in the energy sector to help reverse a costly energy deficit. Argentina’s abundant shale resources have attracted a growing number of major international companies, and attention has mostly been focused on the Vaca Muerta shale fields. Located in Patagonia they are one of the world’s largest reserves of shale gas.

The proposed investments revealed in YPF’s strategic plan for 2018-2022 indicate that the company intends to contribute $21.5bn directly, with the remainder coming from partnerships and associated companies.

 Mauricio Macri

Mauricio Macri has focused on increasing investment into Argentinian energy during his tenure as President.  Image: Marcos Corrêa/PR

YPF intends to ramp up oil production and continue the development of Argentina’s huge shale resources. The company said its non-conventional production is expected to grow by 150% over the period 2018-2022, with half of its hydrocarbon production coming from shale and tight oil and gas by 2022. The lifting of shale gas output will be helped by the continued fall in development costs.

Shale gas growth will increase the availability of natural gas liquids (NGLs) for chemical production. YPF estimates that the growth in shale gas will result in a 45% increase in its supply of NGLs between 2017 and 2022. YPF indicated that it has identified opportunities to invest in petrochemicals in Argentina, Brazil, Peru, Bolivia and Paraguay.

 Shale oil and gas

Shale oil and gas is accessed though hydraulic fracturing or ‘fracking’. Image:    

These investments would take advantage of the regional market imbalance together with shale gas growth, it said in its strategic plan, presented to investors in October 2017. ‘The region is a net petrochemical importer with room for a world scale complex,’ it added. 

There is room for one or two more ethylene sites, one or two methanol sites and two or three urea sites in the region, according to YPF.

The company said it is also developing opportunities to stimulate demand for natural gas, because demand in Argentina is highly seasonal. Opportunities include power generation, exports to Chile, Uruguay and Brazil, as well as petrochemical investments.

 YPF

YPF is Argentina’s largest petrochemicals producer, with a capacity of 2.2m t/year. It has three plants, located in Ensenada, Plaza Huincul and Bahía Blanca. Output includes benzene, toluene, mixed-xylene, ortho-xylene, cyclohexane, solvents, methyl tert-butyl ether (MTBE), 1-butene, oxo alcohols, tert-amyl methyl ether (TAME), linear alkylbenzene (LAB), linear alkylbenzene sulfonate (LAS), polyisobutylene, maleic anhydride, methanol and urea. The Bahía Blanca site is operated by nitrogen fertiliser producer Profertil, a 50:50 joint venture with Canadian company Agrium.

Argentina’s potential for new petrochemicals investments was highlighted recently by Marcos Sabelli, president of the Latin American Petrochemical and Chemical Association (APLA). 

petrochemicals gif

Originally posted by randomlabs

Speaking at the Latin American Energy Organization’s Forum on Regional Energy Integration in Buenos Aires, he said development of the Vaca Muerta shale fields improves the potential for steady feedstock supplies. 

‘We are proposing that we replicate the US model,’ he said. The US shale boom enabled the US to move from an importer to an exporter of petrochemicals. ‘Argentina has this potential. There is feedstock, market and companies,’ he added.

YPF said it is the largest shale operator outside North America, with a daily production exceeding 67,400 barrels of oil equivalent. The company participates in 50% of Argentina’s Vaca Muerta shale gas and oil reserves area, with more than 550 producing wells; 168 are horizontal. 

 The Green River Formation

The Green River Formation, Colorado, US, is one of the richest oil deposits in the world. Image: National Park Service

Conventional hydrocarbons will remain the basis of the company’s production, with the development of more than 29 projects and the drilling of more than 1600 wells, it said. YPF has three refineries, accounting for 50% of Argentina´s capacity.

The company expects its production of oil and gas to grow by 5%/year over the next five years, reaching 700,000 barrels of oil equivalent per day in 2022. Exploration efforts will continue, with reserves targeted to rise by 50%. YPF also intends to boost its electricity production, much of it through renewables, as part of efforts to become a fully integrated energy company. YPF is pledging the investments at a time when President Macri’s pro-market government is on a drive to attract investments to consolidate an economic rebound after six years of stagnation.

 oil and gas

YPF are hoping to up its production of oil and gas as energy resources by 5% a year by 2022. Image: Pixabay

Argentina’s GDP is forecast to grow by 2.9% in 2017 and 3.2% in 2018, according to the Organisation for Economic Co-operation and Development (OECD). The country’s shale gas boom, combined with economic growth, could make it an attractive candidate for a major new petrochemicals project.

Sustainability & Environment

Latin America is setting the pace in clean energy, led by Brazil and Mexico. Renewables account for more than half of electricity generation in Latin America and the Caribbean – compared with a world average of about 22% – according to the International Energy Agency. 

Brazil is one of the world’s leading producers of hydropower, while Mexico is a leader in geothermal power. Smaller countries in the region are also taking a lead. In Costa Rica, about 99% of the country’s electricity comes from renewable sources, while in Uruguay the proportion is close to 95%.

 The Itaipu hydroelectric dam

The Itaipu hydroelectric dam, on the border of Brazil and Paraguay, generated 89.5TWh of energy in 2015. Image: Deni Williams

At the same time, countries such as Chile, Brazil, Mexico and Argentina have adjusted their regulations to encourage alternative energy without having to offer subsidies. Some have held auctions for generation contracts purely for renewables.   

Latin America’s renewable energy production is dominated by an abundance of hydropower, but there is strong growth potential for other sources of renewable energy. Wind and solar power are expected to account for about 37% of the region’s electricity generation by 2040, compared with current levels of about 4%, according to a report from Bloomberg New Energy Finance (BNEF). 

Total electricity generation in Latin America is forecast to grow by 66% by 2040, and renewable energy is expected to account for the vast majority of the new capacity. While Brazil has significant solar water heating, solar PV is virtually non-existent. But consumer-driven rooftop PV is expected to account for 20% of Brazil’s electricity generation by 2040, it says. This compares with an expected 24% in the leading country, Australia, followed by 15% in Germany and 12% in Japan. Meanwhile, in Mexico, solar is forecast to overtake gas and hydro to dominate Mexico’s capacity mix.

Brazil is the world’s third largest producer of renewable power, after China and the US, and has the world’s second largest hydropower capacity, after China, according to a report issued by the Renewable Energy Policy Network for the 21st Century (REN21). Brazil also ranks fourth in terms of bio-power generation - after the US, China and Germany - and fifth in terms of solar water heating collector capacity. 

Rio do Fogo wind farm

Rio do Fogo wind farm, Brazil. Image: The Danish Wind Industry

Short-term decline

However, the recent economic downturn in Brazil, combined with declining electricity demand, has dampened growth in investments in renewable power in the country in the short-term. Although substantial hydropower capacity was commissioned in Brazil in 2016, the country’s renewable energy auction scheduled for 2016 was cancelled, and many projects awarded contracts in tenders through 2015 were stalled. 

In the wind power sector, a shift is expected away from Brazil to other countries in the region. The unstable politic and economic climate in Brazil coincides with unprecedented auction activity in Mexico, Argentina and Chile, says Make Consulting, part of Wood Mackenzie. It expects more than 47GW of new wind power capacity to be commissioned in Latin America by 2026. But following the cancellation of Brazil’s reserve power auction planned for 2016, wind power installations in Brazil in 2019 are expected to be half the size of 2014 and 2016.