Page 5 - GLNG Week 29

GLNG CommEntaRy GLNG
Argentina’s floating flexibility
Marine infrastructure has allowed Argentina to switch quickly to exports
invEstmEnt
WHat:
Rising production at the Vaca Muerta shale elds has sharply reduced Argentina’s need for gas imports.
WHy:
Exmar’s quick deployment of a oating lNG facility gave the country a means to take advantage of seasonal supply gluts.
WHat nExt:
Argentina’s intention to halt lNG imports entirely by 2020-21 looks viable in light of plans for further development of the Vaca Muerta basin.
LNG’S ability to serve flexible supply and demand is becoming an increasingly important part of the energy mix – and nowhere can this be seen more clearly than in Argentina. e country has historically imported gas both by land (that is, by pipeline) and by sea (that is, in the form of LNG) in order to meet domestic demand.
But it is now moving in the other direction. On June 6, Argentina exported its rst cargo of LNG from the Tango LNG facility.
Hail shale
e main factor underlying this switch is uncon- ventional gas development in the Vaca Muerta Basin. is shale formation, which covers 34,800 square km in Neuquen Province, holds around 8.722tln cubic metres of gas in technically recov- erable reserves, as well as 16bn barrels of crude oil and gas condensate.
As in the US, these vast reserves of shale gas have been a game-changer for Argentina. ey have more than compensated for output declines at the mature conventional elds that allowed the South American country to be a net exporter of natural gas between 1990 and 2007.
Vaca Muerta is a long way away from reach- ing its peak. us far, only 4% of the basin’s acre- age has been developed, and this small slice of the total saw output levels top 28.32mn cubic metres per day in December 2018. As a result, Vaca Muerta already accounts for no less than 23% of Argentina’s gas production.
Nevertheless, the ow of gas is not constant. Shale gas elds in the Vaca Muerta Basin pro- duce much more abundantly in the warm period between October and March or April, so the country o en experiences a supply glut during this part of the year. By contrast, it typically needs to import both LNG and pipeline gas during the cooler months between April or May and Sep- tember, when demand is higher and domestic production is lower.
time to tango
Happily, technology – in the form of oating LNG (FLNG) facilities – has given Argentina an opportunity to ride out these uctuations and take advantage of the oversupply conditions that prevail during the warmer months.
Before shale gas ows upended its thinking, Argentina’s interest in FLNG capacity centred mostly on floating storage and regasification units (FSRUs) – that is, in import facilities. It had two FSRUs in place and was considering a third when it realised that it ought to start building up
its export capacity. Accordingly, it released the Bahia Blanca GasPort, an FSRU provided by Excelerate Energy, and brought Belgium’s Exmar in for the Tango FLNG project.
e facility has a capacity of 500,000 tonnes per year (tpy) and is operating under a tolling contract. It is due to remain in operation for a period of 10 years.
Exmar delivered the Tango LNG unit to Argentina in February of this year and then announced the commissioning of the unit in June, with the delivery of a 25,000 cubic metre cargo from Vaca Muerta elds. e facility is likely to come fully on stream a er Argenti- na’s winter season, but it is not big enough to eliminate the need for imports just yet. e country is therefore likely to continue import- ing LNG during the cooler months, at least for the time being.
Nevertheless, the Argentinian government has previously said it intends to halt LNG imports by 2020-21. It is already taking steps in this direction, as is evident from the fact that the yearly period of imports has grown shorter. ( e country used to import gas from March or April until October.)
opportunity knocks
Exmar pointed out when it commissioned the Tango LNG facility that the project had come to fruition in record time. This was no idle boast, given that it only signed on to the plan in November 2018.
The Belgian company attributed its quick progress to co-operation with Argentina’s national oil company (NOC) YPF, but it was also a matter of opportunity. In any event, this rapid turnaround would have been unthinkable 10 years ago – not just for the FLNG facility, but for Argentina itself. Even so, the country’s switch from net importer of gas to net exporter is hap- pening, and more change will come as develop- ment expands in Vaca Muerta.
Indeed, YPF took another step in that direction last week by signing a pre-front- end engineering and design (FEED) services contract with the US company McDermott International on another gas liquefaction unit. e contract, which may be worth up to $50mn, calls for McDermott to draw up plans for a 5mn tpy LNG plant, with the potential for expanding the capacity to 10mn tpy. Since the facility will process gas from Vaca Muerta elds, it will help push development forward in that vast shale formation.™
tango:
Tango flNG was originally built for
Paci c Exploration and production (pEp) under a deal signed in 2012 for exports from Colombia. pEp went into bankruptcy in 2016 and the vessel was delivered in 2017.
As a result, Exmar
was eager to explore alternative options for its vessel. There was even a suggestion that it might put the unit to work in iran.
Week 29 25•July•2019 w w w . N E W S B A S E . c o m
P5