Argentina to use local frac sand

The cost of drilling in Argentina’s vast but barely tapped Vaca Muerta shale formation will fall at least 10 percent by the end of 2016, state energy company YPF said on Thursday, part of an efficiency effort aimed at attracting much-needed investment.

The cost drop is expected to start in August when Argentina starts using its own sand in fracking rather than more expensive imported sand, YPF’s chief executive Miguel Galuccio said.

YPF has already cut the cost of drilling a vertical well in Vaca Muerta to $6.9 million from a previous $11 million, Galuccio told reporters gathered on the outskirts of Buenos Aires for a demonstration of how YPF is refining fracking sand.

By the end of 2016, Galuccio said Argentina will produce all sand it needs for shale drilling.

“We are continually looking for ways to reduce well drilling costs. The sand is one form, which in itself will allow us to save 10 percent,” Galuccio told Reuters.

YPF is building a plant near Vaca Muerta that is set to start refining raw yellowish sand mined from the southern province of Chubut into the fine gray sand used in fracking.

YPF says it has about 300 wells producing up to 45,000 barrels per day of oil and gas equivalent, a fraction of Vaca Muerta’s potential.

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