The company is conducting preliminary studies at its La Calera field in Argentina, according to the source, who is not authorized to speak on the record.
The preliminary work is designed to identify the future potential of unconventional gas reserves at La Calera. The field, which has been producing small volumes of oil and traditional gas, is in the Neuquen Basin, a formation believed to have a high potential for shale and tight gas. La Calera itself is near YPF's Loma La Lata and Total's Aguada Pichana fields, the country's two largest gas producers.
The economic viability of the shale gas project will depends on the production potential of the reserves as well as gas prices, Apache said in a statement.
Argentina has some of the lowest gas prices in the world, in large part because of governmental controls designed to curb inflation and bolster the competitive edge for manufacturers. The controls, which began after a 2001-02 economic crash, have led to a cutback in exploration and production, driving down gas production by 7.8% to 132 million cu m/d from a record 143.1 million cu m/d in 2004.
This has led to shortages, prompting the federal government to offer incentives, the chief of which is the right to market the production of gas from new fields or wells at prices above the domestic average, now at $2.45/MMBt at the wellhead. Gas producers have arranged sales deals at
$4-5/MMBtu for new supplies under the incentives program.
Apache is producing two-thirds of the gas now in production under the program, the company said in a statement. Apache is a top-10 gas producer in Argentina, with output at an average 3.9 million cu m/d. It won approval last year for a tight-gas project at its Anticlinal Campamento and Estacion Fernandez Oro fields in Neuquen Basin. It will sell 1.5 million cu m/d of the output at a wellhead price of $5/MMBtu to a nearby power plant.
