Fracking activity in Vaca Muerta, Argentina shot up in January to its highest level in 17 months, according to the Argentine unit of Houston-based services company NCS Multistage.
Demand for oil in Argentina is recovering from an eight-month lockdown for the coronavirus pandemic, plus pricing incentives spur drilling for natural gas.
The number of frac stages in Vaca Muerta rose 39% to 662 in January from 477 in November. Of the activity in January, Argentina's energy company and biggest oil and gas producer, YPF, was the most active with 382 stages, trailed by Mexico-based Vista Oil & Gas with 111, Argentina’s Tecpetrol with 39, Argentina’s Pluspetrol with 31 and BP-backed Pan American Energy with 24, the data showed.
In year-on-year terms, January fracking activity was nearly double the 340 stages in the year-earlier period, a sign of how the lifting of the March-November lockdown is rekindling oil and gas demand.
January had the highest number of stages fracked since August 2019, when it totaled 676, according to NCS.
The lockdown for the pandemic had cut fracking to as little as zero frac stages last April because of the decline in demand and restrictions on working in the fields. They didn’t start to really return to the fields for fracking until September. Since then, the number of stages has averaged more than 300 per month.
The lifting of the lockdown has boosted oil and gas demand, helping oil production to recover. Oil output recovered to 479,431 b/d in December from a pandemic low as 445,614 b/d in May as demand for diesel and gasoline has steadily recovered. Argentina supplies all of its own oil for refining, with most of the light crude from Vaca Muerta being consumed in the country.
A rise in global oil prices has also encouraged new activity in the play, which has been driving Argentina-s overall oil and gas production growth over the past few years.
Another help has come from the December launch of a 2020-24 program in Argentina to improve returns on gas production with higher pricing and long-term supply contracts.
Despite the gains, oil production is still shy of the pre-pandemic level of nearly 520,000 b/d in March, while gas production — at 113.8 million cu m/d in December — is 21% less than a most recent high of 144.4 million cu m/d in July 2019.