Production of unconventional hydrocarbons became globally prominent in 2010, when the US, for the first time, reached a daily output of 1 million barrels of tight oil. In Latin America, where high unconventional hydrocarbon potential has been widely recognized, Governments noticed the need to attract experienced international operators, qualified suppliers and risk-prone investors to develop such resources. The current global low-prices and increasing social and environmental pressures raise questions about the timing of Latin America’s unconventional take-off.
This article anticipates that, notwithstanding the pitfalls, at least 1 mmboepd of new unconventional oil and gas production could come online in Latin America within the next 10 years.
There are enablers and challenges to be addressed to develop Latin American unconventional hydrocarbon resources efficiently:
- Benefit from the US’s and Canada’s development experience
- Encourage collective knowledge building and innovation
- De-risk reserves fast and efficiently
- Use advanced analytical tools selectively and fine-tune processes to attain outstanding results
- Assure sustainable operations and community support
- Secure market advantage
As conventional O&G production in Latin American countries such as Mexico, Colombia and Argentina approaches a decline phase, their unconventional O&G upside can be explored and developed, and serve to both increase overall hydrocarbon production and improve the trade balance.
This is not only good news for their NOCs, but also offers ample opportunity for international E&P companies and service providers with appetites for and experience in unconventional production. However, the unconventional developments in the region will be subject to particular country level conditions and Argentina has taken the lead in developing large unconventional resources in Latin America, followed by Mexico and Chile, while Colombia still needs to overcome key challenges to relaunch exploration.