The main street of Añelo, a remote town in Argentina’s southern Patagonia region which is set to become the country’s shale oil capital. In 15 years the population will have climbed to 25,000, 10 times what it was just two years ago. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
AÑELO, Argentina, Oct 23 2014 (IPS)

This small town in southern Argentina is nearly a century old, but the unconventional fossil fuel boom is forcing it to basically start over, from scratch. The wave of outsiders drawn by the shale fuel fever has pushed the town to its limits, while the plan to turn it into a “sustainable city of the future” is still only on paper.

The motto of this small town in the province of Neuquén is upbeat and premonitory: “The future found its place.”

But for now the town’s roads, most of which are unpaved and throw up clouds of dust from the heavy traffic of trucks and luxury cars driven by oil company executives, contradict that slogan.

“Many eyes around the world are on Añelo, but unfortunately we don’t have a good showcase, to put us on display,” the director of the town’s health centre, Rubén Bautista, told IPS.

“We are living on top of black gold, they take riches out of our soil, but they leave practically nothing to the local population,” added the doctor who, along with three other colleagues, covers the health needs of a population that doubled, from 2,500 to 5,000, in just two years.According to conservative projections, Añelo will have a population of 25,000 in 15 years, including people directly employed by the oil industry, indirect workers, and their families, who have begun to pour into the new mecca for Argentina’s energy self-sufficiency plans.

Añelo, a bleak town on the banks of the Neuquén river surrounded by fruit trees, goats and vineyards, is the town closest to the Loma Campana shale oil field, which is being worked by Argentina’s state oil company YPF and the U.S.-based Chevron.

It is only eight km from the oil field, which is part of new riches that hold out the biggest promise for revenue to fuel the country’s development: Vaca Muerta, a 30,000-sq km geological reserve that is rich in shale oil and gas and has made this country the second in the world after the United States in production of unconventional fossil fuels.

But the black gold is not shining yet in Añelo – which means forgotten place in the Mapuche indigenous language – located some 100 km north of Neuquén, the provincial capital.

The health centre, which refers serious cases to hospitals in the provincial capital, has just two ambulances, while 117 companies from across the planet are setting up shop in and around the town.

According to conservative projections, Añelo will have a population of 25,000 in 15 years, including people directly employed by the oil industry, indirect workers, and their families, who have begun to pour into the new mecca for Argentina’s energy self-sufficiency plans.

“They are people who come to Añelo with the idea of finding a better future…thinking about what unconventional fossil fuels could mean in their lives,” YPF Neuquén’s communications manager, Federico Calífano, told IPS.

YPF alone has 720 employees in the area. The workers come from nearby towns as well as other provinces, and from abroad, brought in by international companies in the construction, chemistry, hotel, transportation and services industries.

The town’s only hotel is full, and camps spring up on any flat area, with containers turned into comfortable temporary lodgings for the workers. Rent for a small apartment is five times what people pay in the most expensive neighbourhoods in Buenos Aires.

“We are building a city from scratch,” Añelo Mayor Darío Díaz told IPS, although he pointed out that even before the shale boom the town was “a strategic waypoint.”

YPF has been exploiting unconventional fossil fuels in the region since the 1980s, but “when their work was done they would leave,” Díaz explained. “This is much more intensive; there will be a lot of work over the next 30 years.”

“The town has infrastructure for around 2,500 inhabitants. It is too small now given the new demand for basic services like water, electricity, roads, and dust emission,” the province’s environment secretary, Ricardo Esquivel, told IPS.

The sound of hammering and pounding is constant. Two workers, who make the 120-km commute back and forth every day from Cipolletti, in the neighbouring province of Río Negro, are working on a new sidewalk. “It’s spectacular.There’s a lot of work here for everyone. More people are needed. The problem is housing,” construction worker Esteban Aries told IPS.

The YPF Foundation carried out an “urban footprint” study which gave rise to the Añelo Local Development Plan. The plan has the support of the Inter-American Development Bank (IDB) and its Emerging Sustainable Cities Initiative.

Carried out together with the local and provincial governments, the plan outlines different growth scenarios with the aim of assessing the risks and vulnerabilities of the area.

It addresses, among other aspects, “what surface area the city should have, how the urban planning process should start, what the diagram should look like, what services are needed – what Añelo is going to need today and in two, three, or five years,” Calífano said.

YPF reported that the work had already begun, including an expansion of the sanitation system, construction of homes for doctors, and a vocational training centre, linked to the needs of the oil industry. Primary healthcare clinics were set up in two trailer trucks – although Dr. Bautista said that’s not enough.

The economic growth has brought heavy traffic. The government is planning a two-lane highway to Vaca Muerta, on the so-called “oil route”, to keep the trucks out of the town.

“The steadily growing number of accidents is overwhelming,” Bautista said. The average has increased from 10 traffic and work-related accidents a month two years ago to 17 today.

“You have to keep in mind that most of the activity has been going on for a year,” said Pablo Bizzotto, YPF’s regional manager of unconventional fuels in Loma Campana, where some 20 wells are drilled every month, which has driven production up from 3,000 to 21,000 barrels per day of oil.

“There are things that we will obviously work out together with the authorities, as we go. This is all very new,” he said.

Agricultural engineer Eduardo Tomada left everything behind in Buenos Aires and invested his savings to open up a restaurant in Añelo, which is now packed with workers.

His cook, local resident Norma Olate, said she was happy because she’s earning more. But she nostalgically remembers when her town was “practically a sand dune.”

Development has brought work, “but also bad things,” the 60-year-old Olate told IPS. “There have been armed robberies, which we didn’t see here before.”

Olate, who has young, single daughters, said she is also worried about “the invasion of men.”

“So many men!” she said, laughing. “I’m not interested anymore, but the girls…there are guys who come and deceive them, a lot of them end up pregnant….that’s bad for the town too.”

Provincial lawmaker Raúl Dobrusín of the opposition Popular Unity party denounced the rise in prostitution, drug trafficking and use, alcoholism and corruption.

“We say the only things modernised in Añelo were the casino and the brothel,” he said ironically.

Dobrusín complained about the government’s lack of “planning” and “control” over these and other problems, such as real estate speculation and prices that are now unaffordable for many people in the town.

Nevertheless, for Mayor Díaz the balance is positive. “We have to take advantage of this opportunity for Añelo to develop as a town and improve the living standards of our people. What worries me is whether we will make the necessary investments quickly enough,” he said.

The province is preparing a “strategic development plan” for Añelo, along with nearby “oil micro-cities”, which will include the construction of an industrial park, schools, hospitals, roads and housing, and increased security.

“We’re not going to build an oil camp in Añelo without a city,” the mayor summed up.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

A YPF driling derrick at the Vaca Muerta shale oil and gas field in Loma Campana in the Neuquén basin in southwest Argentina. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
LOMA CAMPANA, Argentina , Oct 1 2014 (IPS)

Production here has skyrocketed so fast that for now the installations of the YPF oil company at the Loma Campana deposit in southwest Argentina are a jumble of interconnected shipping containers.

Argentina is staking its bets on unconventional oil and gas resources, and the race to achieve energy self-sufficiency and surplus fuel for export can’t wait for the comfort of a real office.

“The camp here is our temporary offices,” Pablo Bizzotto, regional manager of unconventional resources of the state-run YPF, told a group of foreign correspondents during a visit to this oilfield in the southwestern province of Neuquén. “I apologise. But this is what we were able to set up quickly when we began the operations.”

Since last year, Loma Campana, some 100 km from the city of Neuquén, has been the Argentine oil company’s operating base, where 15 to 20 wells are drilled every month in the Vaca Muerta shale oil and gas field in the Neuquén basin.

There are currently more than 300 wells producing unconventional gas and oil here and in other oil camps in this part of Argentina’s southern Patagonia region. Some 250 are operated by YPF and the rest by foreign oil companies.

The final installations, with offices and a control and remote operation room, will be ready by mid-2015. But work at the wells is moving ahead at a different pace.

From January 2013 to mid-2014, daily oil output climbed from 3,000 to 12,000 barrels per day, before jumping to 21,000 in September.

“Loma Campana is the only large-scale commercial development [of shale oil and gas] outside of the United States. The rest are just trials,” said Bizzotto, explaining the magnitude of the operations in Vaca Muerta, which contains shale oil and gas reserves at depths of up to 3,000 metres.

Unlike conventional oil and gas extracted from deposits where they have been trapped for millions of years, shale oil and gas are removed from deep parent-rock formations.

According to YPF, which has been assigned 12,000 sq km of the 30,000 sq km in Vaca Muerta, the recoverable potential is 802 trillion cubic feet of gas and 27 billion barrels of oil.

A worker walking near pipes used to extract shale oil and gas at YPF’s Loma Campana oilfield in the southwest Argentine province of Neuquén. The shipping containers used as temporary offices can be seen in the background. Credit: Fabiana Frayssinet/IPS

With that potential, the country now has 30 times more unconventional gas and nine times more unconventional oil than traditional reserves. Thanks to recoverable shale resources, Argentina now has the world’s second largest gas reserves, after China, and the fourth largest of oil, after Russia, the United States and China, according to YPF figures.

Bizzotto said that in terms of both quantity and quality, as measured by variables of organic matter, thickness and reservoir pressure, the reserves are comparable to the best wells in the Eagle Ford Shale in the U.S. state of Texas.

Rubén Etcheverry, former president of the Gas y Petróleo de Neuquén, a public company, said the reserves open up “a new possibility for development and self-sufficiency from here to five or ten years from now.”

This is encouraging for a country like Argentina, whose reserves and production had declined to the point where over 15 billion dollars in fuel had to be imported.

“The possibility of converting these resources into reserves means that Argentina could have gas and oil for more than 100 years,” Etcheverry, who is also a former Neuquén energy secretary, told IPS.

But the challenge is just that: turning the shale resources into actual reserves.

Since 2013, YPF has invested some two billion dollars in Vaca Muerta.
But because of the magnitude of the resources and the country’s difficulties in obtaining financing from abroad, Etcheverry said “new actors are needed” in order to achieve the required volumes of investment, which he estimates at 100 billion dollars over the next five or six years.

YPF, which was renationalised in 2012, when it was expropriated from Spain’s Repsol oil company that controlled it since 1999, is now looking for foreign partners – a strategy that some political and social sectors see as undermining national sovereignty.

In Loma Campana, YPF operates one portion with the U.S. oil giant Chevron and is developing another shale gas field with the U.S. Dow Chemical.

Other companies involved in the area are Petronas from Malaysia, France’s Total, the U.S.-based ExxonMobil, the British-Dutch Shell, and Germany’s Wintershall, while negotiations are underway with companies from other countries, including China and Russia.

According to provincial lawmaker Raúl Dobrusín of the opposition Unión Popular party of Neuquén, the oil companies are waiting for the Senate to approve a controversial new law on hydrocarbons.

The legislation would grant 35-year concessions, reduce the tariffs the companies pay for imports, and allow them to transfer 20 percent of the profits abroad, and if they do not do so they would be paid locally at international values and without tax withholding, Dobrusín said.

The development of unconventional fossil fuels has also run into criticism from environmentalists.

Hydraulic fracturing or “fracking” is the technique used for large-scale extraction of unonventional fossil fuels trapped in rocks, like shale gas. To release the natural gas and oil, huge volumes of water containing toxic chemicals are pumped underground at high pressure, fracturing the shale. The process generates large amounts of waste liquids containing dissolved chemicals and other pollutants that require treatment before disposal.

Environmentalists say fracking pollutes aquifers and releases more toxic gases than the extraction of conventional fossil fuels.

“There is no doubt that it causes pollution. Wells are abandoned without being cleaned up. Here in Plottier the water contains heavy metals and isn’t potable in most places, and we blame that on conventional production that has polluted the groundwater,” Darío Torchio, who has a business in Plottier, a city of 32,000 located 15 km from Neuquén, told IPS.

“Oil is a heavy inheritance for our descendants, which ruins everything, while the wealth goes to the companies,” said Torchio, a member of the Permanent Comahue Assembly for Water.

Silvia Leanza, with the environmental Ecosur Foundation, said Argentina is opting for a development model based on “neoextractivism”.

These plans, she told IPS, are “designed in the central countries as part of the neoliberal economic development and globalisation package, where we are suppliers of raw materials.”

“The focus is on the exploitation of a non-renewable resource, fossil fuels, which also has an economic impact, because that money could go towards clean energy sources that could also be developed in Patagonia,” Carolina García, an activist with the Multisectorial contra el Fracking group, told IPS.

“This is an alarm signal,” Etcheverry said. “The timeframe is very short. We had reserves for the next eight or 10 years.”

But the government of Cristina Fernández has no doubts about the model of development being followed.

“When unconventional gas and oil production in Vaca Muerta reaches 1,000 wells, the gross geographical product will tend to grow between 75 and 100 percent in the province of Neuquén. That will have a three to four percent impact on the country’s gross domestic product,” argued the head of the cabinet, Jorge Capitanich.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

Mariana Matranga outside the School of Engineering at the University of Buenos Aires. Credit: Juan Moseinco/IPS

By Marcela Valente
BUENOS AIRES, Jul 3 2012 (IPS)

The recovery of state control over the oil company YPF was a strategic move for Argentina, which is highly dependent on fossil fuels. But the country needs to incorporate cleaner sources of energy, and this will take time, says energy expert Mariana Matranga in this interview.Today, 90 percent of the country’s energy needs are met with fossil fuels, and this is a reality that cannot be ignored, Matranga said in an interview with Tierramérica *.

“We all like to travel by car, get places quickly, turn on the air conditioning. There are increasingly more things that you can’t do without using batteries… What’s important is that the public realizes that our way of life has a cost,” stressed the chemical engineer and researcher at the University of Buenos Aires, who has worked in the hydrocarbons sector in Argentina, Bolivia, Canada and Norway.

Q: What do you think about the decision to nationalize YPF?

A: I agree with it. It was necessary. It will give the state a very effective tool to act on an energy mix which, whether we like it or not, is currently dominated by fossil fuels.

Q: Do you think this greater state participation will be strategic?

A: Yes, because it affects all aspects of life. Energy consumption is not an end itself, it is a means. This decision wasn’t made thinking about the profits to be made from a commodity, but rather about the common good. Energy is what keeps the economy functioning. That means the whole sector is strategic. Today Argentina depends on fossil fuels for 90 percent of its energy needs. I don’t want fossil fuels to be strategic, I would love it if they weren’t, but the reality is that they are.

Q: And what can be done to change that reality?

A: It’s a reality that has to be corrected while it continues functioning. Changing the energy mix entails engineering works that take time and money. The energy mix is an inertial system. It is very difficult to change it. The way to work on it is through a strategic long-term plan.

Q: Is this something a government can do?

A: A government has to deal with the present situation. It has to keep the machine running and at the same time work on a plan to modify this situation. It’s not simple, and it can’t be done overnight. We have machines from the 1970s that are still within their useful life spans and with good maintenance they can continue to be used in thermal power plants. An investment in energy is for 40 or 50 years.

Q: What do you think about the debate on energy use that was triggered in Argentina by the nationalization of YPF?

A: What’s important is that the public realizes that our way of life has a cost. Even the cleanest energy has an impact. A wind farm in the middle of the route of migratory birds has an impact.

We all like to travel by car, get places quickly, turn on the air conditioning. There are increasingly more things that you can’t do without using batteries. We demand increasingly more energy. Nobody likes to be told that they have to consume less energy or lower their standard of living to make it more environmentally friendly. Since man discovered fire there have been impacts, and these impacts will be greater if there is a growth in demand.

Q: So how can more alternative energy sources be incorporated?

A: The technologies with the least impact are the ones that require the greatest initial investment, which means that compromise solutions have to be adopted. If you ask me, I’d love it if all energy were renewable. But I don’t think that’s possible. Governments try to maintain a balance and make compromise decisions.

Q: Do you think the planned exploitation of unconventional gas and oil will increase dependence on fossil fuels even more?

A: Fossil fuels are not renewable, and their production is likely to decline within a short time. Unconventional fuels will begin to be seen in five years. So this doesn’t necessarily imply an expansion in fossil fuel use, but rather the maintenance of the current proportion.

Q: And the environmental cost of unconventional fuels?

A: It depends on how it’s done. Unconventional technology has only been in use for a short time in the world. It uses a significant amount of water, and while 90 percent goes up in steam, the whole watershed needs to be monitored very carefully. It can be done well or it can be done badly. A lot depends on how much is invested.

Q: Are there international studies on the impacts of this type of exploitation?

A: It’s banned in France. But they have an energy mix dominated by nuclear energy, which can’t easily be changed. It’s in the United States and Canada, where there are significant potential reserves for unconventional extraction, where most of the concerns have been raised.

In Texas and Pennsylvania they are exploiting reserves that are in agricultural areas and are densely populated. On the other hand, in New York, they placed a moratorium on hydraulic fracturing for shale gas until its impacts could be determined. This shows how new all of this is and how little is known. In the United States, the results of an impact assessment will be released in September.

Q: Do you think that there are major risks involved in this area?

A: The final disposal of the treated water is an important factor. It contains the chemicals used in the fracturing as well as those that are washed up from the reserves. But treating this water has its costs. It can be done well, but it is expensive. That’s why regulation is so important. The more that is invested, the lower the risk.

But the risk is always there. You have to decide whether or not you want to take it. These are political decisions. I don’t think it would be very intelligent if this is the only thing we do. In Argentina, unconventional fuel exploitation might be sensible in the short or medium term. But in the long run, we have to increase consumption of other energies and reduce the weight of hydrocarbons.

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