YPF has secured a 35-year period extension for the development of the unconventional Rincón del Mangrullo block in Argentina from the authorities of Neuquén province.

In return, YPF has agreed to an investment commitment of $150m to launch an unconventional gas pilot program. The pilot’s objective will be to further develop the tight gas Mulichinco formation and explore the potential in the tight gas Las Lajas and the shale gas Vaca Muerta formations in the Rincón del Mangrullo block.

In this regard, YPF, which is the operator and licensee of the block, has inked an agreement with the Neuquén province to get the unconventional exploitation concession.

The Mulichinco project, according to a report in Neuquen Informa, will see an investment of nearly $300m. It will feature drilling of 38 horizontal wells and is expected to have a production of 1.3 million cubic meters per day by 2027.

Currently, the Rincón del Mangrullo block of 183 km2 area is being developed jointly by YPF and Petrolera Pampa, the oil and gas subsidiary of Pampa Energía. Both YPF and Petrolera Pampa hold 50% each in the Argentine block.

Pampa Energía through its subsidiary will only take part in the tight gas development of the Rincón del Mangrullo block. As a result, it has agreed to make 30% of the total investment.

Pampa Energía stated: “It is worth to highlight that for the first time horizontal wells will be drilled in the Block, a method that our partner YPF has plenty of experience and was picked up from the operation of other unconventional blocks in Neuquén.”

YPF and Petrolera Pampa have been developing the block, located mid-east of Neuquén province, to produce natural gas from Mulichinco formation. Alongside, the partners have been undertaking exploration activities in the Las Lajas formation to determine its potential.

Till date, the partners have drilled 116 wells in the Rincón del Mangrullo block while producing daily 177 million cubic feet of unconventional gas.