Vaca Muerta: A journey to the heart of the oil´s Big Bang
Thesteel jaw painted red closes on the gleaming tube. The operators move away andstart to turn with the maximum speed of a blender. It is brutal and at the sametime there is a surgeon's precision in every movement. Like a tracheotomy to agiant. The tube penetrates the earth and links a metallic snake, a hellish wormthat will eat the rock for thousands of meters until it finds the exact pointto extract the fluid.
"Before,we use to do this with a lever on the floor, very rustic," explains MartinLagos, field manager at Vista. We are in the control cabin of drilling rig.Medano de la Mora block. A mixture of lunar module and world crane. The pilotis surrounded by electronic screens, video monitors, panic buttons, giantclocks. It rotates on a helicopter chair and has a blue joystick in each hand.It is the heart of the RIG F-19 platform, which the multinational Naborsoperates for the boutique oil company that Miguel Galuccio created a littleover a year ago and is revolutionizing the way of working that immense motherrock known as Vaca Muerta.
VacaMuerta is like the flagship of the Empire, only instead of floating on theplanet, it is stationed 3,000 meters below the surface. A stone the size ofDenmark that can change the destiny of Argentina forever. With the potential togenerate the dollars that end with the external restriction, main reason of thecyclical macroeconomic imbalances of the country.
TheVista operation plans to generate 65 thousand barrels per day in three years.And it is a medium-sized company. With ten companies like this, foreigncurrency would already be produced for the same amount as the whole soybeancomplex, about 19 billion dollars per year. And we still do not count thegiants that have already buried a foot in that desert, such as Chevron, Shell,Petronas, Total, Statoil, Exxonmobil and Wintershall, as well as theArgentinean Pan American Energy and Tecpetrol. The figures give vertigo. VacaMuerta is another country. One that works. In Vista, they know that they are atthe apex of a movement of historical transcendence, a crossroads oftechnological, economic change, that returns to Argentina a window ofprosperity, as happened in the 1930s when it became the barn of the world.
"Weare the next Argentine unicorn", people get excited at Vista´s offices.There is talk of an EBIDTA that could climb to 900 million dollars in justthree years. Crazy.
Galuccioarrives at his incredible headquarters in Neuquén, facing the Limay River. Thereare no individual offices. Common spaces and meeting rooms. For a journalist itis a familiar environment: The newsroom. Only instead of writing notes theydrill oil wells. But the effect is the same, flattens the hierarchies and theinformation is shared organically. It seeks to break the silos, the new fetishconcept of corporate jargon.
Justoff the plane, Galuccio supports the black leather backpack on the floor andstarts a meeting that will last for hours. Managers, technicians, analysts, arebeing tested. He demands them to the maximum. Galuccio knows the business likenobody else. It is hard, but they admire it because it was made from below andit is at the frontier of the business. Vista is the Apple of Steve Jobs of VacaMuerta. The place to learn and experiment.
Macrihas to release the export of oil as Obama did in 2015 and triggered an economicprosperity that Trump enjoys today. The United States with a deposit similar toVaca Muerta went from its historical dependence on the fluid to be on track tobecome the world's leading oil exporter, above Saudi Arabia. In addition, itshould sign a decree obliging companies to share their geological andoperational information. "This is how you learn faster," explainsGaluccio, who should be the least interested in socializing the knowledge thatVista produces. But in Vaca Muerta everything acquires another dimension. Ifyou work to export a commodity, the market is the world and partnering is thelogical way to understand a monster that will take decades to put into value.Today between 2 and 3 percent of the rock is exploited. The investment isaround 7 billion dollars and some studies indicate that the total operation ofVaca Muerta will demand almost two hundred times that figure.
TheOrejano and Fortín del Aguila, are the first milestones in this story.Tecpetrol shot the gas production from the field with an impressive operationand, almost alone, managed to get Argentina to export again. But Macri droppedthe subsidized price of Resolution 46 and lit a yellow light. At Vista, theyknow that gas is a business that is very tied to internal contingencies andfocused on oil.
The Big Bang
Galucciois Vaca Muerta. He assumed the leadership of YPF with the laser sight in thatsite that for many was another Argentine fantasy. He was able to convinceCristina Kirchner that there were few more important things in the country topay attention to and he managed to sign the decree that enabled the first jointventure with the North American multinational Chevron, to begin to exploit thedeposit. An extreme audacity for the story of that administration. And Dow cameback, Petronas and many others. Today when you go through the gravel roads ofthat desert you can see the first condensation of that effort. More than thirtydrilling rigs operating. In Eagle Ford and Permian, the twin fields of theUnited States, there are more than a thousand. Of that size isthe growth potential.
"Thiscity is going to change forever," says the US oilman as soon as it landsat the modest Neuquén airport. And it's happening. Cyan, the hotel that Vistauses for its staff, has full occupancy every day throughout the month."They told us that the weekend and the holidays were going to fall, but itdoes not happen, we have been a hundred percent for several months," saysthe manager. The city begins to be populated by towers, for new executives andworkers in an industry that pays well and in many cases in dollars. "I amgrateful to my parents who decided to live here thirty years ago," saysthe driver from Buenos Aires, who proudly comments that he was able to buy ahouse for his family.
Adecade ago just a daily flight connected this Patagonian capital with BuenosAires. Today there are more than twelve and there are already direct routes toCórdoba and other points of the interior. The airline desktops are stacked ontop of each other and almost do not paint the posters, as is the case with carrental companies. Everything is overflowing. Like the routes. Reaching VacaMuerta is torture. Motorway sections, routes under repair, dusty roads. The infrastructureis not going to be -it is- the big bottleneck. And the regulation. TwoArgentinean classics.
Butwe are lucky. The formation is in the middle of a desert, with no urbanpopulations nearby, on a flat land with easy access. In the United States theyhave to drill in the backyard of neighbors and in China, where the other largeshale deposit is located, it is practically inaccessible. In addition, the VacaMuerta oil is light, sweet, elegant. Top quality.
Vista´s model
Theboy opens the air bottle and connects a balloon. A line of gray and whiteballoons. The blonde singer rehearses a cover. The girls are going to put onmakeup. Vista celebrates its first year of life and have reasons to celebrate.In days the first results of the unconventional operation will be known. Thecontained euphoria is perceived. Like a secret that cannot stand.
Galuccioinnovated from minute zero. The company was created with a SPAC, a novelfinancial vehicle that instrumented the stock market of Mexico, to financeprojects without assets. If in two years the promised objectives are not met,the money is returned. It's basically a blank check. It raised 800 milliondollars to finance a company that did not exist. He had the idea of creatingthe most important independent oil company in the region. And the accumulatedprestige of its management in YPF and Schlumberger, the largest operator of oilservices in the world. They believed him.
Helooked here and there: Argentina, Brazil, Mexico, Colombia. And he put thefirst full strong in Vaca Muerta. That's how Vista was born. He partnered withformer YPF Juan Garoby, Pablo Vera Pinto and Alejandro Cherñacov. And theyadded Matías Weissel as the brain of the operation of the formation. A nerd ofoil that was in the first drilling of Vaca Muerta. There is not a team thatknows the rock better. Gaston Remy of Dow came to complete the team as CEO ofArgentina.
Butit was not the only innovation. The first thing he did was to buy an operationin decline of conventional oil to Pampa Energía. And then a very large field inBajada de Palo, in the heart of Vaca Muerta, surrounded by the giants of theindustry. It wasn´t clear until it finally did.
Theconventional operation became slim fit, dealt with deficiencies and increasedproduction. It generated cash flow and with that the exploration of theunconventional operation accelerated. Go to the past to finance thefuture. Genius.
Todaythe company's stock has already increased by 30 percent and has not yetdelivered its first numbers. "There's a smell of goal," they say inVista. The requests of politicians, journalists and businessmen to visit thefield are piled up and the name of Galuccio returns to circulate for veryimportant positions.
Butthe man is focused. Vaca Muerta is that son he saw growing up from the cradle,but the long look is in Latin America. A wild and vibrant, dangerous land,where the pioneer spirit finds its best element.