Natural gas output from Argentina’s Vaca Muerta formation in the Neuquén Basin has been growing steadily, and President Alberto Fernández has greenlighted an infrastructure project to move the fuel to market.

The aim of the project is to further spur natural gas production from Vaca Muerta and to reduce the nation’s reliance during winter months on liquefied natural gas (LNG) imports. A second phase of the project might include potential export infrastructure, Fernández said earlier in November.

The $1.5 billion first phase would involve constructing the 24 million cubic meters/day (Mm3/d) Néstor Kirchner pipeline. Energy Secretary Darío Martínez said the president “asked us to begin work immediately.” A tender process is being designed jointly by the Martinez’s office and state firm Integración Energética Argentina (Ieasa).

The pipeline would run from Tratayen in Neuquén to Salliqueló in Buenos Aires province. Other construction includes upgrades to the Gasoducto Norte pipeline system, which would allow natural gas to reach northern Argentina and potentially displace Bolivian gas imports. 

The news comes as Argentina comes out of a winter of high LNG needs amid soaring global natural gas prices. Infrastructure bottlenecks in Neuquén have also slowed growing domestic production.

In September, 62% of Argentina’s 133 Mm3/d, or 4.7 Bcf/d of production, came from Neuquén province, according to the Buenos Aires-based General Mosconi energy institute. The September production figure was up 8% year/year.

Natural gas output in Vaca Muerta, meanwhile, grew sequentially every month from May through August. Production hit an all-time high of almost 1.6 Bcf/d in August, compared to 890-920 MMcf/d during the six-month period from November 2020 to April, according to analysts at Rystad Energy.

In a hydrocarbons promotion bill sent to congress in September, Argentina’s government said natural gas would be an essential part of the country’s energy transition. The bill includes price stabilization mechanisms, and guarantees that volumes produced for export will see preferential tax rates and access to capital markets. This would be in addition to current incentive programs in the sector.