New York Times (NYSE:NYT) reports that a discovery in May of an estimated 150 million barrels of oil (NYSE:USO) in Argentina’s Patagonian Field could catapult the country towards oil independence, and serve as a much needed boon to a national economy that has stagnated in recent years. The field is known as the “Vaca Muerta” or ‘dead cow’ in Spanish, due to its difficult to access reserves stored in shale rock. From the times article, “geologists say that the Vaca Muerta is a harbinger of a possible major expansion of global petroleum supplies over the next two decades as the industry uses advanced techniques to extract oil from shale and other tightly packed rocks.”
American oil companies have led the way in developing and implementing techniques to extract oil (NYSE:OIL) from shale field deposits, having had success with similar fields in North Dakota and Texas. The oil is drilled via a process known as hydraulic fracturing, or ‘fracking’ whereby water is used to break down the rock and release the oil reserves. Environmental groups have raised concerns that the process can lead to pollution of local water supplies.
Fadel Gheit of Oppenheimer and Company says the discovery could be huge for Argentina, and other countries with significant shale reserves, saying, “[of shale oil] It could potentially be a game changer…We are going to see much wider distribution of oil reserves, to the benefit of the whole world. It could rerank countries, in which the very needy might become self-sufficient. Countries like Canada (NYSE:EWC) and Australia (NYSE:EWA) could potentially become the new Saudi Arabia for energy.”
Oil companies are also excited about the potential of Argentina’s discovery and the growing evidence of similar shale deposits across the world. Aubrey McClendon, CEO of Chesapeake Energy (NYSE:CHK) commented on his hopes for Shale Oil, “I believe there’s shale oil and tight sand oil to be found all over the world.” The Times reports that oil companies BP (NYSE:BP), and Royal Shell Dutch (NYSE:RDSA) are working with the Chinese and other foreign governments to crack shale oil deposits on a global scale.