Chevron steps up Vaca Muerta investment

Chevron is seeking to scale up shale production in Argentina’s Vaca Muerta formation by expanding drilling activity at its El Trapial block. The company plans to increase the number of drilling rigs there from one to three by early 2029, with a second rig scheduled to arrive in June next year. This expansion is intended to help accelerate Chevron's goal of tripling its production in Argentina to 195,000 boepd by 2035.

The planned rig additions are central to Chevron’s effort to apply its experience from the U.S. Permian Basin to Vaca Muerta, a shale region where development has lagged expectations. Executives see El Trapial, located in a remote area of Argentina, as a key platform to implement drilling and completion techniques refined in the Permian and to build a more continuous development program.

Chevron is pursuing government approval for a long‑term investment plan at El Trapial valued at $13.8 billion over 30 years. The company disclosed the existence of this plan in June, but details on the implementation timeline and the intention to add rigs to speed up production growth have only recently been outlined. The investment is designed to support higher output from El Trapial, one of three Chevron projects in Vaca Muerta.

El Trapial is fully owned and operated by Chevron and currently produces about 40,000 barrels of oil equivalent per day. As part of the long‑term strategy, Chevron envisions extending its contract for the western section of the block beyond its 2032 expiration. The company also plans to build additional facilities, including tanks to separate oil and water, to handle the anticipated increase in production.

Beyond El Trapial, Chevron aims to expand its overall footprint in Argentina’s oil sector. The company has previously stated it intends to triple its total production in the country by 2035 to 195,000 barrels of oil equivalent per day. Company leadership has indicated that this timeline could be accelerated if the additional rigs at El Trapial are delivered and integrated as planned.

Chevron’s portfolio in Vaca Muerta includes a 50% interest in the Loma Campana block, which produces about 110,000 barrels of oil equivalent per day, and a 50% interest in the Narambuena block, which has not yet started production. State‑controlled energy firm YPF (YPF) operates both Loma Campana and Narambuena, while Chevron’s stake in the upcoming Vaca Muerta Oil Sur export pipeline reflects a broader commitment to the region’s export infrastructure.

Despite its scale, Vaca Muerta has not reached its full production potential, in part due to Argentina’s volatile economic environment. Past episodes of protectionism, sovereign debt defaults, hyperinflation and capital controls have complicated access to U.S. dollars for imports, affecting investment and supply chains. These macroeconomic factors remain a backdrop for Chevron’s expansion plans.

On the operational side, bringing a well online in Vaca Muerta currently costs about 30% more than in the Permian Basin, reflecting higher costs and a less developed local supply chain. Sand for hydraulic fracturing must be trucked nearly 2,000 kilometers from north of Buenos Aires because local sand sources have not yet met requirements for high‑pressure fracking. Chevron expects that the arrival of the second rig next June will allow it to build an inventory of drilled wells so that a fracking crew can work continuously on site instead of on an intermittent schedule.

Chevron’s more than 25‑year presence in Argentina and its investment in export infrastructure underline its belief that the country’s oil sector can maintain an upward trajectory. Company leaders view Vaca Muerta as one of the world’s largest shale basins, with significant untapped potential despite past underperformance. By applying techniques refined in the Permian and committing to long‑term capital spending, Chevron is positioning El Trapial as a core asset in its global shale portfolio while navigating economic and logistical constraints in Argentina.