Crown Point and Aconcagua receive licence for Chañares Herrados block

A joint venture of Crown Point Energy and Petrolera Aconcagua Energía (Aconcagua) has secured exploitation licence for the Chañares Herrados block in the Cuyo Basin, Argentina.

Located approximately 50km south of Mendoza City in the Province of Mendoza, the Chañares Herrados oil producing block will be equally owned by Crown Point and Argentine oil and gas company Aconcagua.

Following the launch of an auction in 2020 to award a licence covering the Chañares Herrados concession, the Province of Mendoza issued a decree on 11 March 2021 confirming that the joint venture is the only qualifying bid.

As a result, the Province of Mendoza awarded the 25-year exploitation licence to the joint venture for the 40.6km² concession.

As per the licence agreement, the joint venture will make an $8.3m cash payment to the Province, as well as pay a 13% royalty on oil production.

The joint venture will also invest $85.7m to undertake a ten-year work programme, which involves well work overs, infrastructure optimisation, and a multi-well drilling programme.

Crown Point said that, in January 2021, the Chañares Herrados concession produced an average of 528 barrels per day of sweet medium gravity crude oil from sandstone and conglomerate reservoirs of the Barrancas (Jurassic) and underlying Río Blanco (Triassic) formations.

Crown Point said in a statement: “Water is handled on site and disposed of in three field injection wells.

“An additional 20 oil wells are shut-in waiting on maintenance. Most of these can be quickly restarted with minimal investment, which is expected to significantly increase production from the concession.”

Covered by 3D seismic, the concession is close to pipeline infrastructure, which delivers oil to the YPF refinery located near Mendoza City.

While Aconcagua will operate the Chañares Herrados concession, Crown Point will provide geological and geophysical support for the work programme.