Fracking's Impact: Añelo's Boom and Argentina's Challenges

The town of Añelo in Argentina has transformed remarkably due to fracking, but this economic boost raises broader questions about the nation's future.

Añelo, once a quiet town, has experienced explosive growth due to fracking, with its population soaring and local businesses thriving. However, this boom contrasts sharply with Argentina's broader economic challenges, including inflation and debt. Experts note that while the energy sector offers promise, it may not resolve the country's deep-seated economic issues. The future hinges on not just exploiting resources, but also addressing underlying economic and environmental concerns.

Mechanic Fabio Javier Jiménez found himself in the right place at the right time. When his father moved their family-owned tyre repair shop to the rural Argentine town of Añelo, it was a small, sleepy place, some 1,000km (600 miles) southwest of Buenos Aires. There was no mains water or gas, and the electricity supply was constantly being cut off.

Then in 2014, fracking for oil and gas started in the surrounding region, and the conurbation boomed. We set up the tyre repair shop in the middle of the sand dunes, far from the town centre, says Mr. Jiménez. Then the town grew and passed us by.

Fuelled by its new-found energy wealth, Añelo's population soared from 10,788 in 2010 to 17,893 in 2022, an increase of more than 60%. In addition, Añelo sees some 15,000 workers enter the town each week day. This has made the roads very busy, including lots of oil tankers going through.

Añelo is located in the heart of Vaca Muerta, a 30,000 sq km (12,000 sq mi) oil and gas-rich geological formation. It was first discovered as far back as 1931, but it wasn't until fracking became legal in Argentina in 2014 that the deposits could be commercially accessed.

Fracking is a method of mining that first became widespread in the US in the early 2000s, whereby a high-pressure mixture of water, sand, and chemicals is injected into the ground. This cracks or fractures the rock, allowing the gas or oil trapped inside to be brought to the surface.

The first fracking operation in Vaca Muerta was a joint operation between Argentina's majority state-owned oil firm Yacimientos Petrolíferos Fiscales (YPF) and US giant Chevron. By February of this year, there were 3,358 wells in active production in Vaca Muerta, according to the Argentine Institute of Oil and Gas. This accounts for more than half of Argentina's oil and gas production.

The oil and gas from Vaca Muerta has given Argentina energy self-sufficiency, overturning decades of shortages and the need for expensive imports. It has also allowed Argentina to export oil and gas, helping it to earn foreign currency. However, it won't be 'the panacea' for correcting Argentina's economic and political challenges.

Critics argue that oil and gas extraction from Vaca Muerta is being held back by Argentina's poor credit rating and strict currency limits, which deter international investment. Environmental concerns are also a growing issue, as many feel the fracking boom does not adequately consider ecological ramifications, drawing attention to the uneven political support in favor of energy exploitation.

Mr. Jiménez, now operating a second garage due to increased business, voices skepticism about the sustainability of the current boom, stating, Yes there will surely be oil and gas for many years to come, but that does not mean that Argentina will not continue to experience economic and political ups and downs.