There is one and only one international shale oil play that has attained any significant momentum. It is the Vaca Muerta, located in Argentina. The Vaca Muerta today is the most attractive shale oil play in the world for a producer to spend money drilling wells in. I'll explain why in a moment.

And guess who has just become a major player in it? That good old shale oil and gas "land man," Aubrey McClendon.

Aubrey And The Vaca Muerta
I don't know if shale pioneer and Chesapeake Energy co-founder Aubrey McClendon is a cat, but he definitely seems to have at least nine lives in the oil and gas business.

McClendon through American Energy Partners (where he is CEO) just agreed with YPF to invest $500 million over the next three years. The appeal for the Argentinians is McClendon's extensive experience in getting a major shale play up and running.

As noted in the press release announcing the deal, under McClendon's tenure, Chesapeake grew from a start-up in 1989 to the largest gas producer and driller of new wells in the U.S. in less than 20 years.

Unlike some of McClendon's other moonshot shale investments, he is hardly alone this time.

The Vaca Muerta has some major attention
There are some heavy hitters with big stakes in the Vaca Muerta. The quality of the companies interested in the play speak volumes about its long-term potential.

Chevron (NYSE: CVX) agreed to a deal in 2014 with Argentina's YPF SA (NYSE: YPF) that would involve eventually investing $15 billion developing the Vaca Muerta.  That investment is expected to result in 1,500 wells, along with daily production of 50,000 barrels per day of oil and 3 million cubic meters of shale gas. 

The biggest non-state-owned producer of them all, ExxonMobil (NYSE: XOM), is also bullish on the Vaca Muerta. Through its subsidiary XTO Energy, Exxon has several blocks in both the north and south sections of the play.

And Royal Dutch Shell (NYSE: RDS-A) recently acquired a 35-year deal to exploit two Vaca Muerta blocks, a deal that was entered into after the price of oil collapsed.

To move the needle for the likes of Chevron, Exxon, and Shell, the potential needs to be very large. In 2013, the EIA estimated that with 27 billion barrels of technically recoverable oil, the Vaca Muerta is the worlds fourth largest shale oil play.

That would seem to be needle-moving.



You're selling oil for how much per barrel?
Business isn't just tough for oil producers in North America -- this is a straight-up disaster. Most shale producers were built for a world of $80-plus-per-barrel oil. Their balance sheets weren't ready for what we're experiencing today. I feel pretty confident in saying that back in 2014 there were no companies that developed a business plan to deal with sub-$30-per-barrel oil prices in 2016. Yet here we are, and some regions of North America are even worse off.

Oil in the Bakken hit sub-$20 per barrel last week. Brutal.

Oil for Canadian heavy oil producers (Western Canadian select) was trading for $14 less than WTI last week, which would put it at $18 per barrel. Worse still.

For companies pumping oil out of the Vaca Muerta in Argentina, however, things are better. A lot better. On Jan. 5, the Argentinian Government set the price for oil sold in Argentina at $67.50 per barrel.

Say what?

Yes, the price of oil that producers in Argentina are receiving is more than twice the current WTI and Brent prices. The reason is that the Argentinian government sets a minimum price to encourage producers to develop domestic assets. The Argentinian government's view is that oil prices will rebound, and they want to keep producers motivated to invest in Argentina in the meantime. The oil and gas business has the potential to drive the economy in Argentina for many years to come.

In most developing countries, the governments have subsidized fuel prices, but in Argentina the motorists are subsidizing the producers.

What To Make Of All Of This

With Aubrey's interest and the presence of some major players there isn't much doubt that the geology of the Vaca Muerta is solid.  At this point these companies know what they are looking for when it comes to shale reservoirs.

With the price of oil being propped up by the government in Argentina it is also likely the only shale oil play with a chance of growing production in 2016.  

This looks to be the international shale play that actually turns into something significant.

TMFWolfpack has no position in any stocks mentioned. The Motley Fool owns shares of ExxonMobil. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.