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Colombia's State Council upheld a temporary ban on hydraulic fracturing that proponents argue would revitalize the country's stagnant hydrocarbon reserves.
The highly anticipated ruling by the high administrative court today marked a significant setback for the government of President Ivan Duque and the oil and gas sector, which had lobbied hard for authorization to set up unconventional pilot projects.
The government wants to replicate the success of the US unconventional industry, and more recently of Argentina, where rising shale oil and natural gas flows are reviving exports.
Colombia's influential oil chamber (ACP) said it respects the court's decision, even though it contradicts the recommendations of a committee of experts earlier this year. "Even though the high court decision does not imply that Colombia has prohibited fracturing, it is inevitable that the decision will affect investor confidence and judicial security, jeopardizing fiscal and energy sustainability in Colombia," the ACP said.
The executive president of Colombia's oil services chamber Campetrol German Espinosa said after the ruling: "We are convinced that we have to keep on working together as an industry, showing that we can do things well, generating more instruction and building public trust."
Environmentalists grouped in an anti-fracturing alliance celebrated the decision after a fierce lobbying campaign in which they argued that the practice posed a threat to the country's water supply and public health. "We welcome the court's decision, which defended collective environmental rights," said Carlos Santander Santiago, a leader of the Colombia Free of Fracking Alliance. But he warned that the measure bans all unconventional activities, including coal-bed methane which is already under development by coal miner Drummond. Orlando Cabrales, head of gas chamber Naturgas, warned last week that CBD should be excluded from the debate over hydraulic fracturing.
There was no immediate comment from Colombia's mines and energy ministry.
The oil industry pledged to keep up the fight for hydraulic fracturing. "This is bad news for the country," said Julio Cesar Vera, head of Bogota-based consultancy Valjer Energy and former president of oil engineers' association Acipet.. "The battle was lost but the struggle continues."
Among the most to lose if the suspension is not lifted is state-controlled Ecopetrol, whose chief executive Felipe Bayon early today warned that the country will eventually need to import oil and gas unless the industry is allowed to pursue unconventional drilling.
"This is not about doing pilot projects quickly, but doing them well," Bayon said before the decision. "The country has a lot of potential," he said, adding that the company will continue to prepare for a future ruling that would eventually permit the practice.
Colombia´s unconventional potential lies in the Middle Magdalena Valley basin in the central region, which holds 4bn-7bn bl of oil equivalent (boe) resources, and 4 trillion to 13 trillion cf of natural gas, according to Ecopetrol's estimates.
In Rancheria in the northern department of Cesar, Ecopetrol sees the potential for 10 Tcf of unconventional gas, with another 0.3-0.5 Tcf in naturally fractured reservoirs. In the restive Catatumbo region of Norte de Santander department, Ecopetrol's estimates range from 0.2 Tcf to 1.4 Tcf.
Nationwide, proven crude reserves increased by 9.9pc to 1.96bn bl in 2018 from 1.78bn bl in end-2017, extending the life of the reserves to 6.2 years from a previous 5.7 years.
In contrast, proven gas reserves slipped by 2.9pc to 3.78 Tcf, equivalent to 9.8 years. At the end of 2017, gas reserves totaled 3.89 Tcf, or 11.7 years of supply.
Colombia currently produces around 890,000 b/d of crude and just over 1bn cf/d of gas.
