Court allows Colombia to test oil fracturing

Colombia's government and oil industry are celebrating a high court clarification late yesterday that authorizes pilot projects for hydraulic fracturing, a practice they say will boost flagging reserves.

The State Council, Colombia's high administrative court, clarified a 10 September ruling that had been widely interpreted as banning the pilot projects by upholding a November 2018 suspension of fracturing.

The court now says the ruling ratifies the suspension but "does not impede the realization of integral pilot research projects" as recommended earlier this year by a committee of experts appointed by President Ivan Duque in November 2018.

The government and national oil company Ecopetrol are hoping to replicate the success of the US unconventional industry, and more recently of Argentina, where rising shale oil and gas flows are reviving exports.

Ecopetrol chief executive Felipe Bayon has promised the company would carry out the pilot work in a "fish bowl" to ensure maximum transparency for all stakeholders.

The first pilot projects are expected to take place in the Middle Magdalena Valley basin, which holds the potential for 4bn-7bn bl of oil equivalent (boe) resources, and 4 Tcf (113bn m³) to 13 Tcf of natural gas, according to Ecopetrol's estimates.

Francisco Jose Lloreda, president of Colombia's oil chamber ACP, said last night's judicial clarification is "good news for the country, because it will allow us not only to validate the potential of existing oil and gas, but also to obtain valuable subsoil technical and environmental information."

Environmentalists grouped in an anti-fracturing alliance predicted a "long road" to carrying out the pilot projects, as they are obligated to fulfill eight conditions, including access to information, strengthening of institutional capabilities and establishment of baseline social, environmental and health data.

The group pledged to keep up its fight to ban the practice, and reiterated that the court-ordered suspension also covers coal-bed methane extraction by coal-mining company Drummond, an assertion challenged by the firm.

"There is no free path for fracturing in Colombia," the environmental group said last night.

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 1 Bcf/d of gas.