Drummond ordered to halt CBM gas production

Colombia's high administrative court ordered coal miner Drummond to halt coal bed methane (CBM) gas production.

The temporary ruling tasks the mines and energy ministry and hydrocarbons regulator ANH to enforce the suspension of CBM production at the Caporo field, located in the Caribbean province of Cesar, by no later than 13 March 2020.

Drummond's CBM project has drawn the scrutiny of environmental groups in the wake of a court-ordered ban on unconventional drilling that was not initially associated with CBM, but rather to hydraulic fracturing.

Even though CBM is listed as an unconventional deposit, the technique used at Caporo is conventional, the government's environmental regulator ANLA has said.

But in its new decision, the State Council determined that CBM drilling falls under the unconventional umbrella that is currently prohibited in Colombia, except for recently authorized pilot projects.

"Hydraulic stimulation in conventional reservoirs, in horizontal or vertical wells, is the means to achieve extraction, activities that are currently suspended ....it would be a contradiction to allow production of unconventional deposits to continue because it is clear and indisputable that this activity is temporarily prohibited," the State Council said in its 30-page ruling.

Drummond, which is Colombia's top coal producer, has said it uses conventional vertical drilling at Caporo, similar to the method that has been used in the country for more than 50 years in large oil fields such as Cusiana, Cupiagua and Apiay, rather than horizontal drilling that would be used for hydraulic fracturing. The company declined to respond to queries sent today.

Drummond started CBM production at its La Loma license in the second half of 2018. The firm has drilled 15 vertical wells at Caporo between 2017 and the first half of 2018, and those wells will be halted with the court's order.

The State Council's decision is a blow to the oil industry, which has a green light to set up pilot unconventional drilling projects in Colombia.

Environmental groups including Corporación Podion and the Colombia Free of Fracking Alliance had petitioned the State Council to halt the CBM project because they said it violates the temporary ban on unconventional drilling.

In a 6,462-hectare area known as Caporo North, Drummond plans to drill 57 gas production wells, but to increase output to 14mn cf/d Drummond will need new environmental licenses, the company has said.

The firm signed the exploration and production contract to develop the field in 2004, while in February 2012, Drummond declared the commercial viability of CBM on its La Loma license. Drummond says it has invested $43mn to explore for CBM at La Loma.

The company discovered CBM in the Caporo 1, Iguana 1 and Hicotea 1 wells in 2007-10, according to the ANH.

Drummond's had planned to produce shale gas using fracturing techniques at another section of La Loma, but the initiative is halted until the State Council issues a definitive ruling, which is expected to come in 2020.

Speaking at a mining event today, mines and energy minister Maria Fernanda Suarez said that the government will review the new ruling.

The State Council also ordered the country's controller's office and attorney general's office to oversee the process of suspending CBM activities.

By Diana Delgado