Colombian energy minister says Calgary-based Parex Resources fracking of VMM-9 block in Santander can now proceed

Cimitarra, Santander

While President-elect Gustavo Petro, who will be sworn into office on August 7, has promised to ban fracking in Colombia, the outgoing energy minister says that existing contracts allow fracking to proceed.

Semana now reports: “The ruling of the Council of State that left firm the technical regulations for fracking in Colombia also allows companies that have contracts of this type signed with the National Hydrocarbons Agency (ANH) to move towards the exploration and commercial production of hydrocarbons, without the need to wait for the results of the pilots that Ecopetrol advances.”

The article continues:

“There are exactly seven contracts that the ANH signed with different companies between 2013 and 2016 to carry out activities in unconventional deposits. The estimated investments to carry out these projects exceed US$517 million.

[The Alabama, US-based] Drummond Energy has four contracts to fracking in the Cesar-Rancheria basin. For its part, the American ConocoPhillips has two (VMM-2 and VMM-3) and the Canadian Parex Resources has a contract (VMM-9). Both are in the Middle Valley, of the Magdalena.

As explained by the Minister of Mines and Energy, the decision taken by the Council of State has implications on these seven contracts because the process had issued precautionary measures that provisionally suspended a decree (3004 of 2013) and a resolution (90341 of 2014) that contain all the technical regulations for the exploration and commercial exploitation of this type of deposits with fracking.

Therefore, it is not necessary to wait for the completion of the fracking pilots that Ecopetrol is advancing to move towards a commercial exploration and production of hydrocarbons with this technique, which has been questioned in the country and that President-elect Gustavo Petro assured that he will not allow it to be carried out.

“With the ruling that denies the request for nullity, these contracts will be able to move to the environmental licensing stage. They will have to build an Environmental Impact Study (EIA), file it with the ANLA and wait for a decision regarding whether or not to grant them the license,” said Minister Diego Mesa.

It is also important to note that the ruling of the Council of State does not affect the ‘fracking’ pilots that Ecopetrol is advancing. Both will be held in the municipality of Puerto Wilches, in Santander. Kalé has been licensed by the National Environmental Licensing Authority (ANLA) since March of this year, while for Platero the entire respective process is being advanced so that this permit is also granted.

Ecopetrol assured that the pilots are still in the enlistment stage, so no civil works or operational activities have yet been carried out. Kalé is expected to start in October this year, while Platero would do so in the first quarter of 2023. If the pilots prove successful, Ecopetrol would begin the commercial hydrocarbon production stage from 2025.”

Reuters adds: “Neither Drummond nor Parex, which hold four contracts and one contract respectively, were immediately available to comment. A spokesperson for ConocoPhillips, which has signed two contracts, declined to comment on the court’s decision.”

Additionally, in this July 2017 interview, Colombian environmental activist Oscar Sampayo from the Environmental and Extractive Studies Group in Magdalena Medio commented, “What worries us is that in 2014 Parex directly entered Magdalena Medio in block VMM9. This block is located in the municipality of Simitarra in Santander. That block is destined for the development of a nonconventional deposit using fracking.”

When we visited recently visited Colombia, we saw the Parex Resources Aguas Blancas gas operations near Bajo Simacota, Santander.

Furthermore, on January 6, 2022, the Colombian newspaper Portafolio reported that of the 69 blocks auctioned between 2019 and 2021, 26 blocks went to Parex Resources. Eighteen of the 26 bids by Parex were made in December 2021.

We continue to follow this closely.