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Colombia’s shale gas on offer for the first time
Colombia has included unconventional oil and gas blocks into its latest bid round for the first time as it attempts to attract more foreign investment
By Nnamdi Anyadike
Colombia is offering 109 blocks on offer in Round 2012, of which 31 are unconventional
The ANH estimates Colombia to hold far greater unconventional reserves than previously projected
Colombia’s series of international oil and gas roadshows hosted by the country’s hydrocarbon government agency Agencia Nacional de Hidrocarburos (ANH) reached London’s Park Lane Hilton Hotel last week. Under ANH’s new president, Orlando Cabrales Segovia, Colombia is making a determined effort to expand its oil and gas output and has put 109 blocks – 98 offshore and 11 onshore – on offer under its current Round 2012. The blocks are divided up into Type 1, Type 2 and Type 3, depending on their maturity. However, it is the inclusion of unconventional oil and gas resources for the first time that is making this round such a landmark event. Of the 109 blocks on offer, 31 are unconventional. ANH has estimated that Colombia has a total of 33.3 trillion cubic feet (943 billion cubic metres) of shale gas reserves, 1 tcf (28.3 bcm) of tight sands, 725.4 billion cubic feet (20.5 bcm) of coal-bed methane (CBM), 3 billion barrels of oil shale and 3.45 billion barrels of oil sands. These numbers are greatly in excess of previous estimates and are the result of a study carried out in 2011 for ANH by the National University of Colombia. The prospective basins for shale gas are Eastern Cordillera, Eastern Llanos and Caguan-Putumayo. “The Eastern Cordillera Basin could easily have three to four times the size of unconventional resources that are contained within [the Eagle Ford shale],” Segovia said. Breaking new ground So groundbreaking is the offer of unconventional blocks in this round that it has created problems with drawing up a contract template. “Because this is the first round globally to include shale in a methodical way, no contractual model existed anywhere for us to base our agreements on,” said Segovia. ANH is providing incentives for companies to explore and produce from the unconventional blocks. “We have made adjustments to reflect the new realities for unconventional oil and gas,” Segovia told UOGM. “There will be a 40% discount for unconventional oil and gas over the royalty rates established for conventional oil and gas,” he continued. “In addition, the new base price for oil will be US$81, irrespective of API. This compares with the current system of between US$33 and US$50 depending on the API,” he told UOGM. According to the timetable, the current round of roadshows is due to wind up in Rio de Janeiro in April before returning to Bogota, Colombia, when the data rooms will be open. The bid documents are expected to be submitted by June and the qualification process will commence the following month. Areas will be awarded to the successful bidders on November 26 and all contracts are due to be signed by December. The contract period will be split between an exploration and production period. For the conventional blocks, the exploration period is six years evenly split into two three-year phases. For the unconventional blocks, the exploration period is eight years split into two threeyear phases followed by a two-year phase. ANH’s technical advisor, Luis Ardila, said that at a minimum, the unconventional exploration phase should include geological mapping for at least 50% of the block area, 2-D seismic, surface geochemistry and two stratigraphic wells with physical and geochemical logs. In both the conventional and unconventional cases the exploration period is 24 years. Attracting investors Colombia is banking on its attractiveness as an investment location to boost its activities in unconventional oil and gas. As of the beginning of this year, some shale gas and heavy oil exploration had already begun to take place in the country, but it is hoped that the bid round will give it a significant boost. “Our macroeconomic policies are sound and of late there has been a significant improvement in our security. We are a mature democracy and we are open to invest and trade,” said Segovia...
Colombia is the C in CIVETS nations, fast growing, emerging economies, with potential to explosive growth, in the next years, called, Latin Americas Emerging Tiger Nation, Colombia is a "must look at" spot on the global investors "next to do list" ...
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