Colombia court decision on fracking could end speculation before July


BOGOTA (Reuters) – A ruling from Colombia’s highest administrative court on the exploration of non-conventional energy deposits could put a years-long argument between energy companies and anti-fracking activists to bed within the next four months.

Commercial production from non-conventional deposits – such as shale gas and coal bed methane – could be allowed if the Council of State rules in favor. Currently, such activities are not permitted in Latin America’s fourth-largest economy.

A decision on whether to allow their development, which energy companies say is the only way to replace Colombia’s dwindling reserves, could come in the next four months, Council Magistrate Ramiro Pazos told Reuters.

“The court thinks this process is sufficiently advanced and a decision will be taken in the first half of this year,” he said.

Environmentalists say non-conventional techniques will put health and water supplies at risk and add to the global climate crisis.

The more than decade-long debate over fracking accelerated in 2014, when the previous government said it would allow energy companies to start exploring the deposits.

“It hasn’t been easy for companies given that some of them have held signed contracts for around 10 years,” Francisco Lloreda, head of the Colombian Petroleum Association (ACP) told Reuters. “It has been a long wait.”

The ACP says four potential pilots in the Cesar and Santander provinces could bring $5 billion in investment and eventually boost oil production by 450,000 barrels a day.

The Council ordered the temporary suspension of non-conventional exploration in 2018. It upheld the moratorium last year, but after widespread misinterpretation, it was forced to clarify a week later that the suspension did not block pilot projects.

In December, the court ordered coal miner Drummond to suspend operations at 15 wells at the La Loma field.

The ruling was hailed by environmentalists as a strike against unconventional energy. But Drummond denied using unconventional extraction methods, saying it was producing coal bed methane using conventional vertical wells.

Although anti-frackers have rallied around the moratorium, Pazos said the “precautionary measure” was not an indication of what the final ruling might be.

“The fact the rules have been suspended doesn’t imply prejudgment,” he said.

COMPANIES READY TO START PILOTS

The government, beset by criticism from left-leaning politicians and environmental groups, has taken pains to emphasize it is not for or against fracking and will defer to the court’s ruling.

However, this month it published regulations for pilot projects that permit the drilling, fracking and measuring of non-conventional deposits.

Although further rules for developing the pilot projects depend on several government ministries, anti-fracking groups say the decree was an act of contempt against the moratorium.

Companies insist they will be ready to start pilot projects once licenses are approved.

“We are going to be ready. We are continuing with planning and preparing,” Felipe Bayon, CEO of state-run oil company Ecopetrol, told reporters recently.

Activists campaigning against the projects say tests will not show the full potential effects of developing non-conventional deposits.

“The exploration of the pilot projects won’t have the same impact as when commercial exploration begins,” said Carlos Santiago, of the Colombia Free from Fracking Alliance. He added that the impact from a potential 1,400 commercial wells would not be discernable from just a few pilot projects.

Water sources and public health could be at risk, he said, citing investigations and examples from around the world, including the United States, where residents of fracking areas have won millions for damage to ground water.

Coronavirus has provided an unexpected boost to campaigners, as the disease’s spread leaves markets over-supplied and low oil prices are exacerbated by a price war between Saudi Arabia and Russia.

Activists hope continued low prices will make investing in expensive fracking operations unattractive for investors.

Come what may, anti-fracking campaigners say they are prepared to keep fighting no matter the ruling and that they will not accept anything less than a ban.

“We don’t have an intermediate position,” Santiago said.

Reporting by Oliver Griffin; Editing by Dan Grebler



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