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The Silence Before The Storm In Oil Markets

Current market volatility may seem…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This Oil And Gas Nation Is Doing Something It's Never Done Before

Despite lower oil prices, a number of intriguing trends are unfolding today across the energy industry.

That includes the opening of big, new offshore plays (this week Somalia said it’s conducting ground-breaking seismic over the Indian Ocean). And even more critical, the race to take unconventional drilling to new frontiers outside of North America.

That movement got another lift late last week. With one of the biggest players in the E&P space saying it is advancing the first-ever frack job in one of South America’s most important oil and gas nations.
The company is ExxonMobil — and the place is Colombia. Related: Oil Industry Cutting Again, But It Still Might Not Be Enough

Exxon told Bloomberg it has filed for a permit with the Colombian government to use hydraulic fracturing in exploring for oil and gas. Specifically targeting the VMM-37 block in the Middle Magdalena basin of north-central Colombia, where Exxon is earning in from junior Sintana Energy.

This would be the first fracking permit approved across Colombia — a country that’s been a go-to destination for conventional production from international firms for several years now.

And that could be a very significant development in the race for international shale. Related: EU Could Break Gazprom’s Business Model

South America has already been one of the leading spots for unconventional exploration globally — with groups like Chevron and Dow Chemical advancing fracking projects in Argentina’s Vaca Muerta play.

Like Argentina, Colombia has a well-developed oil industry and services sector — which is a major key in making fracking effective and economic.

And the potential in Colombia may be even better, given that the proven petroleum system here has seen no testing yet using unconventional techniques — meaning that the sweetest spots will be prodded first.

Colombia’s regulators outlined rules around fracking late last year, and this would thus be the first test of the new regime. But all indications are the country will be supportive of unconventional development. Related: How Low Can It Go? Oil Crashes To $35 Handle

Exxon’s partner in the VMM-37 block, Sintana, said in October that the Manati Blanco-1 well on the license has been drilled and cased across several tight oil formations to 14,500 feet. Exxon hasn’t confirmed, but the frack permit could apply to this well — raising the possibility that frack testing could happen relatively soon.

Watch for announcements on the planned work program here, and potential results. If successful, we could see a new player rising in the international shale game.

Here’s to unconventional techniques in unconventional times

By Dave Forest

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