(Thanks to Oiljack who first referenced this article on the Oil and Gas Discussion BB)

12/10/2015 Conoco Bets on Colombian Shale While Shell Retreats
http://interfaxenergy.com/gasdaily/article/18628/conoco-bets-on-colombian-shale-while-shell-retreats

ConocoPhillips is taking a bet on Colombian shale by seeking approval to frack a block previously operated by fellow supermajor Shell. If Conoco is given the go-ahead it would hold one of Colombia’s first fracking permits, with the Latin American country yet to grant a licence.
"ConocoPhillips is currently conducting the required environmental impact assessment [EIA] to gain approval from Colombian regulators to conduct unconventional drilling operations on [the] VMM-3 [block]," a company spokeswoman told Interfax on Wednesday. The EIA has not yet been submitted to Colombia’s environmental agency (ANLA), she added.
The VMM-3 concession lies in Colombia’s oldest producing basin, the Middle Magdalena Valley in the northwest of the country. The basin contains the La Luna and Tablazo shale formations, where technically recoverable resources are estimated at 510 billion cubic metres of shale gas and 4.6 billion barrels of oil.
The authorities in Colombia gave Conoco the green light for unconventional exploration of VMM-3 on 2 December, added the spokeswoman. "We now hold an 80% interest in the block. We will continue to take steps to further evaluate the Picoplata well."
Shell was the former operator of the VMM-3 block, with a 50% stake. "Shell agreed with Conoco to finalise the conventional contract and exit from VMM-3 block on 2 December. We do not have an interest in the new contract," a Shell spokeswoman told Interfax.
Interfax understands Conoco required an additional contract for unconventional exploration of the concession. CNE Oil and Gas, a subsidiary of Canada’s Canacol Energy, owns the other 20% of VMM-3. Exploration of the 33,715-hectare concession will require around $85 million.
Bogota is likely to be concerned by Shell’s exit from the block. The company had been optimistic about La Luna, spudding the Picoplata well in October 2014 – its first in the formation.
Laurens Gaarenstroom, unconventional exploration manager for Shell’s Latin American business, told conference delegates in September 2014 that La Luna could be among the top three global shale plays.
Industry experts at the same conference claimed the thick La Luna source rock was analogous to the Eagle Ford formation in Texas. Officials showed petrography charts indicating aspects of La Luna’s source rock were superior to that of the North American play in terms of total organic carbon range.
However, Gaarenstroom also warned delegates that La Luna was an "ecologically sensitive" area, and said that Shell’s journey to unconventional exploration in Colombia had been "difficult".
Shell still has majority interests in the nearby VMM-27 and VMM-28 blocks in the Middle Magdalena Valley, though it farmed out 30% to Conoco in August 2013. The company also has a stake in the CPE-4 block in eastern Colombia’s onshore Llanos basin.
Counting costs
The costs of shale exploration in Colombia are likely to concern supermajors. ANH President Mauricio De La Mora told local press last month that fracking was expensive. State-run Ecopetrol has said oil prices need to be above $70 per barrel for unconventional exploration to be economically viable.
Fellow supermajor ExxonMobil has submitted an application for an EIA for the VMM-37 block. It is unclear how long it will take ANLA to grant approval. The organisation did not return calls seeking comment. Exxon farmed into VMM-37, also in the Middle Magdalena Valley, through an agreement with Sintana Energy’s subsidiary Patriot Energy Oil & Gas in November 2012.
A handful of unconventional wells have been drilled in Colombia, but the development of the country’s shale sector has been slowed by bureaucracy, as well as low oil prices.
The fracking of unconventional reservoirs was prohibited until September 2014 pending the release of environmental guidelines for the process. Bogota has said the production regulations will be published in Q1 2016.
Only five of 31 unconventional blocks attracted bids in the country’s 2012 licensing round, despite sweetened terms for the concessions. The blocks were split between Ecopetrol and Exxon.
Bogota awarded only one unconventional concession out of the 18 available in Colombia’s disappointing 2014 bid round. Canadian independent Parex Resources won the VMM-9 block.
Authorities are seeking to grant environmental licences more quickly than before, an adviser to Colombia’s energy ministry told Interfax. "We’re having some success. Last month we spoke to Anadarko, and they received an environmental licence for offshore drilling within two-and-a-half months," said the adviser.
However, it remains to be seen if the environmental approvals process will be accelerated for the country’s shale sector.