November 7, 2018 / 9:34 PM / 6 days ago

Fracking could generate $500 million per year in Colombia: study

BOGOTA (Reuters) - The development of non-conventional oil deposits using fracking could generate $500 million per project per year in taxes, royalties, dividends for shareholders and salaries in Colombia, the country’s private oil producers association said on Wednesday.

According to an analysis by the Colombian Petroleum Association (ACP), a single fracking project with a typical 30-year lifespan and up to 1,400 wells could generate some 5,000 direct and indirect jobs.

“In an environment like this one, where the fiscal sustainability of the national government is not guaranteed, non-conventional deposits represent an opportunity for Colombia to generate the required resources to finance government programs and social development,” ACP President Francisco Lloreda said in a statement.

Colombia does not currently carry out oil exploration or exploitation activities with fracking, but an expert committee convened by the energy and environmental ministries has begun a study into use of the technique. Results are expected in January.

President Ivan Duque has favored fracking, which is used to extract oil and gas from unconventional deposits in rock formations that do not allow the movement of fluid, despite opposition from local communities and environmentalists.

Hydraulic fracturing, or fracking, technology fractures rock formations with pressurized liquid. Its use is credited for booming oil and gas production in the United States, but environmental activist have blamed it for water pollution.

Non-conventional deposits could be two to six times bigger than current proven oil reserves, the statement added.

“Oil reserves from conventional deposits are being exhausted and in the last few years there’s been low incorporation of oil and gas,” Lloreda said. “It’s a scenario that does not just threaten Colombia’s energy self-sufficiency but which could worsen the macroeconomic problem.”

Duque’s government is trying to pass a controversial tax reform that aims to raise 14 trillion pesos ($4.4 billion) to finance social programs.

Problems with development of non-conventional reserves in the United States, Canada, Argentina and the United Kingdom have not been proven sufficient to prohibit use of the technology, the statement added.

Colombian state oil company Ecopetrol has already requested an environmental license to launch a pilot plan to explore for crude using fracking.

The area the company wants to explore could have 2 billion to 7 billion barrels of oil, triple the current proven reserves of 1.78 billion barrels, Ecopetrol has said.

The country produced an average of 854,121 barrels per day of crude in 2017.

Reporting by Julia Symmes Cobb; Editing by Leslie Adler

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