July 27, 2020

In 2019, the Independent Interdisciplinary Expert Commission commissioned by the National Government concluded that in Colombia it is possible to carry out Integral Research Pilot Projects (“PPII” from its acronyms in Spanish) through the horizontal drilling and hydraulic rock fractures technique (better known as “Fracking”), provided that some requirements are met. Accordingly, the Expert Commission published a full report, which contains the main conclusions and recommendations that the National Government must consider when implementing PPII related to unconventional deposits using Fracking.

In that sense, on February 28, 2020, the Ministry of Mines and Energy (“MME”) published Decree 328 “By means of are set the guidelines to carry out the exploration activities in Integral Research Pilot Projects (PPII) on unconventional hydrocarbon deposits with the use of a multi-stage horizontal drilling hydraulic fracturing technique .”
Thus, in compliance with article of Decree 328 of 2020, on July 7, 2020, the MME issued Resolution 40185, which established the technical guidelines for the development of PPII projects (the "Resolution").
The following are some of the guidelines included in the Resolution:

  1. Considering the scientific and technical experimental nature of a PPII, a maximum of four PPII may be developed in the country, and these must be located in the Middle Magdalena Valley and Cesar-Rancheria basins.

  2. Up to two horizontal wells can be drilled, completed, fractured, stimulated, and sized by means of the fracking technique, in each PPII. 

  3. Companies interested in developing PPII must obtain approval for drilling each well. For such purpose, the drilling program and the related technical documentation must be submitted before the National Hydrocarbons Agency ("ANH"), intention to drill a PPII well form, as established in article 10 of the Resolution. 

  4. Once the company interested in carrying out a PPII signs a contract for the development of the PPIIs, as contractors, they will have the obligation to submit before the ANH a daily drilling report on each well.

  5. Wells cannot be drilled within 500 meters from inhabited infrastructure. However, this prohibition only applies to infrastructure that is built and inhabited at the time the national environmental licensing authority issues the order to begin the environmental licensing process.

  6. PPIIs cannot be developed within one kilometer from a geologically faulted land.

  7. PPIIs can be suspended when no corrective actions are submitted in time if: (i) an earthquake of magnitude 4 or greater on the Richter scale with the epicenter within the cylinder occurs; (ii) a loss of fluid containment occurs due to a failure in the well integrity; and/or (iii) uncontrolled flow of fluids to the surface or other formations occurs.

  8. The transparency center, which will be managed and operated by the MME or a third party established by the MME, will be responsible for collecting and spreading the information related to the development of the PPIIs, in order to create a communication channel with the citizens. Therefore, contractors must transmit to the transparency center all the obtained information, as well as a video with a real-time panoramic view of the location for the respective operating activities.

  9. A real-time and permanent monitoring of the activities carried out in the PPIIs should be carried out, which will include, among others, controls on the seismicity and the use and final disposal of water.

  10. During the development of the activities of the PPIIs, the ANH shall have a permanent petroleum engineer in each of the locations in order to verify compliance with the technical guidelines.

  11. Contractors must file their application for an environmental license within the term set out in the contractual mechanism signed with the ANH and taking into account the terms of reference issued by the Ministry of Environment and Sustainable Development for the PPII. However, if the contractor does not obtain the environmental license within 10 months as of the filing of the application, it may continue with the procedures to obtain such a license but may not begin the drilling stage.

After the issuance of this Resolution, the environmental, contractual, and social guidelines will be issued by the Ministry of Environment and Sustainable Development, the ANH, and the Ministry of Interior.

Given the above, the ANH published the draft agreement “By which Agreement 2 of 2017 is amended to incorporate the rules that allow carrying out Research Projects in development of Integral Research Pilot Projects on unconventional deposits -YNC of hydrocarbons through the horizontal drilling and hydraulic rock fractures technique –FH-PH”. Regarding the draft agreement, please refer to our Newsflash in such regard in the following link: 

For more information regarding the Resolution, please refer to the following link: https://www.minenergia.gov.co/documents/10180/23517/48604-Res_40185_Reglamento+Te%CC%81cnico+PPI+%281%29.pdf


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