ConocoPhillips, CME ink shale gas deal

The Colombian government signed an agreement on Friday with US operator ConocoPhillips and Canadian company Canacol’s regional affiliate CME for unconventional shale oil exploration in the middle and upper Magdalena basins.

The two companies will invest $85 million for shale exploration and development. ConocoPhillips will pay $13.5 million in cash to Canacol and carry out drilling, completing and testing in 13 wells in the basins. ConocoPhillips will take 70 percent of shale found in deeper reservoirs. Canacol will retain 100 percent of shale in shallow reservoirs.

The deal signals Colombia’s increasing appeal for oil and gas companies, as daily crude production has grown 40 percent between 2009 and 2011 ,according to the US Energy Information Administration. Venezuela and Ecuador have recorded meagre increases or flat output in recent periods.

ConocoPhillips’ chief executive Ryan Lance said last week the country’s business climate was a bright spot in South America. After pulling out from Venezuela in 2007 following the nationalisation of the country’s oil assets and announcing plans last year to halt exploration in Peru, ConocoPhillips will only be operating in Colombia.