The director of Colombia’s National Hydrocarbons Agency says Alberta worries too much about bad oil sands press

Widespread anxiety about "dirty oil" image confirms the impression is wrong-headed, Armando Zamora says

April 07, 2010

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Does Alberta worry too much about its international reputation? In the eyes of Armando Zamora, director of the Colombian National Hydrocarbons Agency, the anxiety of Canadian industry and government leaders about “dirty-oil” smear campaigns just confirms that the slurs are false.

“It’s part of your ethical behavior. If somebody tells you you’re bad, you take it seriously,” Zamora said in an Alberta Oil interview. “Canadians are a high-technology, rich oil-exporter country with a lot to offer. They make ideal partners. Canada has a very good image for integrity and ethical business conduct.”

Colombian leaders speak from long experience of being on the receiving end of disparaging publicity. “We have a bad image. You have a good image,” Zamora says. Green critics are inventing an environmental black mark to replace the fading 1980s caricature of his nation as a cauldron of narcotics gangs, guerrilla warriors and bandits.

Zamora boasts that as measured by carbon emissions, “We are one of the cleanest, pristine countries.” Colombia has no counterpart to the greenhouse gas clouds vented by coal-fired generators that dominate industrial contributions to global warming in the United States and Canada. “Eighty per cent of our power is hydroelectric and 20 per cent comes from burning gas.”

But he acknowledges that Colombia came under fire at the last United Nations climate change summit in Copenhagen. His country is the world’s fifth-biggest coal exporter after Australia, Indonesia, Russia and South Africa. Most Colombian production goes to Europe, where the big customers include Danish power plants. But instead of tackling coal consumers, environmentalists made the Copenhagen summit a pulpit for calling on Colombia to save South American rain forests by shutting down mining development.

Zamora gives no official reply. He just shakes his head over jarringly one-sided green publicity campaigns against energy suppliers. He walks his talk that Canadians are held in high international regard as respectable partners for oil and gas development.

Canada was the first stop by a globe-trotting road show of about 470,000 square kilometers of Colombian drilling prospects. Zamora’s team will also touch down at a dozen cities in the United States, the United Kingdom, Brazil, Australia, China and Southeast Asia by mid-May. As he arrived in Calgary, local firms confirmed that he represents growth prospects.

Petrominerales Ltd., majority-owned by Petrobank Energy and Resources Ltd., reported natural production, unaided by pumps or other devices, of 10,900 barrels per day from a single Colombian discovery well. Canacol Energy Ltd. set a US$37-million 2010 budget for Colombian drilling and production installations to follow through on a late-2009 discovery well that flowed more than 8,000 barrels per day. NXT Energy Solutions Inc., meanwhile, landed a US$431,000 contract for its third Colombian airborne geophysical survey.

Colombia has entered a stage in oil and gas evolution that comes naturally to Alberta entrepreneurs, Zamora reports. The industry is in its adolescence: mature enough to provide abundant technical clues towards fresh discoveries, but not too old or picked-over to rule out decent finds by the standards of small- to medium-sized firms.

Colombia has moved beyond the early phase known in the international industry as elephant-hunting, when corporate giants that can afford to take high risks do long searches in unknown territory for suspected deposits of one billion barrels or more. The first targets are akin to the modern Alberta industry’s 1947 founding gusher at Leduc, which took Imperial Oil Ltd. eight years and more than 100 dry wells to track down.

Colombia currently resembles 1950s-’70s Alberta, when the province’s independent oil exploration and production clan grew up on a rich diet of spinoff discoveries. The pattern was repeated in natural gas during the 1980s and ’90s.

The South American country’s oil elephant-hunting phase lasted for about 50 years of sporadic activity amid high political and economic risks. About 160 representatives of Calgary companies turned out to hear Zamora and technical specialists describe the less exciting but more businesslike development era now at hand.

With constitutional and economic reforms begun in the 1990s, Colombia has evolved a natural resource regime that closely resembles Alberta. All subsoil mineral rights still belong to the government as a public asset. But the reforms let investor-owned firms obtain exclusive exploration and development leases. The state oil company, Ecopetrol, no longer has power to seize cuts of potentially all the action. Mandatory production-sharing has been abolished.

Colombia uses its mineral ownership to mimic an Alberta advantage: public treasure maps. Technical information is becoming an open book. Exploration results are reported to the government, which makes the material available to industry. Geological and drilling records are on hand in digital form. Zamora’s directorate is working on building up accessible production databanks.

“Many prospects are already mapped and ready to be discovered,” he says. Depending on companies’ appetites for geological risks and difficult work sites, targets range from 100-barrel-a-day industrial bread and butter to 15,000-barrel gravy trains. “We’ve had a few of those in the last couple of years,” he adds, reviewing results reported by Petrominerales and Canacol that would be hailed as instant company-makers if the wells were in Alberta.

Companies are still warned to take security precautions if they go into Colombia. “They have to be careful,” Zamora says. But thanks to U.S. military aid in 1998-2002, followed by continuing use of American security advances such as airborne pipeline patrols, the formerly high threat level has cooled down. A decade ago, Colombia’s oil line had about 170 bomb attacks a year. The annual number of incidents has dropped to two or three — or no more than in northern British Columbia.

Peaceful industrial expansion is the new order of the day in Colombia, Zamora maintains. After increasing production by 25 per cent to 750,000 barrels a day and doubling the national proven reserves inventory to 2.5 billion barrels since 2008, Columbia is the third-best oil supply growth source outside OPEC recorded by the Paris-based International Energy Agency. And new South American black gold can still be found without resorting to the type of heavy lifting required in Alberta’s oil sands.

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