South America's Bakken, Shale Oil in Argentina and Colombia

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abarrelfull wrote on 06 Apr 2012 06:26
Tags: argentina canacol colombia exxon shale ypf

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There can hardly be anyone left in the universe who has not heard of the Bakken, the world's most prolific "shale oil" production area. Its impact on global oil markets can be seen in the huge disparities between WTI and Brent crude prices. Little North Dakota has become the epicentre of a new Black Gold Rush.

Investor newsletters are awash with stories about the "Next Bakken", with Eagle Ford and Utica being popular favourites. Yet as with Shale Gas before it, Shale Oil is now starting to make the news outside of the USA.

Yesterday it was Colombia.

Canacol Energy Ltd. (“Canacol” or the “Corporation”) (TSX:CNE) (BVC:CNEC) is pleased to announce that its wholly owned subsidiary, Carrao Energy Sucursal Colombia (“Carrao Colombia”), has entered into a farm-out agreement (the “FOA”) with ExxonMobil Exploration Colombia Limited, a wholly-owned subsidiary of ExxonMobil Corporation (“ExxonMobil”) (NYSE:XOM) for the exploration of the Corporation’s non-operated VMM 2 exploration and production (“E&P”) contract located in the Middle Magdalena basin of Colombia. The VMM 2 E&P contract is one of three adjacent contracts that Canacol has interests in, representing 126,000 net acres that expose Canacol to a potentially large, unconventional shale oil play.

The estimates of reserves are in the several hundreds of millions of barrels of oil, but as we know from past experience, these are no more than an educated guess.

Just a week ago, Shale Oil was making the news elsewhere in South America:

The positive result allows us to extend the estimate of the area prospects for such training at 2,000 km2 with an expectation of resources 1,000 million barrels of oil equivalent for this site in the Province Mendoza.

Yes you read that right. YPF believes it has discovered 1 Billion barrles of high quality Shale Oil in Argentina. So once again, South America is a source of exciting new developments. At this rate the Western hemisphere is going to become a net exporter of oil.

Given the newness of the technology and techniques, and the challenges facing explorers in many parts of the world, Shale Oil may be a very long time coming. Nevertheless, it does have the potential to change the destiny of nations. Argentina and Colombia may have a head start, but the race has just begun.