Lessons for Latin America on shale oil and the environment

Despite the fact that the basic technologies used for the exploitation of shale oil, such as horizontal drilling and hydraulic fracturing, have been used for years, only recently have the technological advances allowed for a profitable exploitation of this resource. In the current context of low oil prices, the pressure to reduce costs and increase productivity is particularly strong.

This is the initial statement of the report La explotación del shale y el medio ambiente: Lecciones de política para América Latina (The exploitation of shale and the environment: Policy lessons for Latin America), published by the Inter-American Dialogue and CAF, Development Bank of Latin America. 

Latin America is one of the regions with the greatest potential for the exploitation of shale oil outside of the United States, according to estimates of global reserves of shale developed by the government of the United States. Argentina is the only Latin American country that currently produces commercial quantities of shale oil, with a production that exceeds the equivalent of 50,000 barrels of oil per day. In 2012, Colombia awarded its first contract for the drilling of blocks with potential shale deposits, establishing regulations for the exploitation by means of hydraulic fracturing in 2014.  

Pemex, the state-owned oil company in Mexico, produced its first shale gas from an exploratory well early in 2011. The mexican oil company intends to include non-conventional areas as part of its first round of competitive bidding of the oil sector since its opening to private investment. 

Argentina, Mexico, and Colombia have a significant potential of oil resources and shale gas that the respective governments have tried to develop. Each country has, to different degrees, implemented specific environmental regulations for the exploitation of shale. However, regulators and legislators must improve the regulations and practices in two areas: balance the centralized regulations with flexibility, and improve transparency and public dissemination. 

As the industry grows, the governments, companies, press, and NGOs of the region could optimize the access to data and other types of information on shale exploitation even more. Latin America could benefit by sharing the best practices among the countries of the region, taking the shale industry of the United States as an example, as it is the only significant experience in the world. 

To see the complete report, click here