Eagle Ford Shale and Mexico: An Important Partnership

June 4, 2015 Elizabeth Alford

There are billions of gallons of shale oil waiting to be fracked in Mexico and for the first time in generations, the Mexican government is opening up its oil and gas fields to foreign investors.

Mexico passed historic energy reforms last year in hopes of boosting lagging production and have set the stage for greater collaboration between businesses that operate in the Eagle Ford Shale and Mexico.

At last week’s Eagle Ford Consortium held in San Antonio, speakers talked about ways that businesses on both sides of the border might tap into the opportunities that are connected to the new energy reform laws.

“Mexico is interesting to energy companies operating in Texas - and around the globe - because it has something for everyone - deep water, shallow water, onshore conventional and unconventional shale fields.”

— Carlos Garcia, Lewis Energy Group

It is estimated that there are billions of barrels of potential resources in what is often called, ‘Mexico’s Eagle Ford Shale’. This hidden volume will require hydraulic fracturing to get it out of the ground and Mexico will look to partner with Texas businesses to get the job done.

There has already been some movement to create the important infrastructure:

In April, Mexico’s state power company(CFE) announced it had initiated an aggressive construction campaign that includes $3.3 billion to be spent on 12 natural gas and electricity projects.
Petróleos Mexicanos acquired funding to complete the construction of the pipeline Los Ramones II for an estimated $900 million.

More Pipelines Cross Texas-Mexico Border

April 7, 2015 Elizabeth Alford

Despite low oil prices, Mexico will move forward on pipeline initiatives that will impact the Eagle Ford in Texas.

Jumping on the opportunities afforded by the new energy reform measures, the state power company (CFE) has initiated an aggressive construction campaign that includes $3.3 billion to be spent on 12 natural gas and electricity projects.

Even though oil prices have tanked, the state power company (CFE) plans to move forward on a couple of these projects including the $450 million Colombia-Escobedo pipeline. This project, set to begin in June 2017, will include the development and construction of 155 miles of pipe to run from the town of Colombia in the US border to Escobedo in Mexico's Nuevo León state. The pipeline will have a capacity of 500Mf3/d and will transport natural gas from Webb County, Texas to Nuevo León state where it will be connected to the country's pipeline network.

The oil industry has historically been a key factor in Mexico’s economy, accounting for 13% of the nations export revenue in 2013. But production has fallen over the last 10 years and in an effort to open the Mexican energy sector to competition and fuel increased investment in infrastructure, the country has initiated historic energy reform measures.

Crucial to these reforms is insuring Mexico's access to abundant, low-cost US natural gas through expanded pipelines on both sides of the border.

“Mexico has suffered a deficit of natural gas and could not import enough gas to satisfy national demand,” Wood said at the Gulf Coast Power Association meeting in Houston yesterday. “Pipeline projects to carry low-cost US natural gas into Mexico will help solve the supply question, Wood said. “That may be the single biggest factor that is changing Mexico’s electric sector.”

Eagle Ford Gas Headed to Mexico

March 30, 2015 Elizabeth Alford

Petróleos Mexicanos announced Friday that is has acquired the funding to complete the construction of the pipeline Los Ramones II for an estimated $900 million.

The deal was a collaboration between Blackrock and First Reserve will be one of the first projects for Mexico’s historic energy reform that will enable a low-cost energy supply and create jobs. The first part of this project, the Ramones I, ranges from Eagle Ford in Texas to Los Ramones, Nuevo León and phase II will reach Guanajuato to supply the central and western parts of the country.

“Participation of the private sector in infrastructure will be very important in Mexico, and around the world. Given the recent reforms, growth in Mexico and economic stability, investment opportunities in Mexican infrastructure have definitely drawn our attention and we hope to explore other opportunities in the near future.”

— Jim Barry, CEO of the Infrastructure Investment Group of BlackRock

The terms of the deal commit BlackRock to $4.6 billion and First Reserve to $30 million over 25 years and gives them a combined 45 percent control of the project.

Mexico’s rising demand for natural gas has created a lucrative export industry for Eagle Ford producers in recent years. The country hopes to lessen its dependence on other sources by tapping into its own shale oil and natural gas within the next five to 10 years.

The Oil Boom Stops at the Mexico Border

November 19, 2012 R.T. Dukes

Jose Alcala is intrigued by what could be just across the border in Mexico, where friends and relatives live and too often struggle finding jobs.

“You know, the oil doesn’t stop at the border,” he said. “It just goes on and on into Mexico.”

But the boom in oil and gas development does stop at the border, for the most part, a victim of the insecurity generated by warring drug cartels and by a Mexican energy sector that has been stunted by bureaucracy and lack of innovation, observers say.

Read the rest of the story at DallasNews.com

PEMEX Shale Play Spending to Grow to $200 Million

September 13, 2012 R.T. Dukes

PEMEX is preparing to spend $200 million researching and testing shale plays in Mexico. The national oil company plans to test two shale plays, with a focus in the Eagle Ford and one other play.

Commissioner Guillermo Dominguez said seismic studies to be carried out are designed to determine whether the rich petroleum deposits found in shale rock formations in the U.S. extend into Mexico. He said one of the two "large blocks" to be studied is an extension of the Eagle Ford shale rock formation that runs from Texas into Mexico. The other site is just down the Gulf of Mexico near Tampico.

Even if PEMEX is successful, don't expect a drilling boom any time soon. Company representatives expect they are 5-8 years away from true shale gas development. To be honest, there's no need to push it. The country is positioned well to import U.S. natural gas, which is very cheap in in the worldwide market. Read more about the company's plans in our article Eagle Ford Gas is Headed to Mexico.

You can read an article with additional quotes at rigzone.com