The Ministry of Energy in Mexico has estimated a $100 billion in investment is needed over the next 10 years to develop Mexican shale resources. Some sources have mentioned figures closer to $250 billion.
While Pemex has only invested approximately $250 million in Mexico shale gas exploration and production, foreign companies won't drill new wells or bring the needed investment until clarity from the Mexico energy reform process takes place later this year or Q1 2015.
The prolific Eagle Ford shale formation in Texas extends south across the border into Mexico's Burgos Basin and accounts for two-thirds of Mexico's shale gas resources, which are estimated to reach approximately 600 trillion cubic feet of recoverable shale gas and ranks 6th largest in the world.
Mexico is also estimated to have 13 billion barrels of recoverable shale oil resources and ranks 8th largest in the world. With the development of Eagle Ford in Texas and the ongoing energy reform, many believe that Mexico could replicate the success.
This huge opportunity has its challenges. Even once the Mexican government clarifies how foreign investment will be allowed to take ownership of shale gas assets in the country, the exploration process will not be easy. Infrastructure is needed for the oil and gas industry to flourish in the northern part of Mexico.
One issue faced by shale extractors is the vast amount of water needed to drill reserves. In Coahuila where a vast quantity of the untapped shale is located, the water supply is scarce. In fact, Coahuila is Mexico's second driest state and agriculture activities alone require three-quarters of the state's total supply.
The presence of drug cartels also poses a threat to foreign investors as they may be targets of extortion and theft. Investments will need to be made on many levels. Local governments and private enterprise will need to work together to ensure a healthy balance is sustained over time. This healthy balance includes addressing the security risks and improving education in local communities of shale rich regions like Coahuila, Nuevo Leon and Tamaulipas.
The Mexico Shale Summit:
The Mexico Shale Summit is an oil and gas event that will bring together internationally recognized industry speakers, government officials, and C level executives from the energy, transportation, logistics, and infrastructure industries. The geographic scope for the event will cover Mexico as a region with a strong focus on the opportunities and challenges associated with Northern Mexico.