• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 1 hour OPEC will consider all options. What options do they have ?
  • 11 hours Maybe 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on funding terrorism, wars, suppressing dissidents, building nukes * Too late now
  • 3 hours Recession Jitters Are Rising. Is There Reason To Worry?
  • 17 hours Russia Accuses U.S. Of Stoking Tensions With Missile Test
  • 8 hours What to tell my students
  • 21 mins With Global Warming Greenland is Prime Real Estate
  • 12 hours TRUMP'S FORMER 'CHRISTIAN LIAISON' SAYS DEEPWATER HORIZON DISASTER WAS GOD'S PUNISHMENT FOR OBAMA ISRAEL DIVISION
  • 9 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 4 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 8 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 1 day In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 13 hours Flaring is at Record Highs in Texas
  • 24 hours Get First Access To The Oilprice App!
Alt Text

Japan Is Bargain Hunting As LNG Prices Slump

Utilities in Japan, the world’s…

Alt Text

Kurdistan’s Massive Gas Reserves No One Knows About

The announcement of independent driller…

Alt Text

Is Big Oil's Natural Gas Bet Turning Sour?

Big Oil has been piling…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Can Mexico Replicate The U.S. Shale Boom?

Natural gas has been hailed as the bridge between fossil fuels and renewables. Global gas demand has been growing at an average annual 2.3 percent over the last ten years, although it slowed in 2016 to 1.5 percent. The market is oversupplied, which has pressured prices so much as to make the bridge fuel even more attractive especially for emerging economies such as Mexico.

Mexico has been slow to develop its gas reserves, however. Until recently, all its natural gas output came in the form of associated gas – the gas that gets extracted as a by-product of oil production.

What’s more, the country only recently started to deregulate its energy industry and the regulatory framework for shale gas extraction is wanting in many respects, as Forbes’ Jude Clemente notes. In addition, there are problems with infrastructure, production costs, and shale hydrocarbon extraction know-how.

Why shale? Because the Energy Information Administration (EIA) estimated in 2013 that Mexico has unproved but technically recoverable shale gas resources of 545.2 trillion cu ft. Most of this, around 343 trillion cu ft plus about 6.3 billion barrels of oil (half of the total shale oil resource base) is located in the Burgos Basin, which is connected to the Eagle Ford shale play in Texas and covers a much larger area.

Last month, the Mexican energy ministry, SENER, announced it was opening the onshore part of the basin to private foreign investments in natural gas exploration. The move was prompted by the declining natural gas production, a direct result of the decline in crude oil production, which is also being addressed by stimulating foreign investments.

The Burgos Basin is an already producing region, with natural gas output from it accounting for 15 percent of the country’s total, which last year averaged a little over 5 billion cu ft daily and is seen to fall further this year before recovering in the 2020s.

Like other tight oil and gas formations, natural gas development in the Burgos is highly capital-intensive. This forced Pemex to curb its investments in the basin by 92 percent this year, to US$657 million. Foreign investment would be vital for the development of Mexico’s shale gas reserves.

Related: This Critical Oil Price Divergence Could Boost US Exports

These need developing and soon: Mexico is currently dependent on gas imports from the U.S., with the daily average inflows at 4.2-4.5 billion cu ft, making up 60 percent of the country’s consumption. Mexico also imports almost a quarter of U.S. LNG production. Good as this is for the exporters, it’s not so good for Mexico, because 60 percent of consumption coming from imports constitutes serious dependency.

Mexico has the resources--and it is willing to develop them. The problem is the global gas glut – that same glut that made gas such an attractive alternative to oil and coal in addition to its lower emissions.

In the low-price environment, investors would think twice before reaching into their pockets for the billions needed for the development of the Burgos Basin.

Yet the government is determined to make the play as open to new entrants as possible – it has planned a series of tenders for Burgos and other shale plays across the country by the end of next year.

Natural gas consumption in Mexico is growing fast. Production needs to start catching up.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment
  • JeffreyJ. Brown on August 24 2017 said:
    Well, there are a few impediments--high operating costs, corruption and high, and rising, crime rates--to mention just a few.

    In addition, Mexico nationalized their oil and gas production before, what would prevent them from doing it again?
  • Citizen Oil on August 24 2017 said:
    Mexico has a massive trade deficit with the USA. Energy is one thing they have actually been buying from us . Producing their own NG and shutting out imports will only exacerbate this huge issue. Automotive and other manufacturing has been fleeing at an accelerated rate to Mexico . This is a big problem.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play