Mexico Poised to Open Shale Fields to U.S. Drillers Next Year

U.S. energy executives note that Mexico’s shale resources in the north of the country are essentially an extension of the Eagle Ford reservoir, which runs from central Texas into Mexico. American producers are familiar with the geology and have pioneered hydraulic fracturing, meaning they could be the first to develop fields south of the border.

Energy media observe that Mexico is involved in extensive energy reforms and is selling rights to private companies to drill its untapped reserves. The country is reported to have garnered more than $22 billion in private sector commitments to date for projects that range from oil drilling to pipelines to power plants. However, Mexico suspended bids for shale exploration two years ago when crude oil prices crashed. Coldwell said his country is finalizing details for new environmental rules covering hydraulic fracturing and pipeline infrastructure to transport natural gas and other products.

Mexico nationalized its energy industry in 1938 and expropriated nearly all the foreign oil companies operating on its territory. Prior to nationalization, the Mexican energy industry was dominated by foreign-owned companies such as Royal Dutch Shell and Standard Oil. Moving forward more than seven decades, with decreasing production, increasing consumption, and nearly depleted reserves, Mexico was on track to become a net importer of oil by 2020, despite the wealth of untapped natural resources still within the North American country.

Steps were undertaken by lawmakers to pass constitutional amendments to implement energy reform. The reforms did not seek to privatize state-owned Petróleos Mexicanos, or Pemex, but ended the ban since nationalization
that prohibited foreign investment in Mexico’s energy sector. The reforms removed Pemex’s monopoly on oil and natural gas extraction and production, and allowed private investment to revitalize the country’s energy industry.