Mexico to invite US drillers into its shale fields

Fuel Fix:

Mexico could open up its vast shale oil fields to U.S. drillers as soon as next year, the Mexican energy secretary said Friday.

Pedro Joaquin Coldwell, speaking to energy executives, attorneys and academics at Rice University, said the long-suspended auctions for northern Mexico’s shale fields could reopen after the first quarter of 2017.

“Everything will be ready by March,” Coldwell said of the environmental regulations necessary to start the work.

Mexico, in the middle of a sweeping reform of its government-run energy sector, has been holding auctions to sell the rights to private companies to drill in untapped oil fields. The state suspended bids for shale fields when oil prices crashed two years ago. “We thought industry wouldn’t be interested,” Coldwell told the roughly 100 attending a university event on the country’s energy reform efforts.

In addition, the country lacked environmental rules to regulate hydraulic fracturing and the pipelines necessary to transport natural gas, a byproduct of oil drilling.

But recently, Coldwell said, companies have asked the country to restart the shale auction.

Coldwell said he expects to have environmental regulations ready by March and bids prepared to issue soon thereafter.

Mexico kicked foreign oil drillers out of the country more than 70 years ago and nationalized its energy industry.
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Most of these fields are a continuation of the Eagle Ford formation on the Texas side of the border.  At the current price, there may be a question as to the feasibility of the prospects.  There will be additional cost for the Mexican fields because they lie in an area that the cartels are still fighting turf wars over.  It is not unlikely that producers would need extra security to deal with attempted kidnapping events.

The good news is that Mexico is waking up to the inefficiencies of socialism.