Mexico Aims to Triple Natural Gas Imports from U.S.

The Wall Street Journal, 5/16/2013

The construction of a natural gas pipeline from southern Texas to central Mexico will allow for a tripling of imports from the U.S. to meet increasing demand from industry, an official from Petroleos Mexicanos has said. Alejandro Martinez Sibaja, the director of the state-owned company’s gas division, said that Mexican industry is currently hampered by its reliance on more expensive fuels because of the lack of pipeline capacity for natural gas to come across the border.

“The lack of gas means that our industries are having to burn fuel oil,” which is currently about three times as expensive as natural gas, Mr. Martinez said in an interview on Wednesday. “A lot of investment is looking to come to Mexico, so we have to respond by providing natural gas as part of our offer to get these companies to come.” The gas supply problem is expected to be alleviated with the Los Ramones project, a pipeline that Mr. Martinez said will carry around 3 billion cubic feet of natural gas per day by 2015 from southern Texas to the central Mexican state of Guanajuato, which is a hub for the Mexican auto industry.

Read more…

Mexico debates opening its doors for shale development

FuelFix, 5/15/2013

Energy reform is likely to be one of the most important sweeping legislative changes that an incoming Mexican government will address, experts said Wednesday at a Houston conference on energy issues. The PRI government, which led the government for most of last century and who won the 2012 election, has indicated that it may consider expanding opportunities for private and international companies to help it expand needed infrastructure to develop its natural resources, including a wealth of natural gas.

One of the key issues is whether any reforms will focus on Mexico’s state-owned energy company, PEMEX, or will make more sweeping, fundamental changes. Either way will open up additional energy supply, said Duncan Wood, the director of the Mexico Institute at the Woodrow Wilson International Center “That is a crazy situation for a country that has the fourth largest share of natural gas in the world,” Duncan said. “PEMEX can’t do it alone. It doesn’t have the know-how and technological experience to work in deeper waters and on shale.”

Read more…

Mexico: Uphill battle joined in effort to restructure oil industry

Financial Times, 5/15/2013

When Mexico in the 1950s reinforced laws making it illegal for Pemex to enter into joint ventures with third parties, it closed Mexican oil to private capital, foreign or national. Experts say the apparent determination of Mr Peña Nieto and his centrist Institutional Revolutionary party to open up the country’s oil industry could prompt tens of billions of dollars of investment a year. Developing the potentially huge reserves of shale gas could also lower energy costs, cementing Mexico’s new-found competitiveness as a manufacturing centre for the Americas.

Yet at least two big obstacles to their development remain. The first is Pemex itself. Created in 1938 in the aftermath of the 1910 revolution, the once-shining symbol of Mexico’s 20th-century confidence is a shadow of what it was. It is better known today for its inefficiency, corruption and huge losses. Only its exploration and production arm, one of its four subsidiaries, regularly turns a profit – about 95.5bn pesos ($7.9bn) last year, according to preliminary results. Its other three subsidiaries produced a combined net loss of 111.6bn pesos (roughly the same as the annual state budget of Bolivia). All this was against Pemex’s reported sales last year of about 1.6tn pesos.

Read more…

The U.S., Mexico And The Decline Of The Colorado River

Forbes, 5/14/2013

An amendment to a standing water treaty between the United States and Mexico has received publicity over the past six months as an example of progress in water sharing agreements. But the amendment, called Minute 319, is simply a glimpse into ongoing mismanagement of the Colorado River on the U.S. side of the border. Over-allocation of the river’s waters 90 years ago combined with increasing populations and economic growth in the river basin have created circumstances in which conservation efforts — no matter how organized — could be too little to overcome the projected water deficit that the Colorado River Basin will face in the next 20 years.

In 1922, the seven U.S. states in the Colorado River Basin established a compact to distribute the resources of the river. A border between the Upper and Lower basins was defined at Lees Ferry, Ariz. The Upper Basin (Wyoming, Colorado, Utah and New Mexico) was allocated 9.25 billion cubic meters a year, and the Lower Basin (Arizona, California and Nevada) was allotted 10.45 billion cubic meters. Mexico was allowed an unspecified amount, which in 1944 was defined as 1.85 billion cubic meters a year. The Upper and Lower basins — managed as separate organizations under the supervision of the U.S. Bureau of Reclamation — divided their allocated water among the states in their jurisdictions. Numerous disputes arose, especially in the Lower Basin, regarding proper division of the water resources. But the use of (and disputes over) the Colorado River began long before these treaties.

Read more…

Mexico prepares for more intense eruptions from Popo volcano

Los Angeles Times, 5/14/2013

Mexico’s giant Popocatepetl volcano may generate lava flows, explosions of “growing intensity” and ash that could reach miles away, the National Center for Disaster Prevention said Monday. Officials were preparing evacuation routes and shelters for thousands of people who live in the shadow of Popocatepetl, located 40 miles southeast of Mexico City. Officials have created a 7.5-mile restricted zone around the cone of the volcano.

Popo, as the volcano is known, has displayed a “notable increase in activity levels” in the last few days, including tremors and explosive eruptions, according to a statement from the federal government. The 17,887-foot volcano has been disgorging large towers of steam and ash since mid-April, but officials have become more concerned in recent days as activity has intensified. Webcams have shown large chunks of molten rock spewing from the crater, and ash has rained down on the nearby city of Puebla. On Sunday, the National Center for Disaster Prevention elevated its warning level to Yellow Phase 3, the fifth stage of a seven-stage warning scale.

Read more…

Mexico still far from tapping shale potential, minister says

Reuters, 5/8/2013

Despite having some of the world’s biggest shale gas reserves, Mexico imports about a third of its gas needs and, in the absence of major reform, risks further dependence on outside energy supplies, the country’s energy minister said Wednesday. “We need to enter into a new era of making the most of our non-conventional resources,” Pedro Joaquin Coldwell said at an energy conference in Mexico City. “We have prospective shale gas resources that rank us fourth globally, but we are far from taking advantage of this potential.”

Mexico has an estimated 681 trillion cubic feet of recoverable shale gas resources in deposits that may contain rich pockets of both natural gas and oil, according to the U.S. Energy Information Administration data. At the end of April, Mexico’s state oil and gas monopoly Pemex announced its first ever production of shale gas from a test well in the country’s northern Burgos basin, just across the border from Texas. The company said the Chucla 1 well produces 1.9 billion cubic feet per day of natural gas, as well as 24 barrels per day of crude oil and other condensates.

Read more…

To power Mexico forward, Peña Nieto looks to energy reform

The Washington Post, 5/7/2013

It has been 75 years since President Lázaro Cárdenas seized the country’s foreign-dominated petroleum industry and placed every drop of oil under the everlasting domain of the Mexican people. But while it once was a source of national pride, the state-run monopoly he created — known as Pemex — has become a dinosaur, sapped by debt, sagging output and dated technology. The Mexican government siphons off the company’s revenue to cover about one-third of the federal budget, leaving insufficient funds for what has become a critical task: finding more oil.

Mexico remains the third-largest source of foreign oil for the United States after Canada and Saudi Arabia. But the country’s easy-pump crude is quickly running dry, and the company lacks the technology and know-how to drill for the vast stores of tougher-to-reach deposits that are thought to exist beneath Mexico’s deserts and seas. Fixing the company, Petroleos de Mexico, has become a top priority for Mexico’s new president, Enrique Peña Nieto. With an overhaul plan expected by late summer, U.S. and other global energy companies are waiting to see whether Mexico will once more give outsiders a crack at the country’s hydrocarbon treasures, including the massive, virtually untapped beds of shale gas south of the Texas border.

Read more…

U.S.-Mexico deal on expanded Gulf oil drilling still in limbo

Reuters, 4/29/13

More than a year after the United States and Mexico signed a much-lauded deal that would remove obstacles to expanding deepwater drilling for oil in the Gulf of Mexico, the agreement still has not been finalized by the United States. The delay, for which people close to the administration blame Congress while Republicans in Congress blame the administration, is certain to be discussed when President Barack Obama visits Mexican President Enrique Pena Nieto in Mexico City on Thursday.

Mexico immediately ratified the pact in April 2012, but the United States has so far been unable to pass a simply worded, one-page law to put the agreement into force. The deal, formally known as the Transboundary Hydrocarbons Agreement, provides legal guidelines for deepwater drilling in the 1.5 million acres of the Gulf that straddle the U.S.-Mexico boundary.

Read more…

Mexico sues BP over Gulf disaster as oil giant faces 2,200 new lawsuits in less than two months

The Telegraph, 4/30/13

The explosion on the Deepwater Horizon rig on April 20, 2010, killed 11 men and unleashed the worst offshore oil spill in US history. In first-quarter results on Tuesday, BP said that since March 6 it had been named as a defendant “in more than 2,200 additional civil lawsuits brought by individuals, corporations and government entities” and warned that “further actions are likely to be brought”.

It said the plaintiffs in these cases included “a foreign government”, understood to be Mexico, which had threatened to sue BP soon after the 2010 accident. BP said it believed the onslaught of new lawsuits had been submitted ahead of the third anniversary of the disaster, after which the company could have tried to use a statute of limitations to dismiss their claims.

Read more…

Bill Seeks to Allow Drilling Near US Mexico Maritime Border

Rigzone, 4/22/13

A legislative hearing will take place Thursday in Washington D.C. as lawmakers consider a bill that would lift the current moratorium on drilling along the U.S.-Mexico maritime border in the Gulf of Mexico.

H.R. 1613, the Outer Continental Shelf Transboundary Hydrocarbon Agreement Authorization Act, would amend the Outer Continental Shelf Lands Act and implement the terms of the U.S.-Mexico Transboundary Hydrocarbon Reservoirs Agreement. That agreement, signed in February 2012 by then Secretary of State Hillary Clinton and Mexico’s Minister of Foreign Affairs Patricia Espinosa Castellano at the G-20 Summit in Los Cabos, Mexico, would govern development of shared oil and natural gas resources in the U.S. Gulf between the United States and Mexico maritime border.

Read more…