‘Perfect storm’ causing gasoline shortages in Mexico: analyst

July 7, 2015

7/6/15 via Platts

pemex21Pemex said Monday it has planned “additional volumes of gasoline imports in order to regularize supplies” in several states following what one analyst described as a “perfect storm” of shortages involving red tape and crime.

The state company traditionally prides itself in ensuring supplies of all fuels to industry and consumers. But long lines have formed in recent weeks at the pumps of the service stations that still have gasoline on sale.

The problems have arisen in at least half a dozen states, though not in Mexico City, with its population of 20 million.

Pemex cited several factors for the shortages, including a new billing system that has failed to register the orders made by service stations for new supplies.

Read more…


Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

July 6, 2015

Norma Alicia Valdez conserves water to clean her home, located in the center of Cuatro Cienegas, a farm and business hub set amid a thriving oasis in Mexico's Coahuila state.  The city now struggles with water shortages related to water extraction for large-scale farming nearby. Valdez' family used to farm 20 hectare of Alfalfa, but when the large companies moved in around them and made wells, just north of the city, near Ocampo, Valdez said her family no longer could find sufficient water. As a result, they now only farm 5 hectare.

The state of Coahuila receives little more than 300 millimeters of rain annually (12 inches). So much water is being pumped in two farm regions near Cuatro Ciénegas to irrigate crops and care for livestock that not early enough is left to supply the pools and marshes. With every passing year, the desert claims more land, more ponds, and more streams that used to be wet.Photo © Janet Jarman/Circle of Blue.

Day 8, our final day of our on-going article excerpts. Check out the blog for more, or head straight to our website for the entire article.

Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

by Keith Schneider

Industry Still Exuberant

American energy companies spent an average of $US 15 billion a year to develop the Eagle Ford shale since 2008, more than $US 80 billion in total. Mexico authorities think it will take at least $US 100 billion to develop Coahuila’s shale resources.

That figure is well below the $US 662 billion to $US 1.02 trillion in capital spending that Goldman Sachs estimated would be needed to develop Mexico’s shale reserves in an analysis last year.

Some of the difference in cost estimates is the result of the quality of northern Mexico’s shale. Studies in the open geological science literature suggest that the Eagle Ford shale beneath Coahuila differs substantially in structure and carbon composition than the shale beneath Texas. Goldman Sachs researchers also noted in their study that due to the extensive investment in needed infrastructure “we would not anticipate any robust development taking place before 2018-2020.”

The global oil industry, ever audacious in its quest for hydrocarbons, is driven to tap new reserves where they exist, and never more so than during this century. From the icy depths of the Arctic to the perilous high-tech platforms of the Gulf of Mexico, from the isolation of Siberia to the narrow foothill Himalayan valleys of Sichuan, the global energy industry is exploring and tapping new reserves. It’s no surprise that the enthusiasm displayed by the oil and gas industry for northern Mexico’s shale potential is genuine, deep, and characteristically flamboyant.

During a Mexico shale oil and gas summit in San Antonio in February, for instance, business and government authorities rallied around the idea of Coahuila drilling and its role in a U.S.-Mexico-Canada oil and gas alliance capable of competing with OPEC for global leadership in hydrocarbon production.

“The possibility of a North American energy confederation is still something I would like to see on the table – for Canada, Mexico and the United States,” Chris Faulkner, chief executive of the Dallas-based Breitling Energy Corp. told the conference. “It doesn’t seem to be on anyone’s radar in Washington. But if we could strive for North American energy independence first, we would be the second largest oil producing coalition in the world next to OPEC, and would be incredibly formidable in determining world oil policy.  Mexico is in an excellent position. They know it.”


Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

July 2, 2015

The Lago de las Monjas used to be a thriving lake but dried out a few decades ago. (Reason unclear.) will clarify

The state of Coahuila receives little more than 300 millimeters of rain annually (12 inches). So much water is being pumped in two farm regions near Cuatro Ciénegas to irrigate crops and care for livestock that not early enough is left to supply the pools and marshes. With every passing year, the desert claims more land, more ponds, and more streams that used to be wet.Photo © Janet Jarman/Circle of Blue.

Day 7 of our on-going article excerpts. Check out the blog again tomorrow for more, or head straight to our website for the remainder of the article.

Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

by Keith Schneider

A Ban on Groundwater Use For New Energy

According to Carlos Gutiérrez Ojeda, head of the groundwater division of the Mexican Institute of Water Technology, that leaves energy development companies with several other options for securing adequate supplies of water for fracking.

The first and easiest, said Ojeda in an interview, is for energy developers to buy existing groundwater use permits from farmers, industry, or other users.

Other options, he said, include:

  • Discovering and tapping new aquifers that lie deeper than known groundwater reserves. The deeper groundwater sources, if they exist at all, are likely to contain high levels of salt and minerals that will need to be treated. National water authorities are likely to issue permits to tap those brackish groundwater supplies, which are not currently used by cities, farms, or industry.
  • Recycling and treating wastewater from municipal and industrial treatment plants. That potential supply, though, is at least 80 percent less than what the energy industry is likely to need. An important consequence of using treated municipal wastewater is that this water supply is now discharged to streams and rivers. Thus, capturing this water could have the effect of reducing flows to streams, which could harm aquatic ecosystems and downstream water users.
  • Pumping water from the Gulf of Mexico and transporting it hundreds of kilometers in new pipelines to the drilling zones. Seawater is too salty for fracking using current technology. Some desalination capacity would need to be constructed near the sea, or at the other end of the pipe close to the drilling zones.

Summed up, if Mexico enforces its proposed ban on issuing drillers permits for existing groundwater sources, the industry’s water demand can only be met by uncertain and expensive supplies. “There are big questions that need to be answered,” said Ojeda. “We are looking closely at what could happen. Conagua says no groundwater will be used for fracking. Water must come from some other source. That’s what the authorities said.”

Among industry executives and government authorities charged with promoting job growth, though, the scale of what’s possible with shale development in Coahuila, and the potential investment treasure chest that it could open, overwhelms other considerations — for understandable reasons.


Shell moves forward on major Gulf of Mexico platform

July 2, 2015

07/02/15 Yahoo News

Photo by Flickr user Azfar Hakim

Photo by Flickr user Azfar Hakim

Royal Dutch Shell announced it will build a deep-water platform in the Gulf of Mexico for its Appomattox field discovery with an estimated startup close to 2020. Shell said Wednesday it authorized the major project after finding 20 percent in cost reductions and determining that it will produce a profit as long as the global benchmark for oil prices stays above $55 a barrel. International benchmark crude was priced at more than $62 a barrel early Wednesday.

Read more…


Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

July 2, 2015
The sun rises over the quaint town of Cuatro Cienegas. Until three decades ago the 215-year-old farming community of Cuatro Ciénegas was a farm and business hub set amid a thriving oasis where vineyards and orchards of pomegranate, walnuts, and peaches were irrigated with water drawn from clear, spring-fed streams and pools.

The sun rises over the quaint town of Cuatro Cienegas. Until three decades ago the 215-year-old farming community of Cuatro Ciénegas was a farm and business hub set amid a thriving oasis where vineyards and orchards of pomegranate, walnuts, and peaches were irrigated with water drawn from clear, spring-fed streams and pools.

Day 6 of our on-going article excerpts. Check out the blog again tomorrow for more, or head straight to our website for the remainder of the article.

Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

by Keith Schneider

Competition For Water Leads To Deficit

The source of Cuatro Ciénegas’ water deficit, according to researchers from the University of Texas at Austin, is groundwater irrigation from grain farms in Ocampo, about 50 kilometers north (31 miles), and from alfalfa and dairy production in the south Hundido Valley, about 45 kilometers (28 miles) southwest.

Both farm areas lie at elevations above Cuatro Ciénegas, explained Brad Wolaver, a research associate with the University of Texas Jackson School of Geosciences. Farmers irrigate with wells drilled into aquifers recharged from rainfall from nearby mountains. But those same higher ground aquifers also are connected to the network of springs that supply Cuatros Ciénegas, which are on the valley floor.

So much water is being pumped in the two farm regions to irrigate crops and care for livestock that not early enough is left to supply the pools and marshes. With every passing year, the desert claims more land, more ponds, more streams that used to be wet.

“One major stream that flowed from the Ocampo-Calaveras Valley to the north ceased flow,” said Wolaver. “There are dozens of springs that still flow, but in the long term, may see reduced flows if heavy groundwater pumping continues in the surrounding valleys.

“What’s happening is a lesson in what occurs when a finite supply of water needed by everyone is used without enough concern about limits,” Wolaver added in an interview.

It’s entirely possible, maybe even probable without a clear and enforceable plan for water use, that the same circumstance could occur on a much larger scale in cities and farm areas in close proximity to Coahuila’s oil and gas fields.

“Water supply is an urgent concern throughout that entire region,” said Mark Briggs, a restoration ecologist with the World Wildlife Fund, based in Tucson. “Populations are growing on both sides of the Rio Grande. Water supplies in the Rio Grande Basin are over-allocated. Cities are reaching across groundwater basins to supply themselves with water. Climate change is a factor in intensifying drought cycles. Add major energy development and its water needs. You have to wonder where all this is going. “

To some extent, water supply is part of the government discussion about energy development in Coahuila. Conagua authorities last year declared that new permits for the state’s 28 existing aquifers would not be available for developers of shale oil and gas wells. Nor is water available for fracking from the Rio Grande River, which is over-allocated and regulated by various transboundary commissions.


Mexico Moving Forward With Major Natural Gas Pipeline

July 1, 2015

07/01/15 Reuters Africa

oil pipeline150On June 22, Mexico’s Federal Electricity Commission (CFE) announced it would tender a new round of 24 energy infrastructure projects totaling $10 billion, including a $3 billion underwater pipeline bringing U.S. natural gas from Texas to Tuxpan, Veracruz. Amidst a grand national “gasification” strategy that has promoted Mexican imports of U.S. natural gas, this may be one of the most ambitious projects yet.

Of course there are concerns around potential risks associated with the project – whether there is the local capacity to carry it out, and whether it’s really necessary – all of which must be resolved if the pipeline is to begin transporting the proposed 2.6 billion cubic feet of natural gas per day by 2018.

Read more…


Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

June 30, 2015
In one conservation effort near Cuatro Cienegas, a  pool named Poza Escobedo, on the property of cattle rancher Alfonzo Gonzalez, was restored to its original state, leading the area around it to regenerate its humidity and lush flora and fauna.

In one conservation effort near Cuatro Cienegas, a pool named Poza Escobedo, on the property of cattle rancher Alfonzo Gonzalez, was restored to its original state, leading the area around it to regenerate its humidity and lush flora and fauna.

Day 5 of our on-going article excerpts. Check out the blog again tomorrow for more, or head straight to our website for the remainder of the article.

Water Scarcity Could Deter Energy Developers From Crossing Border Into Northern Mexico

by Keith Schneider

A Desert Oasis That is Drying

There is virtually no surface water available in this part of the Chihuahuan Desert, an expanse of thin pads of grama grass and stands of creosote bushes and mesquite. Coahuila receives little more than 300 millimeters of rain annually (12 inches), according to Conagua. It is the second driest place in Mexico and ranks with Egypt and the Arabian Gulf as among the driest places on Earth.

That is what makes the running streams and desert marshes of Cuatro Ciénegas, a half days’ drive south of Piedras Negras, so rare and such a valuable reference for the ecological disruption and economic dislocation that can occur with mistakes in water supply and use. Until three decades ago the 215-year-old farming community was a farm and business hub set amid a thriving oasis where vineyards and orchards of pomegranate, walnuts, and peaches were irrigated with water drawn from clear, spring-fed streams and pools.

In one conservation effort near Cuatro Ciénegas, a  pool was restored, leading to the recovery of riparian vegetation. Despite management oversight since the mid-1990s by Mexico’s national parks agency and designation as an international biosphere reserve, Cuatro Ciénegas is steadily drying up. Photo © Janet Jarman/Circle of Blue.

Outside town, thick stands of marsh grasses grew as tall as a man. In the 1960s, Mexican and American biologists and ecologists began to swarm across the 150,000 hectares (370,000 acres) of desert pools and wetlands, discovering a biological treasure of plants and animals so abundant and distinctive they likened Cuatro Ciénegas to the Galapagos Islands.

Today, despite management oversight since the mid-1990s by Mexico’s national parks agency and designation as an international biosphere reserve, Cuatro Ciénegas is steadily drying up. Vinos Vitali, a winemaker and lifelong resident, told a University of Texas video team, “There used to be a lot of water here and a lot of fruit. Now there’s no water and nothing is left.”

Alfonso Gonzalez, a rancher in town, added, “You’re seeing a crisis now because the water has not been sustainably managed.”


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