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PR Campaign for Unconventional E&P Launched in Mexico

Following repeated pledges by President-Elect Andrés Manuel López Obrador to ban hydraulic fracturing (fracking) after he takes office, some of the most prominent stakeholders in Mexico’s hydrocarbons sector – including oil companies, policymakers, and regulators – have launched a public relations campaign on behalf of unconventional exploration and production (E&P).

Commissioner Héctor Moreira Rodríguez of the Comisión Nacional de Hidrocarburos (CNH) was the latest to join the fray, writing in a Monday opinion column for local paper Milenio that, “To say no to fracking is to say no to half the gas reserves in the country.”

Moreira opened the column by asking a question currently on the minds of operators and analysts alike. “There are many types of fracking and many ways to do it...When we hear that there will be ‘zero fracking,’ does this refer to all types, or to fracking under some restrictions?”

Neither López Obrador, who is commonly known by his initials AMLO, nor his top energy advisers, have clarified what he means when he said there will be no fracking on his watch.

Whether he is referring to fracking in general, a technique that has been used for decades in Mexico and elsewhere, or to the combination of high-volume fracking with horizontal drilling to exploit Mexico’s immense shale/tight oil and gas reserves, remains to be seen.

Either way, experts said, the fulfillment of this promise would devastate the local energy industry, which is already facing rapid declines in production and proven reserves.

Fracking has been used in more than 5,000 wells throughout Latin America, of which about 3,350 are in Mexico and 2,000 in Argentina, according to a white paper published in September by the Mexican Senate’s Centro de Estudios Internacionales Gilberto Bosques.

By comparison, the technique, combined with horizontal drilling, has been used in about 650,000 wells in the United States and 300,000 wells in Canada, Moreira said in the opinion piece. Moreira’s comments follow a speech to the same effect made last week by Energy Minister Pedro Joaquin Coldwell before Mexico’s lower legislative house.

Moreira’s position also mirrors that of Pulso Energético, a think tank funded by the Asociación Mexicana de Empresas de Hidrocarburos (AMEXHI). AMEXHI is a trade group of companies operating in Mexico with about 50 members including majors BP plc, Chevron Corp. and ExxonMobil Corp., as well as North American unconventional E&P pioneers Lewis Energy, Renaissance Oil Corp. and Hunt Oil Co.

Pulso Energético last week published links to what it said were “the 10 most recent fracking studies,” all of which were published between 2016 and 2018, and all of which found that fracking caused little or no contamination to aquifers. The cited research included studies conducted by Duke University, Pennsylvania State University, the University of Texas at Austin and the U.S. Geological Survey.

López Obrador’s Morena coalition in the July 1 election wrested decisive majorities in both legislative chambers from the Institutional Revolutionary Party, or PRI. The new congress began its term on Sept. 1, while López Obrador is set to be sworn in on Dec. 1.

The chairman of the lower house energy committee, Manuel Rodríguez González, is a Morena member, but he has taken a moderate tone on energy policy and the 2013-14 de-nationalization of the energy sector under current President Enrique Peña Nieto. Committee Secretary Enrique Ochoa Reza of the PRI, meanwhile, voiced his strong support for fracking in the committee’s first meeting last Thursday (Oct. 11), according to local paper El Economista

The U.S. Energy Information Administration has estimated Mexico’s technically recoverable unconventional gas resources at 545 Tcf and its  oil/condensate resources at 13.1 billion bbl.

Mexico’s Round 3.3 auction, its first ever bid round for unconventional E&P acreage, is scheduled for February.

 

 

 

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