Mexico may become the next great fracking frontier, now that its government has opened the way for exploration into the country’s vast shale oil reserves. But U.S. drillers and hydraulic fracturing experts will have to overcome some key obstacles if they’re to profit from crossing the border.
The new opportunities have existed only since December, when Mexico’s Congress approved a landmark bill that relaxed the 75-year-old grip over oil and gas development by Pemex, the state oil monopoly. The legislation paves the way for foreign companies to cut deals with the Mexican government to develop new oil fields.
One such field is the Eagle Ford Shale Play, which straddles the Texas-Mexico border, running for hundreds of miles deep beneath the earth. On the U.S. side, companies have sunk hundreds of fracking wells into Eagle Ford, making it the second most lucrative oil field in the country.
But Mexico’s portion of Eagle Ford has barely been touched, even though it holds sizeable reserves. Between it and other shale formations, Mexico may sit atop 60 billion barrels of oil—which is more oil than the country produced through a century’s worth of conventional drilling. The country also possesses the sixth largest shale natural gas reserves in the world, according to the U.S. Energy Information Administration.
Going after the shale oil and gas could be problematic for U.S. businesses. For starters, the Eagle Ford formation rests in a part of Mexico dominated by drug smugglers, specifically the Zetas and Gulf Cartel.
“Nabbings, extortion, murder and oil theft by the gangs have made U.S. drillers—traditionally cavalier about violence in the areas where they work—wary of venturing into the shale-rich states of Tamaulipas, Coahuila and Nuevo Leon,” Steve LeVine wrote at Quartz, a digital news outlet.
Another problem for frackers is the lack of infrastructure in this part of Mexico. Roads will need to be built and pipelines constructed to carry out oil and bring in water, of which a great deal is used in fracking operations.
It might be a while before multinational energy companies get around to exploring Northern Mexico, according toNick Miroff of The Washington Post. They’re most interested in taking advantage of the new legislation by drilling in Gulf of Mexico oil fields in that country’s territorial waters.
To Learn More:
The Fracking Divide: Mexico’s Oil Frontier Beckons U.S. Drillers in Wake of New Law (by Nick Miroff, Washington Post)
Fracking, Seismic Activity Grow Hand in Hand in Mexico (by Emilio Godoy, Inter Press Service)
Mexico’s Drug Cartels Are Standing in the Way of a Fracking Bonanza (by Steve LeVine, Quartz)
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