Mexico Shale Gas Extraction- The Debate

After almost eight decades of monopolistic reign of Pemex, the nation’s energy sector has been transformed by concrete energy reforms that have opened up the energy sector to international investment. Supporters of these reforms hope that foreign investment can assist in expanding Mexican shale gas extraction.

The uncertainties:  

Last year, natural gas productivity in Mexico was merely 3.9 percent more than in 2006, while natural gas imports increased threefold. Even though the reforms may boost production and free Mexico off its dependence on imports, several uncertainties loom over the success of this undertaking. Apart from security concerns, other issues of land use and rights, investment risks and water shortages can obstruct the reform’s progress.

For extraction, northern Mexico’s Burgos Basin’s attraction is undeniable, but an entry of multinational gas and oil companies can spark fights over claims to the land. Situated in the states of Coahuila, gas shale tamaulipas, and Nuevo León the Burgos Basin already offers two-thirds of the production of the nation’s current natural gas. But, making use of these resources represents a certain threat for those who are afraid that extracting will mean being stripped off their own land. Minority left-wing PRD and farmers cringe at the possibility of foreign companies and government to expropriate both collectively owned and private property. 

In spite of the ongoing dilemmas, techniques to extract gas shale tamaulipas in the Burgos Basin may be legitimized due to the potential economic gains. In lieu of Mexico’s present economic status, with almost 50 percent of the population living below poverty line, the government is counting on shale to spur growth. However, the inadequate scope of Burgos Basin’s current well count, amounting less than 20, will first require investment in exploration. Apart from this, the lack of infrastructure — such as insufficient roads, pipelines and railways in the country, means that major, expensive construction has to be completed before any shale reserves can be developed fully.