Mexican regulator to auction best gas blocks
Mexico’s national hydrocarbon commission (CNH), overseeing the sale of oil and gas blocks controlled by former state-owned monopoly Pemex, confirmed January 25 the country’s most prospective natural gas producing areas will be made available to private sector producers.
CNH, which has overseen the auctions of onshore and offshore blocks, announced it will tender 37 onshore blocks as license contracts for exploration and extraction, with bids due on July 25.
Of the 37 blocks on offer, 21 are in the gas-prone Burgos Basin, on the Mexico-Texas border, two are in the highly oil and gas prospective Tampico-Misantla Basin, in the Gulf of Mexico state of Veracruz, seven are elsewhere in Veracruz, and the remaining seven are split between Veracruz and neighboring Tabasco.
The blocks comprise a total area of 9,513 km2.
The Burgos basin is just south of the prolific Eagle Ford shale play in Texas, considered to be the largest unconventional shale resource in the US.
Cash-strapped Pemex, which has been concentrating on oil development, has drilled only a few unconventional wells in the Burgos, and production there has fallen from a peak of 1.2bn ft3/day in 2012 to only 870mn ft3/day today, according to estimates by the US Energy Information Administration (EIA). Pemex spent $657 million there in 2012 but just a little over $51 million last year.
The EIA has estimated that the Burgos, which covers portions of the states of Coahuila, Tamaulipas and Nuevo Leon, holds technically recoverable unconventional gas reserves of 343 trillion ft3 of gas and 6.3bn barrels of oil.
Mexico Energy Secretary Pedro Joaquin Coldwell, who has said he wants domestic gas production to grow, recently said imports of US natural gas - which have increased to more than 4bn ft3/day - represent “a national security risk” for the country.
Domestic gas production has declined from 7.02bn ft3/day in 2009 to slightly more than 5bn ft3/day today, while demand in the Central American country has increased by 50% in the last five years, to more than 8bn ft3/day, and some estimates suggest demand in 2027 could reach 11.6bn ft3/day.
The US Geological Survey has has estimated that there are at least 19bn barrels of undiscovered unconventional oil reserves and 83 trillion ft3 of undiscovered unconventional gas reserves in 10 geologic zones in Mexico, Guatemala and Belize, mostly concentrated in the Burgos, Tampico-Misantla and neighboring zones in Mexico. Last year, IHS Markit, in a report on the Tampico-Misantla, described it as a “super basin”, comparing it to the Permian Basin in the US.