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Controversial energy law passes in Mexico

Bloomberg reports this hour, “Mexico will end 75 years of government control of its vast oil reserves after Congress approved the nation’s most significant economic reform since the North American Free Trade Agreement.” The reform passed today will mean that private corporations can now explore and extract oil and gas under licenses and production or profit-sharing agreements.

“The reform could increase foreign investment by as much as $15 billion annually (and) industry analysts and the bill’s authors say the overhaul will … increase production to as much as 4 million barrels per day by 2025 (from the current 2.5 million barrels a day now extracted). …Natural gas production would almost double to as much as 10.4 billion cubic feet by 2025 from current output of 5.7 billion feet, according to the bill.”

More fracking

“Easing restrictions (on foreign investment) will help Pemex revive output and crack vast shale formations, said Brian Youngberg, a St. Louis-based analyst at Edward Jones & Co., who covers oil producers including Chevron and Occidental Petroleum Corp. …(He says), Mexico’s deep-water prospects in the Gulf of Mexico would be attractive to Exxon and Chevron, while shale tracts would probably lure EOG Resources Inc. and ConocoPhillips… Tony Garza, a former U.S. ambassador to Mexico under President George W. Bush…, said by phone. ‘There’s potential to attract additional investment into shale and ultra-deep waters…'”

Mexico City-based Blue Planet Project organizer Claudia Campero writes, “The consequences of the ambitious battle to frack our country is likely to be felt in many communities.” She adds, “Most of the public debate is concentrated on whether or not bringing private companies to the game is in the best interest of the country. (But) we (also) need a much fuller public discussion on how are we going to wean ourselves off fossil fuels and deploy truly sustainable energy solutions.”

Water implications

In April, the Inter Press Service reported, “Mexico plans to expand shale gas exploration this year, but it could run into a shortage of water, which is essential to (fracking). …Since 2011, Pemex has drilled at least six wells for shale gas in the northern states of Nuevo León and Coahuila. And it is preparing for further exploration in the southeastern state of Veracruz… (Pemex) plans to drill 20 wells by 2016… It projects operating 6,500 commercial wells over the next 50 years. …According Mexico’s Energy Regulatory Commission, …fracking takes 7.5 million to 30 million litres of water per well to release the gas, while a field of 10 wells would need between 25 million and 40 million litres of water. …(Pemex has not clarified where the water comes from (for its shale gas wells) or what is being done with the waste.”

In terms of next steps, Bloomberg notes, “The bill secured the required two-thirds majority in a 353-134 vote in Mexico City’s lower house today after challenges to articles were rejected. Before becoming law, the proposal must be ratified by state assemblies, the majority of which are controlled by the party alliance backing the reform.”

Further reading
Energy “Reform” in Mexico Will Only Pave the Road for Fracking
Teaming up against fracking in Mexico
Fracking poses a major threat to water in Mexico
Controversial energy bill debated in Mexico