Shale

Booming oil and natural gas production in the south Texas Eagle Ford Shale and enthusiastic predications for similar shale production in Mexico’s Burgos Basin were the initial motivations for this study. However, the 2018 political transition in Mexico and the postponement of the 2014 Energy Reforms changed the impetus of the study to explore dynamics affecting energy production in the Texas-Mexico border region. The Burgos Basin offers a fascinating space to understand changes in Mexico’s oil and natural gas production strategies and their associated policies. Through interviews conducted with key stakeholders, participation in oil and gas industry conferences, geospatial analyses, and archival research, our study points to the economic opportunities and challenges in the trans-border region and identifies differences between dominant social media and media narratives versus the situation on the ground.
Our interview respondents identified several key policy and economic recommendations. First, the Mexican government’s ban on hydraulic fracturing has garnered much attention. However, there are ample opportunities for conventional natural gas production in the Burgos, as well as offshore production. Moreover, fracturing and similar secondary production techniques continue to be practiced in many of Mexico’s oil fields. Second, uncertainties in Mexico’s energy policies are not new, services companies have worked in Mexico and the Burgos for decades and faced similar policy and security uncertainties. Private firms with interests in the Burgos are advised to be patient. Third, some respondents recommended that the government reopen the contract model and taxing format from 2018 (i.e. the CEE model), start bidding rounds again, and create a fully independent and transparent hydrocarbon production regulatory body. Lastly, if energy security is a concern, the Mexican government could sit on its Burgos reserves until the future, rely on Texas natural gas imports to meet national demand, and double down on renewable energy infrastructure. As well, the central government should invest in and coordinate policy actions with particular states that have ample energy opportunities, such as Tamaulipas.