Mexico Bans Fracking In Key Shale Basin

By Julianne Geiger of OilPrice.com

Mexico has ruled out fracking in a key shale basin, drawing a line through a resource-rich area even as the country looks for ways to cut its dependence on U.S. natural gas.

President Claudia Sheinbaum said hydraulic fracturing will not be allowed in the Tampico-Misantla basin beneath Veracruz and Tamaulipas. The government cited the basin’s dense population, indigenous communities and freshwater reserves.

Sheinbaum ordered a panel to examine whether unconventional gas could help reduce imports from the United States. Mexico buys more than 6.5 billion cubic feet per day of pipeline gas from its northern neighbor, covering roughly 75% of domestic demand.

The commission recommended boosting conventional gas production first. Even with the proposed measures, Mexico’s reliance on U.S. supply would fall only to about 50%, according to Sheinbaum.

Mexico would need unconventional gas to push that figure lower. The panel said future fracking should be limited to basins containing salt water rather than freshwater, leaving northern shale formations in play.

Sheinbaum campaigned as a critic of fracking and its environmental costs. Energy math has since become less cooperative. Natural gas fuels much of Mexico’s power sector and industry, while domestic production has failed to keep pace.

Seven combined-cycle power plants are coming online, with five more planned, adding to the demand for gas. Pemex expects to lift domestic production to just over 4 billion cubic feet per day by 2030, still nowhere near enough to eliminate imports.

The state oil company is also under pressure to reverse falling output while carrying a mountain of debt. Mexico holds an estimated 141.5 trillion cubic feet of unconventional gas resources, mostly in northern basins.