Amlo Rejects Gas Fracking in Mexico
Mexico will not use fracking to produce shale oil and natural gas during the six-year term of president Andres Manuel Lopez Obrador, the president-elect, known as Amlo, told reporters October 5 in the town of San Luis Potosi.
In his most direct statement yet, he told reporters that Mexico “is not going to use the famous method of fracking to produce oil and gas” during his 2018-2024 administration. His comments could jeopardise a public auction scheduled for February to lease drilling rights in nine shale areas in the northern Burgos basin.
“This applies to the whole country. Let it be clear: during my six-year term fracking will not be utilised while we are in government,” he said.
Residents of San Luis Potosi welcomed his promise. In recent months they have voiced opposition to horizontal drilling and fracking for oil and gas in the central Mexico state, asserting that state-owned oil company Pemex is already conducting shale drilling within the state at wells in the Ebano field – a claim the energy ministry and company deny.
Mexico has the sixth largest shale reserves in the world in untapped basins such as the Burgos and Tampico-Misantla. Under the current administration, eventual shale gas production from these basins was often considered as the country’s solution to curb declining production of natural gas and reduce US gas imports so his remarks have alarmed the energy industry. Mexico imports more than 60% of its natural gas needs from the US.
A shale field auction by the National Hydrocarbons Commission (CNH) is still scheduled for February 19, 2019, but only two companies have registered to participate. An onshore auction to lease conventional oil and gas rights in 37 areas is scheduled for the same date, and 15 companies have registered to participate.
It remains unclear if Amlo will continue to hold public auctions for drilling rights in Mexico during his administration. He has said publicly that the auctions would be paused during the first years of his government, though no cancellations are yet official. Since opening its energy industry in 2014 to allow for private and foreign competition, Mexico has awarded more than 100 oil and natural gas exploration and production contracts to international majors such as US Chevron and ExxonMobil and Anglo-Dutch Shell.