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    Pemex, Lewis to Develop Mexican Shale

Summary

Mexico’s state-run Pemex and US Lewis Energy have signed the first integrated exploration and extraction contract (EEC) for the Olmos shale gas field.

by: Dalga Khatinoglu

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NGW News Alert, Natural Gas & LNG News, Americas, Corporate, Exploration & Production, Investments, Shale Gas , News By Country, Mexico

Pemex, Lewis to Develop Mexican Shale

Mexico’s state-run Pemex and US Lewis Energy have signed the first integrated exploration and extraction contract (EEC) for the Olmos shale gas field, in the state of Coahuila with 800bn ft3 (22.65bn m3) in-situ resources.

The purpose is to assess and develop the extension of the Texan Eagle Ford formation in Mexico. The investment is estimated at $617mn, and production is aimed to reach 117mn ft3/d natural gas by 2021, the Mexican state company said March 26.

Pemex is actively using the tools and flexibility the energy reform has granted the company, to share financial and operating risks with third parties and increase the strategic investments that will maximise the value of its hydrocarbon production.

Lewis Energy is a private operator of unconventional fields in the south of Texas. They have drilled over 500 wells in Eagle Ford, focusing on natural gas production. It is the third largest producer in the state of Texas.

Mexico has the potential to become a major natural gas producer, with world-scale shale gas resources. But the success or failure of an upcoming auction of gas-prospective onshore blocks will go a long way to deciding if that potential can be realised.

However, the lack of investment by Pemex in developing natural gas reserves over the last 14 years has led to a decline in proven and potential natural gas reserves of 12.4% and that some barriers stand in the way of future unconventional gas development. The upstream regulator is expecting to announce winners of the onshore round, mostly in the north of the country where Eagle Ford is present, in September. Companies can farm into Pemex acreage, and Pemex was given 90% of the known reserves before the reforms a few years ago ended Pemex' monopoly.