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Roundtable

Development Models for Shale Gas Resources?

Wed, 01/25/2012 - 12:48

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Jaime Buitrago

President
ExxonMobil Ventures México

Mexico is only just beginning to explore the potential of its shale gas reserves. As a company with much experience in shale gas, what would you say about the challenge for an oil company of adjusting to exploiting unconventional resources, and the strategy that ExxonMobil adopted in order to achieve this?

Energy demand in Mexico is estimated to increase 20% by 2030 due to population growth and economic development. In order to satisfy this growing energy demand, mostly in the areas of electricity generation, industrial development and transportation, Mexico will need to optimize the production and use of all its sources of energy. It should not be an issue of focusing on one energy source versus another. Instead, Mexico should be looking to optimize production from all of its energy sources. This includes shale gas resources as well as exploring and developing new oil resources in areas with high potential, such as in deepwater.

Estimates of Mexico’s shale gas resources published both by Pemex and the US Energy Information Administration indicate that Mexico has the potential for shale gas resources that are anywhere from two to 11 times their current gas reserves. However, if you look at how the shale gas revolution took place in the United States, it is very clear that it was possible through innovation and investment from the private sector. So, in order for such a shale gas revolution to take place in Mexico, there needs to be a favourable legal framework and business environment. Many of the elements that would allow the development of shale gas in Mexico will also help the development of other resources. Mexico will of course choose its own way to develop its shale gas resources.

ExxonMobil acquired XTO in order to increase its shale gas footprint. What are your expectations for the potential development of unconventional resources in Mexico?

In the United States, shale gas was developed through competition and a business framework with the appropriate balance of risk and reward for companies of all sizes to innovate.

Fernando Calvillo Álvarez

Fernando Calvillo Álvarez

President
Fermaca

What do you see as the best development model for Mexico’s shale gas resources?

If nothing changes in the next few years, Mexico will become a net importer of gas by 2015. Pemex is extremely unlikely to invest in shale gas if it means diverting money away from oil production. I think Mexico will have no other choice but to open shale gas to the private sector. I don’t think that the Constitution will change, but rather this will become an activity that Mexican companies will be able to invest in, but international companies will not. I think the only feasible way to achieve this is through mining concessions. If this happens, Fermaca will be the first company in line to sign up. We are actually looking into buying a small US drilling company in order to gain experience in shale gas and shale oil production. This might still be a long way o, perhaps 10 years, but it will happen, and when it does we have to be prepared for it.

Horacio Méndez Villalobos

Horacio Méndez Villalobos

General Manager
Weatherford Mexico

What can Weatherford contribute to the exploitation of Mexico’s shale gas reserves based on its international experience?

Weatherford provides technologies to several fields of this kind in North America, such as Eagle Ford Shale, Haynesville Shale and Barnett Shale, where we have succeeded in applying new technologies in the directional drilling of horizontal wells, taking formation cuttings to analyse the mineralogical composition of the carbonates with a high level of precision, as well as systems that help to detect low pressure areas in the formation during drilling, and systems that reduce the times and harshness in the well construction.

These and other technologies can be applied in the horizontal well drilling projects in the shale gas fields in Mexico, in addition to our engineering experience in the design of this type of wells, which can be of great use for the correct drilling and exploitation of the wells.