How Oil Reforms Could Trigger Mexico's Biggest Economic Boom In A Century

Forbes ^ | 10/01/2013 | Christopher Helman

[thackney]

Mexico has one of the world’s most notoriously closed-off oil industries. The Mexican constitution makes it illegal for anyone but the state oil monopoly Petroleos Mexicanos (Pemex) to even own a barrel of oil. If you’re a farmer in Mexico and oil is discovered underneath your land, not one drop of the black gold is yours — it belongs to the state, to the people. As a result, Pemex is the only game in town. There are no private companies operating oilfields in Mexico, no risk-based production sharing contracts or joint ventures with any international oil companies. This could not be more different than the United States, where private ownership of mineral rights is taken for granted.

Yet Mexico’s oil sector is set to begin a radical transformation. Under the leadership of President Enrique Peña Nieto, Mexico’s congress will, by the end of this year (according to a half-dozen analysts I spoke to) pass a constitutional amendment to open up the sector to private investment. By this time next year the likes of ExxonMobil, PetroChina and Statoil could even have contracts in place to start exploring for Mexico’s untapped oil and gas bounty.

How big could these oil reforms be for Mexico’s economy? Not only will it be bigger than the revolution in shale drilling and fracking has been in the United States, says Duncan Wood, director of the Mexico Institute at the Woodrow Wilson Center, “This will be the most significant change in Mexico’s economic policy in 100 years.”

That’s why the energy reforms are the most anticipated piece of the ambitious agenda of government overhauls that Peña Nieto has embarked upon in just his first year in office. This package, which the president has called “The Grand Transformation” aims at shoring up the Mexican economy, reducing violent crime...

[thackney]

This has been talked about for a couple decades, but perhaps the US production increases of the last few years will help drive this to completion.

[Loud Mime]

bump flr

[rrrod]

Knowing mexico nothing will help. Total BS article. Actual lifting cost are sky high...and nothing they do will ever change.

[lgjhn23]

Yep. It’s been talked about for some time now.
As you and I both know, the Eagle Ford doesn’t just stop at the border. IF they can dig their heads out of their azzes over there, and allow some of that to flow down to the common people, both jobs and a little bit of the wealth, it might help ebb the flow of illegals. I ain’t holding my breath for it though...LOL.

[thackney]

As you and I both know, the Eagle Ford doesn’t just stop at the border

BTTT

[Eric in the Ozarks]

There are private asphalt and asphalt paving companies in Mexico. I have bought Mexican asphalt into the US and sold American asphalt into Mexico (all at Juarez, Mexico.)

[umgud]

Good news, but how will it stop violent crime?

[cloudmountain]

Knowing mexico nothing will help. Total BS article. Actual lifting cost are sky high...and nothing they do will ever change.

I'm with you.

[ducttape45]

Good. Maybe all of the illegals here in the US will now go back to Mexico and leave us alone.

[gop4lyf]

Mexico is probably the richest 3rd world country in the world as far a having natural resources. It just astounds me that in 2013 those people still cannot get their act together and turn that country into the potential superpower that it could be.

[ryan71]

Mexico. Yep, that’s who we will look like in 20 years. You won’t be able to tell us apart.

[11th Commandment]

Knowing mexico nothing will help. Total BS article. Actual lifting cost are sky high...and nothing they do will ever change.

The difference is both parties support this reform- PAN and PRI. The fact that PRI is behind it is significant, the idea that "only Nixon could go to China".

I read an article the other day that a hot contested governor race in Baja resulted in the PAN canidate winning. The local PRI petitioned the President to investigate the close win. He refused because he needs the PAN support in Congress for oil reform.

So once again, third world economies get it, Obama and the Democrats don't.

[thackney]

Good news, but how will it stop violent crime?

I think it is wishful thinking but more jobs and a better economy tends to help with crime.

[Oatka]

it might help ebb the flow of illegals

Mexico might even end up with an influx of illegal Americans looking for jobs. :-)

[ckilmer]

yeah the eagle ford formation goes right down into mexico and there’s a coastal formation that starts in missippi and runs right around the gulf down to the Yucatan

[lgjhn23]

“...Mexico might even end up with an influx of illegal Americans looking for jobs. :-)....”

Obamacare fines and property tax liens may drive many of us out of the country before it’s over.

[ckilmer]

[ckilmer]

The Frio and Anahuac Formations cling to the coast of texas and louisiana. The last surveys of the reserves there are now considered to be way low. But not much drilling has strayed from eagle ford to these formations as yet.

...................
In a recent U.S. Geological Survey
assessment of undiscovered, technically recoverable oil and gas resources
in Tertiary strata of onshore lands and State waters,
estimated total mean values of undiscovered resources for the Frio and Anahuac Formations were 172 million barrels of oil (MMBO),
9384 billion cubic feet of natural gas (BCF
G), and 542 million barrels of natural gas liquids (MMBNGL).

http://www.searchanddiscovery.com/documents/2009/10178swanson/images/swanson

[thackney]

click to enlarge

As your map title indicates, it is only showing those withing the Lower 48, not all shale in the area.

[ckilmer]

the interesting thing about these plays is that the estimates of their addressable oil seem to increase faster than they pull out oil.