Mexico still far from tapping shale potential, minister says

MEXICO CITY, May 8 (Reuters) - Despite having some of the world’s biggest shale gas reserves, Mexico imports about a third of its gas needs and, in the absence of major reform, risks further dependence on outside energy supplies, the country’s energy minister said Wednesday.

“We need to enter into a new era of making the most of our non-conventional resources,” Pedro Joaquin Coldwell said at an energy conference in Mexico City. “We have prospective shale gas resources that rank us fourth globally, but we are far from taking advantage of this potential.”

Mexico has an estimated 681 trillion cubic feet of recoverable shale gas resources in deposits that may contain rich pockets of both natural gas and oil, according to the U.S. Energy Information Administration data.

At the end of April, Mexico’s state oil and gas monopoly Pemex announced its first ever production of shale gas from a test well in the country’s northern Burgos basin, just across the border from Texas. The company said the Chucla 1 well produces 1.9 billion cubic feet per day of natural gas, as well as 24 barrels per day of crude oil and other condensates.

The company said it showed that the Eagle Ford geological formation in south Texas extends into northeastern Mexico.

In the United States, Eagle Ford shale gas and oil production has been booming in recent years.

Pemex plans to drill a total of 10 shale test wells this year as the company continues to study its reserves.

“Shale fields involve drilling thousands of wells, the use of the best technology as well as non-potable water supplies found at great depths,” said Coldwell.

He said Mexico ran the risk of becoming a net importer of energy by 2016, without reforms.

President Enrique Pena Nieto has promised sweeping energy reforms later this year that aim to lure more private investment and boost production at Pemex.