Off The Wire
UPDATE 1-Mexico to offer first-ever shale blocks in Sept auction
60 BILLION BARRELS
Mexico's total prospective shale resources have been estimated at some 60 billion barrels of oil equivalent. The shale potential is even larger than the country's deepwater resources in its territorial waters in the Gulf, where Royal Dutch Shell is set to be the biggest producer in the years ahead after winning the most blocks at a January auction. The September auction will be the fourth for 2018, the final year of President Enrique Pena Nieto's six-year term. Shallow water blocks will be on offer later this month and then conventional onshore areas in July. Since a landmark energy reform was enacted in 2013-2014, Mexico has conducted eight oil and gas auctions, awarding some 90 contracts covering onshore and offshore acreage, according the CNH, which conducts the auctions and supervises the contracts. If successful, the approximately 90 contracts could be worth more than $150 billion over their lifetime, according to energy ministry estimates. The energy reform ended Pemex's nearly 80 years of monopoly control over the sector and paved the way for the auctions, ending a long-standing constitutional prohibition on private companies operating fields on their own. Despite a decade-long shale boom in the United States, including lucrative plays near the U.S.-Mexico border like the Eagle Ford Formation, similar petroleum-rich geology that almost certainly extends into northern Mexico has yet to take off. Eagle Ford has been heavily drilled and produces around 1.6 million barrels per day (bpd) of a total of 6.5 million bpd in output from the seven largest U.S. shale regions, U.S. government data shows. Interested companies might include Mexico's Newpek, a unit of conglomerate Alfa , which has developed shale projects in Texas, and U.S. independent Lewis Energy, which has operated on both sides of the border. Alfa executives said on a February conference call that the company was in a good position to participate in Mexican energy projects, without specifying which ones. (Additional reporting by David Alire Garcia and Christine Murray; Writing by David Alire Garcia; Editing by Steve Orlofsky)
Reuters Messaging: david.aliregarcia.thomsonreuters.com@reuters.net))