Mexico’s Burgos Basin now open to natural gas development by private investors

For the first time since the creation of Mexico’s national oil company, Petróleos Mexicanos (PEMEX), private companies will be allowed into the northeastern, shale-rich region of Mexico known as Burgos Basin.

Mexico’s national energy ministry (SENER) made the announcement last month, opening the onshore
portion of the basin to exploration and development. PEMEX has been decreasing its investments in the
area despite it holding the largest undeveloped shale resources in the country and SENER now hopes to reverse the loss in natural gas production through private investment.

Mexico hopes to become less reliant on natural gas imports long-term, at a time when the region has increasingly large natural gas demands. The Burgos Basin offers massive territorial possibilities, with approximately 24,200 square miles onshore and an offshore region that extends into the Gulf of Mexico’s continental shelf. PEMEX first became active there in 1942 and the basin still boasts 3,500 active natural gas wells in non-shale formations.

Complicating matters is low permeability among regional reservoirs, coupled with high decline rates. While this is typical of tight formations, it makes for high investments to maintain or to increase production. Since natural gas prices have been decreasing in recent years, and Mexico’s government has introduced energy reforms that prioritize oil development, PEMEX has decreased its operations in the area.

Further acreage and additional shale basins are expected to open to private companies by the end of 2018.