Upstart driller seeks to break Mexico’s dependence on Texas natural gas
MEXICO CITY (Bloomberg) --An upstart driller in Mexico aims to provide 10% of the country’s natural gas needs as it develops prospects south of Texas’s border.
Jaguar E&P holds as much as 210 billion cubic feet of natural gas in areas like the shale-rich Burgos Basin, the southern extension of a formation that encompasses the Eagle Ford play in the U.S., as well as the Tampico-Misantla, the cradle of Mexico’s oil industry. By mid-year, the Mexico City-based explorer expects commercial production of 15 million cubic feet a day from the Dieciocho de Marzo gas field in Burgos.
“What we believe our portfolio is capable of producing is something in the order of 10% of the gas that Mexico needs to consume over a five to seven year horizon,” Jaguar Chief Executive Officer Warren Levy said in an interview. “There’s a lot of potential left in the Burgos Basin.”
Jaguar was awarded 10 blocks in Mexico under auctions held by the previous government, following landmark energy reforms that ended state-owned Petroleos Mexicanos’ monopoly. President Andres Manuel Lopez Obrador has since dialed back on the push to bring in private explorers, but he’s also seeking to make Mexico self-sufficient in energy and the country currently relies heavily on gas imports from the U.S. to generate electricity.
With Pemex prioritizing increasing oil production, the rise of smaller and more nimble, private gas producers in Mexico could help the country reach its goal of becoming more independent from Texan gas supplies, Levy said.
Lopez Obrador highlighted the dangers of that dependency last month after 4.7 million Mexicans were left without power because the unprecedented cold blast in Texas froze pipelines.
“You have a very large amount of money leaking out of the Mexican economy” because of its natural gas import dependence, said Levy. “Pemex made a strategic decision to focus more on oil, but there’s a lot of potential left there in gas for operators willing to work hard for it.”
Jaguar holds about 50% of the onshore acreage that has been awarded to private companies in Mexico, Levy said.
“We’re flowing out of 18 fields in the Burgos basin, not a huge amount of volume yet, but what we’re finding is that by applying better science, we’re able to extract more value out of the fields.”
