A Pemex gas distribution terminal. Shale gas will account for an estimated 45 percent of Mexico’s natural gas output by 2026. Credit: Pemex

By Emilio Godoy
MEXICO CITY, Jun 26 2015 (IPS)

“People don’t know what ‘fracking’ is and there is little concern about the issue because it’s not visible yet,” said Gabino Vicente, a delegate of one of the municipalities in southern Mexico where exploration for unconventional gas is forging ahead.

Vicente is a local representative of the community of Santa Úrsula in the municipality of San Juan Bautista Tuxtepec, some 450 km south of Mexico City in the state of Oaxaca, where – he told IPS – “fracking is sort of a hidden issue; there’s a great lack of information about it.”

Tuxtepec, population 155,000, and another Oaxaca municipality, Loma Bonita, form part of the project Papaloapan B with seven municipalities in the neighbouring state of Veracruz. The shale gas and oil exploration project was launched by Mexico’s state oil company, Pemex, in 2011.

Papaloapan B, backed by the governmental National Hydrocarbons Commission (CNH), covers 12,805 square kilometres and is seeking to tap into shale gas reserves estimated at between 166 and 379 billion barrels of oil equivalent.

The project will involve 24 geological studies and the exploratory drilling of 120 wells, for a total investment of 680 million dollars.

But people in Tuxtepec have not been informed about the project. “We don’t know a thing about it,” said Vicente, whose rural community has a population of 1,000. “Normally, companies do not provide information to the local communities; they arrange things in secret or with some owners of land by means of deceit, taking advantage of the lack of money in the area.”

Shale, a common type of sedimentary rock made up largely of compacted silt and clay, is an unconventional source of natural gas. The gas trapped in shale formations is recovered by hydraulic fracturing or fracking.

Fracking involves the massive pumping of water, chemicals and sand at high pressure into the well, a technique that opens and extends fractures in the shale rock deep below the surface, to release the natural gas on a massive scale.

The process generates large amounts of waste liquids containing dissolved chemicals and other pollutants that require treatment before disposal, environmental organisations like Greenpeace warn.

The U.S. Energy Information Administration (EIA) puts Mexico in sixth place in the world for technically recoverable shale gas, behind China, Argentina, Algeria, the United States and Canada, based on the analysis of 137 deposits in 42 countries. And Mexico is in eighth position for technically recoverable shale oil reserves.

A map of the areas of current or future fracking activity in Mexico, which local communities say they have no information about. Credit: Courtesy of Cartocrítica

Fracking is quietly expanding in Mexico, unregulated and shrouded in opacity, according to the non-governmental Cartocrítica, which says at least 924 wells have been drilled in six of the country’s 32 states – including 349 in Veracruz.

But in 2010 the study “Proyecto Aceite (petróleo) Terciario del Golfo. Primera revisión y recomendaciones” by Mexico’s energy ministry and the CNH put the number of wells drilled using the fracking technique at 1,323 in Veracruz and the neighbouring state of Puebla alone.

In the northeastern state of Tamaulipas, where 100 wells have been drilled, Ruth Roux, director of the Social Research Centre of the public Autonomous University of Tamaulipas, found that farmers who have leased out land for fracking knew nothing about the technique or its effects.

“The first difficulty is that there is no information about where there are wells,” Roux told IPS. “Farmers are upset because they were not informed about what would happen to their land; they’re starting to see things changing around them, and they don’t know what shale gas or fracking are.”

While producing the study “Diagnosis and analysis of the social impact of the exploration and exploitation of shale gas/oil related to culture, legality, public services, and the participation of social actors in the states of Coahuila, Nuevo León and Tamaulipas”, Roux and her team interviewed five sorghum farmers and two local representatives from four municipalities in Tamaulipas.

The researcher said the preliminary findings reflected that locals felt a sense of abandonment, lack of respect, lack of information, and uncertainty. There are 443 homes near the 42 wells drilled in the four municipalities.

The industry sees the development of shale gas as strategically necessary to keep up production levels, which in April stood at 6.2 billion cubic feet per day.

But according to Pemex figures from January 2014, proven reserves of conventional gas amounted to just over 16 trillion cubic feet, while shale gas reserves are projected to be 141 trillion cubic feet.

By 2026, according to Pemex projections, the country will be producing 11 billion cubic feet of gas, 45 percent of which would come from unconventional deposits.

The company has identified five basins rich in shale gas in 11 states.

For the second half of the year, the CNH is preparing the tender for unconventional fossil fuel exploitation, as part of the implementation of the energy reform whose legal framework was enacted in August 2014, opening up electricity generation and sales, as well as oil and gas extraction, refining, distribution and retailing, to participation by the domestic and foreign private sectors.

The historic energy industry reform of December 2013 includes nine new laws and the amendment of another 12.

The new law on fossil fuels leaves landowners no option but to reach agreement with PEMEX or the private licensed operators over the occupation of their land, or accept a court ruling if no agreement is reached.

Vicente said the law makes it difficult for communities to refuse. “We are worried that fracking will affect the water supply, because of the quantity of water required and the contamination by the chemical products used. When we finally realise what the project entails, it’ll be a little too late,” he said.

Local residents of Tuxtepec, who depend for a living on the production of sugar cane, rubber and corn, as well as livestock, fishing and trade, know what it is to fight energy industry projects. In 2011 they managed to halt a private company’s construction of the small Cerro de Oro hydroelectric dam that would have generated 14.5 MW.

The formula: community organisation. “We’re organising again,” the local representative said. “What has happened in other states can be reproduced here.”

Papaloapan B forms part of the Veracruz Basin Integral Project, which would exploit the shale gas reserves in 51 municipalities in the state of Veracruz.

Pemex has already drilled a few wells on the outer edges of Tuxtepec. But there is no data available.

Farmers in Tamaulipas, meanwhile, “complain that their land fills up with water” after fracking operations, and that “the land isn’t producing like before,” said Roux, who added that exploration for shale gas is “a source of conflict…that generates violence.”

The expert and her team of researchers have extended their study to the northern states of Nuevo León and Coahuila, where 182 and 47 wells have been drilled, respectively.

Each well requires nine to 29 million litres of water. And fracking uses 750 different chemicals, a number of which are harmful to health and the environment, according to environmental and academic organisations in the United States.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

Fishermen from the Mexican town of Coatzacoalcos working to contain an oil spill in their fishing grounds in 2012. Credit: Prometeo Lucero/Greenpeace

By Emilio Godoy
MEXICO CITY, Dec 19 2013 (IPS)

As Mexico is about to open its oil industry up to foreign investment, it will need penalties for negligence and regulations that force private firms to follow best practices in order to avoid problems like oil spills, analysts say.

On Dec. 10-11, the Mexican Congress approved the constitutional reform opening up oil exploration, extraction, refining, transportation, distribution and sale of oil and its by-products to local and foreign private investment.

It is a decision that dismantles the very foundations of the 1938 nationalisation of the oil industry.

“This is a good opportunity for the Mexican state to build a robust regulatory framework and above all to develop the capacity to penalise opportunistic or negligent behaviour,” José del Tronco, a professor at the Latin American Faculty of Social Sciences, told IPS.

The expert said that if oil and gas production are stepped up, greater prevention of risks is needed, and companies should incorporate the environmental and human costs of their activities.

Congress passed the reform of articles 25, 27 and 28 of the constitution, making it possible for the government to sign service, production and profit-sharing contracts with private firms.

The reform also allows the government to grant permits or concessions for the exploration and exploitation of oil blocs – a mechanism used in countries like Argentina, Ecuador, Peru and the United States.

The corporations will also be able to store, transport and sell oil products – which effectively breaks down the monopoly of the state-run Pemex oil company.

But Pemex, also a multinational corporation, will be just one more contractor, and will not maintain control over the activity or over the contracts with new operators, which will fall under the authority of the energy ministry.

The regulatory framework, Tronco said, would have to be very different than when it was only necessary to exercise oversight over one company governed by local rules. Multiple operators will participate in a range of activities, and controls and oversight will be hindered without clear rules that take into account international legislation.

In case Pemex commits breach of contract, the companies will be able to turn to international dispute settlement bodies, such as the North American Free Trade Agreement (NAFTA) panel procedures or the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

The full extent of the reform will be defined by secondary laws that lawmakers will draft in the next few months, and by regulations to be put in place by the government.

The reform was approved in a record 80 hours by the legislatures of 17 of the country’s 31 states – which was needed to enshrine it in the constitution.

Now it has been sent back to Congress for final ratification, before President Enrique Peña Nieto signs it into law.

“International experiences are not encouraging,” Greenpeace Mexico spokesman Raúl Estrada told IPS. “It isn’t clear how the people will benefit from throwing the industry open.

“They say it will draw investment, and that the investment will be spent on the secondary effects of the reform,” such as oil spills and pollution, he said.

The reform has caused political tension. The two left-wing parties in Congress, the Party of the Democratic Revolution and the National Renewal Movement, are opposed to it on the argument that it privatises Pemex and hands over the country’s oil to foreign companies.

Both parties say they will bring legal challenges against the reform and organise a referendum in 2015, based on the federal law on popular consultations passed on Dec. 11.

The reform was voted 95 to 28 in the Senate and 354 to 134 in the lower house.

It was supported by the two traditional forces, the Institutional Revolutionary Party and the opposition National Action Party, along with two smaller parties, Ecological Green and New Alliance.

The government said output of crude would rise from the current 2.5 million barrels per day to three million by 2018 and 3.5 million by 2025, while natural gas production would go up from 5.7 billion cubic feet a day to 8.0 billion by 2018 and 10.4 billion by 2025.

It also projected a one percent rise in GDP by 2018 and a two percent increase by 2025, while promising that 500,000 new jobs would be created in the next four years and 2.5 million over the next 11 years.

The areas where new regulations would be needed are exploration and exploitation of wells deeper than 1,500 metres and shale gas fields, which Pemex has been working on since 2010 with scant results.

After the April 2010 Deepwater Horizon oil spill in the Gulf of Mexico, the National Hydrocarbons Commission (CNH), implemented new industrial safety provisions for deepwater drilling, to prevent such accidents.

The regulations include the assessment of contingency plans and a requirement of accident insurance. But the reform involves a revision of the provisions, so that they also apply to private companies.

“It’s not clear that the state will be more rigorous with Pemex than it could be with private companies. Is it more likely that they will come down hard on Pemex or on Exxon?” Tronco asked rhetorically.

“Do we have the capacity to administer justice in either one of the spheres, public enterprises or private companies? If we don’t, we have to start to build it,” he said.

The U.S. government does not fully implement the new industrial safety and environmental protection standards created after the 2010 disaster, Estrada said.

“We have many many examples of how the law is broken,” he argued. “How does the reform translate into public policies, budget, transparency, monitoring and oversight over the use of resources and the objectives achieved? That is the important part, to see whether these reforms will work or not.”

Greenpeace has protested the way Pemex operates in communities where the oil industry is active.

And such conflicts will be aggravated when the industry is opened up to private companies, Estrada said.

The reform creates the National Industrial Safety and Environmental Protection Agency, which will set industry standards. There are concerns over whether there will be overlap and duplication of efforts with the CNH, the environment ministry, and the federal environmental protection agency, PROFEPA.

Collective lawsuits against oil contracts with foreign companies have heated up the debate on Mexico’s energy reform. Credit: Courtesy of Pemex

By Emilio Godoy
MEXICO CITY, Nov 21 2013 (IPS)

As Mexico moves towards a controversial reform that would be the largest opening of the oil industry to foreign investors in decades, local communities and non-governmental organisations are fighting in court against earlier contracts with foreign companies, which have been possible since 2008.

The collective lawsuits brought against three of the 11 agreements between the state oil company Pemex and private foreign corporations, to operate oilfields in the southeast of the country, are serving as a kind of testing ground for those who wish to fight the energy reform.

The reform, which the international markets are expectantly waiting for and the Mexican Congress may approve in the next few months, would throw this country’s oil industry wide open to foreign companies.

Mexico’s oil industry was nationalised in the 1930s and the state has remained in control of Pemex since then.

But by means of the 11 contracts, Pemex granted contracts to private foreign companies for oil production in the southeastern states of Tabasco and Veracruz in mature or marginal oilfields – fields that have been producing for more than 20 years and whose production is in decline, but which could be reactivated with new technologies.

But opponents argue that the contracts include an illegal formula for payment for the contractors, because it takes into account a direct percentage of the price of sales, based on international oil prices.

“The concessions are unconstitutional, because they mean the loss of oil revenue,” activist René Sánchez, coordinator of the organisation Colectivas, one of the plaintiffs, told IPS. “They damage the country’s wealth, and the companies earn excessive profits.”

A group of organisations and individuals presented two collective lawsuits in 2011 and 2012 against the first three contracts signed. A federal judge is expected to rule on the first lawsuit before the end of the year, and the decision will set a precedent for all of the accords.

The companies directly involved are Britain’s Petrofac and the French-U.S. Dowell Schlumberger. Petrofac won two contracts in 2011 and the Mexican subsidiary of Dowell Schlumberger was granted one contract. All three concessions are for drilling in the state of Tabasco.

A 2010 constitutional reform allowed for class action lawsuits. Under the law, individuals, communities and organisations that feel they have been affected by a government decision can bring a collective lawsuit, even if they weren’t directly harmed.

A year later, the Supreme Court rejected a parliamentary attempt to challenge the oil contracts with private firms as unconstitutional, on the grounds that the legislature was not one of the affected parties.

In its ruling, the Supreme Court did not address the underlying issue: whether the contracts run counter to the Mexican constitution. It did rule that they cannot include payments to the contractor that represent a percentage of the value of sales.

It was in the last decade that Pemex began to sign agreements with private companies for exploration and drilling for gas and oil, in exchange for payments based on output.

First multiple service contracts were signed for exploration and production of gas in the Cuenca de Burgos, a natural gas-rich zone that stretches through the northern states of Nuevo León, Coahuila and Tamaulipas.

In 2008, Congress passed a reform of the Pemex legal framework, which expanded the legislature’s role on the company’s board, among other things. As a result, the board overhauled the firm’s internal rules and regulations and introduced a new system for contracts, which has drawn criticism from the start.

“Few companies are interested in those contracts, and Mexico’s production and reserves are declining,” Miriam Grunstein, with the Centre for Economic Research and Teaching (CIDE), told IPS. “That points to how ineffective they are, from both the commercial and technical standpoints.”

“The recovery of costs can make the contrasts very burdensome for the country,” she said.

Pemex argues that the contracts generate value and bolster productive capacity, with profitable, competitive schemes in mature oilfields and land and deepwater deposits.

It also says they make it possible to increase Mexico’s oil reserves, reactivate marginal fields, and improve the commercial value of offshore deposits.

According to the state oil company, the three fields in question contain total reserves of 182 million barrels and 124 billion cubic feet of gas, in a 312-sq-km area.

Their joint production exceeds 13,000 barrels a day and more than 17 million cubic feet of gas. The contracting companies receive just over six dollars per barrel.

Pemex’s argument for putting the oilfields out to tender was that it lacked the technical expertise and financial capacity to exploit them itself and preferred to concentrate its resources on more profitable undertakings.

Mexican President Enrique Peña Nieto of the Institutional Revolutionary Party (PRI) sent Congress the bill in August that would reform the oil and electricity sectors, and would involve Pemex and the Comisión Federal de Electricidad, the state power company.

The bill includes modifications of articles 27 and 28 of the constitution, to allow profit-sharing contracts to be offered to private firms, and changes in Pemex tax structure, and to strengthen transparency and accountability in the state oil monopoly.

During the debate, Congress could introduce the possibility of granting concessions for blocs of oil and gas, which are more attractive for corporations and similar to the way state oil companies do things in other countries of Latin America, such as
Venezuela, Ecuador, Peru and Argentina.

The collective lawsuits could have a major influence on the energy reform, because if they are successful they would hinder the opening up of the oil industry to foreign capital and could make transnational corporations hesitant to invest in Mexico.

Pemex, which currently produces 2.6 million barrels of crude a day, has outdated technology and is plagued by debt, steadily declining reserves, administrative problems, and accusations of corruption.

“We want the contracts to be declared invalid, to curb the process of privatisation of Pemex. The next step is granting concessions for oil blocs,” Sánchez said.

Any decision that affects the course taken by Pemex, a powerful symbol of Mexico’s sovereignty and identity since the oil industry was nationalised in 1938, has an enormous effect on the country.

One camp is calling for the opening up of the oil industry, while another advocates strengthening Pemex with legal and fiscal reforms, to boost its financial and investment capacity.

But both groups agree that it needs to be overhauled, modernised and made more transparent.

Grunstein recommends removing the option for contracts in the reform and moving instead toward concessions for blocs.

“They should achieve a balance between risk and reward,” she said. “And to be more attractive and capture a larger spectrum of companies, there should be a system where the company would be paid with a share of the output.”

Satellite image of the Gulf of San Jorge in Argentina's Patagonia region, rich in shale gas and part of the world's second largest reserve after China, according to the U.S. Energy Information Administration. Credit: IPS/Photostock

By Emilio Godoy
MEXICO CITY, Aug 18 2013 (IPS)

Non-governmental organisations are putting pressure on multilateral financial institutions not to finance production of shale gas by hydraulic fracturing or fracking because of the high environmental costs they say are associated with this method.

“I think it’s terrible: fracking is one of the techniques posing the highest risk to availability of drinking water in the country,” Nathalie Seguin, the coordinator of the Freshwater Action Network in Mexico (FANMEX), which works for water sustainability, told IPS. “These plans make no sense and must be thwarted.”

“Sound scientific research in several parts of the world has clearly shown a high risk of leaching from vertical wells into water tables,” she said.

Fracking is the technique used for large-scale extraction of non-conventional fossil fuels trapped in rocks, like shale gas.

To release the natural gas, huge volumes of water containing toxic chemicals are pumped underground at high pressure, fracturing the shale. The process generates large amounts of waste liquids containing dissolved chemicals and other pollutants that require treatment before disposal.

Timothé Feodoroff, with the Agrarian Justice Programme of the Amsterdam-based Transnational Institute (TNI), said “Some international institutions are keen to finance fracking. It’s a real risk” that they will invest in the method.

Feodoroff is a co-author, together with Jennifer Franco and Ana María Rey, of a report published in January titled “Old Story, New Threat: Fracking and the global land grab”, which reveals that “behind the scenes in the worldwide scramble for unconventional gas exploration and extraction are a wide range of public and private transnational, national and institutional actors.”

The actors include technology providers, oil and financial companies, governments, lobbying firms and even academic institutions.

TNI will publish another report in September addressing the financial bubble surrounding shale gas fuelled by banks and private investment firms.

“We found that the money was given by Wall Street firms; there is a lot of speculation around fracking. In the 2007 subprime crisis they did the same. There are a lot of investment banks involved, the speculation isn’t over,” Feodoroff told IPS.

The International Finance Corporation (IFC), the private sector lending arm of the World Bank, assured IPS it had no plans to grant any loans for hydraulic fracturing.

However, the IFC owns 10 percent of the Agiba Petroleum Company, made up of Egypt’s General Petroleum Corporation, Italy’s Eni SpA and Russia’s Lukoil, which carries out fracking in the “Falak” and “Dorra” fields in the Egyptian desert.

The Inter-American Development Bank, which did not reply to IPS’ request for information about its plans to finance fracking, published a report in December by David Mares titled “The New Energy Landscape: Shale Gas in Latin America”, which is not available to the public.

But another report, “Shale Gas in Latin America: Opportunities and Challenges“, by the same expert, analyses the outlook for shale gas in the region.

“The main issues that will determine which Latin American countries become part of the shale gas revolution revolve around the needs of investors, the state of the environmental debate, and the ability of the state to provide security for exploration and production operations,” says the report, published in July by Inter-American Dialogue, a Washington-based think tank.

Mares says that development of shale gas resources will vary from country to country, and that financing may come from local sources, foreign direct investment, investment portfolios, and state investment and loans.

Mexico’s state oil company PEMEX has drilled at least six wells in shale rock in this country since 2011 in the northern states of Nuevo León and Coahuila, and the state Mexican Institute of Petroleum (IMP) is preparing for 18 months of geological exploration in the southeastern state of Veracruz at a cost of 245 million dollars.

IMP plans to drill 20 wells by 2016, with an investment of over two billion dollars, and in the next 50 years plans to have 6,500 wells in commercial operation.

The United States’ Energy Information Administration (EIA) ranks Mexico sixth in the world for technically recoverable gas, behind China, Argentina, Algeria, the United States and Canada, based on examination of 137 deposits in 42 countries. Mexico is in eighth position for technically recoverable oil reserves.

NGOs are considering launching an international campaign against the financing of fracking, and are preparing worldwide actions for Global Frackdown Day, to be held Oct. 19.

Seguin said, “The problem is the heavy pressure from private companies and governments for financing these activities.

“It is in the interests of the multilateral financial institutions to lend money. They support infrastructure mega-projects because it is the easiest way to trap countries into debt and to maintain themselves. This financing runs counter to their own environmental and social standards. Why should we exploit shale gas, when it is a major threat?” she asked.

Six organisations have joined together to create the Mexican Alliance Against Fracking, which has not yet decided whether to call for a moratorium or an outright ban on the method in a forthcoming report on the energetic, economic, social and environmental aspects of shale gas.

Feodoroff said, “It’s possible that big banks influence the multilateral agencies. We are warning about corporate power” over their decisions.

The Dutch Rabobank Group, a sustainability-oriented cooperative financial services company specialising in agricultural products and commodities, announced that it would not lend funds for exploration and production of shale gas, a move that experts hope will be imitated by other private institutions.

In his analysis, Mares says “the development of Latin America’s shale gas potential faces significant challenges, and it is not clear that the region will address them successfully.” He warns that Mexico, Argentina and Brazil may face serious problems over shale gas exploitation.

Fed up with oil spills from facilities belonging to Mexico’s state oil company Pemex, residents of two communities in the southeastern state of Tabasco are taking the country’s largest company to court in a bid for compensation for damage to the environment and agriculture.

The people of Cunduacán and Huimanguillo, which have a combined population of 300,000, will present a class action lawsuit against Pemex in June.

Oil rigs and pumps. Credit: Bigstock

“There have been several harmful effects; we have carried out tests on soils, sediments and water and we are about to receive the results,” Marisa Jacott, the head of Fronteras Comunes (Common Borders), an environmental NGO, told IPS.

Fronteras Comunes and the Asociación Ecológica Santo Tomás (Santo Tomás Ecological Association) are providing legal advice to the local population, mainly small farmers and fisherfolk, who have incurred great losses due to oil spills and gas explosions.

Mexico’s 2011 Class Action Law allows individuals and the federal consumer protection agency to sue state and private companies. However, the law does not provide for reparations.

The oil industry has been active in Tabasco since the early 1950s, and expanded there from the 1970s onwards with the construction of petrochemical plants, pipeline networks and storage facilities, sparking an economic boom.

But the boom did not result in benefits for the local communities. Instead, the oil industry displaced traditional activities like banana farming and cattle ranching.

The oil industry is active in 13 of Tabasco’s 17 municipalities, producing 500,000 barrels per day (bpd) – of a national total of 2.5 million bpd – according to the Mexican Petroleum Institute (IMP).

“There is environmental pollution and crop destruction, and there are soils that have lost their fertility. This means that harvests are not as abundant as they were before,” Lorena Sánchez, head of the Tabasco Human Rights Committee (CODEHUTAB), an NGO that has received complaints from local people about these problems, told IPS.

“It has affected people’s diets and caused respiratory health problems as well as blood and skin diseases,” she said.

Since 2011, CODEHUTAB has brought four lawsuits to the federal environmental protection agency, PROFEPA, that have resulted in fines for Pemex, but not in reparations for victims in local communities.

The most recent case, this year, was related to seven gas flares burning in the municipality of Paraíso, where CODEHUTAB took blood samples from 50 children between the ages of seven and 15. Ten percent of the samples had chromosome alterations, linked by the epidemiologists to oil industry activity.

PROFEPA estimates there are an average of 20 crude spills a year in Tabasco. Between 2008 and 2012, the environment ministry recorded 102 sites contaminated by environmental emergencies in the country caused by Pemex, including three in Tabasco.

In addition to Tabasco, the eastern and southeastern states of Veracruz, Tamaulipas, Hidalgo and Puebla and the highways connecting them to Mexico City are regarded as vulnerable to oil industry activity.

The oil industry in this region produces pollution with heavy metals, ozone, sulphur dioxide, nitric oxide, volatile aromatic compounds like benzene, hydrogen sulphide, salts, ammonia, cadmium and acids, all of which are harmful to the environment and human health, the NGOs complain.

Manuel Pinkus-Rendón and Alicia Contreras, academic researchers at the Autonomous University of Yucatán, concluded in a study published last year that “the social and environmental fabric of Tabasco reflects a regional development potential considerably below that which existed over 60 years ago, as a result of environmental degradation.”

For their study “Impacto socioambiental de la industria petrolera en Tabasco: el caso de Chontalpa” (Social and environmental impact of the oil industry in Tabasco: The case of Chontalpa), the authors interviewed 200 residents of four towns in the municipality of Cárdenas, 65 percent of whom expressed negative views about oil industry activity, especially because of the pollution and destruction it causes.

“It is a case that has not been addressed. We want the judges to have the fewest possible reasons to reject it,” said Jacott, of Fronteras Comunes.

In April, the local residents presented a complaint to the National Commission on Human Rights. In 2004 they had filed a legal complaint against Pemex in the attorney general’s office, but it went nowhere.

The environmental organisations and local residents have spent two years building their case. The next step will be legal action over damage suffered in the adjacent state of Veracruz, another major oil-producing region.

“We want them to take the required preventive measures. All Pemex does is supposedly carry out remediation of the damage, but it does not invest in maintaining the pipelines and guarding the area,” CODEHUTAB’s Sánchez complained.

The organisations are asking for an assessment of the state of ecosystems in Tabasco, and the dissemination of Pemex’s policies and guidelines for preventing leaks, addressing environmental contingencies and cleaning up polluted sites.

They are also calling for the gradual replacement of fossil fuels with alternative energy sources, as well as regular measurements of the main atmospheric pollutants in affected areas.

Shale gas well in U.S. state of Pennsylvania Credit: Jeremy Buckingham MLC/CC BY 2.0

By Emilio Godoy
MEXICO CITY, Apr 18 2013 (IPS)

Mexico plans to expand shale gas exploration this year, but it could run into a shortage of water, which is essential to hydraulic fracturing or fracking, the method used to capture natural gas from shale rocks.

“In Mexico there isn’t enough water. Where are they going to get it to extract shale gas?” Professor Miriam Grunstein at the Centre for Research and Teaching in Economics (CIDE) remarked in an interview with IPS.

She is opposed to the involvement of PEMEX, Mexico’s state-run oil company, in fracking, and recommends that it instead focus on higher priority sectors.

In 2012, a lengthy drought especially affected a large part of central and northern Mexico, with a heavy impact on agriculture and livestock, and on living conditions in dozens of rural villages.

And the forecast for this year is not much different.

Since 2011, PEMEX has drilled at least six wells for shale gas in the northern states of Nuevo León and Coahuila. And it is preparing for further exploration in the southeastern state of Veracruz, at a cost of 245 million dollars over the space of 18 months, in conjunction with the Mexican Petroleum Institute (IMP), a state institution.

To obtain shale gas, high pressure is applied in order to pump vast quantities of chemical sludge into layers of shale rock located deep in the earth. This results in the fracturing of the shale and the release of natural gas trapped in the rocks.

Enormous quantities of water and a broad range of chemicals are required. And the process generates large amounts of waste fluids, which contain dissolved chemicals and other contaminants that need treatment before recycling or disposal.

“The environmental impact has to be factored in,” Professor David Enríquez at the private Autonomous Technological Institute of Mexico (ITAM) told IPS. “It is an extremely touchy question, especially when you take into account the lack of water and the environmental problems in this country. Technical studies of all kinds have to be carried out, and the environment should be included in them as the key variable.”

“If that doesn’t happen, shale gas projects should not move ahead,” said Enríquez, who specialises in energy issues.

In a 2011 report, “World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States”, the U.S. Energy Information Administration (EIA) assessed 48 shale gas basins in 32 countries, including Mexico, and estimated that there were 6,622 trillion cubic feet of shale gas in the United States and the other 32 countries studied.

The study went on to say that “To put this shale gas resource estimate in some perspective, world proven reserves of natural gas as of Jan. 1, 2010 are about 6,609 trillion cubic feet, and world technically recoverable gas resources are roughly 16,000 trillion cubic feet, largely excluding shale gas.”

For Mexico, it calculated 681 TCF – the fourth largest reserves in the world

But PEMEX estimates the country’s shale gas potential at a more conservative 297 TCF.

“The best available practices and technology have to be incorporated to achieve a good profit margin, minimise the use of water, and comply with environmental regulations,” Francisco Barnés, a member of Mexico’s Energy Regulatory Commission (CRE), told IPS. “The environment is fundamental; it doesn’t matter whether or not the project is profitable.”

According to statistics from the regulatory agency, fracking takes 7.5 million to 30 million litres of water per well to release the gas, while a field of 10 wells would need between 25 million and 40 million litres of water.

In deposits like Chicontepec in Veracruz, the biggest oilfield in Mexico, which was discovered in the mid-1970s, PEMEX has used recycled water.

But in its shale gas wells, the company has not clarified where the water comes from or what is being done with the waste.

The National Hydrocarbons Commission (CNH), in charge of technical permits for PEMEX projects, will analyse and approve regulations for fracking this year.

Mexico’s oil giant plans to drill 20 wells by 2016, with a total investment of over two billion dollars. It projects operating 6,500 commercial wells over the next 50 years.

“If there is an environmental impact, why isn’t development curbed?” Grunstein said. “When it comes to large-scale drilling, there is no confidence in the state. It implies a ridiculously high opportunity cost.”

In response to the criticism, some cite the experience of the Center for Sustainable Shale Development (CSSD), an alliance of environmental organisations, academics and oil companies established this year in the U.S. state of Pennsylvania, where extensive shale gas development has taken place.

The Center adopted 15 voluntary performance standards for the protection of air quality, water and the climate, a format that could be replicated in Mexico. The scheme includes an independent, third-party evaluation process to certify companies that achieve and maintain these standards

The standards cover aspects such as maximising water recycling, developing groundwater protection plans, closed loop drilling, groundwater monitoring, wastewater disposal, and reducing the toxicity of fracturing fluid.

“There should be an environmental certificate by national and international bodies that evaluate the model used and carry out monitoring,” Enríquez said. “Technical, analytical criticism is needed to tell us, depending on the characteristics of the environment and the market, whether or not it is the moment to develop it in a given area and with specific technology.”

“But I haven’t seen this level of debate happening,” he said.

Barnés proposed fomenting water recycling and desalination of seawater, a costly technique that is plagued by environmental concerns, such as where the residue ends up after the extraction of salt.

“This is what we have to resolve, with heavy environmental regulation,” the official said.

There are 435 desalination plants operating in Mexico. The largest is in the northwest state of Baja California Sur, and has a capacity of 200 litres per second, according to the Mexican Institute of Water Technology (IMTA).