Pemex drilling first shale gas well, Emergente-1

- Wednesday, November 10, 2010

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Mexican state oil company Pemex's E&P subsidiary PEP is drilling its first shale gas well in the Burgos basin's Olmos block, PEP deputy planning and evaluation director Gustavo Hernandez told BNamericas.

In mid-year Pemex started drilling the Emergente-1 well near Nuevo Laredo and has completed its vertical portion. The company has begun horizontal drilling, and expects the well to be completed by year-end, said Hernandez.

If the well's outcome is positive, the company will drill another well as it works toward development of a broader shale gas strategy, he added.

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"It is an issue we have in our sights. We want to see what results it gives us," said the official.

Once a productive shale formation is identified, subsequent gas wells have considerably less exploration risk than, for example, standard drilling in Burgos, which accounts for roughly 60% of Pemex's non-associated gas output.

Hernandez highlighted that just north of Emergente-1, on the US side of the border, San Antonio-based Lewis Energy already is carrying out shale gas E&P. Pemex awarded a multiple service contract (MSC) to Lewis for work on the Olmos block in 2004 as part of its first round of MSCs.

In the US, shale gas production has increased sharply over the past decade, vastly improving the country's outlook for domestic gas supply. Shale gas could likewise prove a boon to Mexico, where domestic gas production currently hovers around 7Bf3/d (198Mm3/d).

Demand, meanwhile, is estimated to reach 11.2Bf3/d in 2024, marking a 2.8% annual increase from 7.59Bf3/d in 2009, according to energy ministry Sener's outlook for the natural gas sector in the period.

The unconventional gas source, however, has drawn fire in the US due to the use of hydraulic "fracking," which involves pumping water into the ground at high pressure to fracture the formation, and allegedly contaminates groundwater.

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