A worker walks up to the floor of Orion Drilling Co.'s Perseus drilling rig near Encinal in Webb County, Texas. The Perseus is drilling for oil and gas in the Eagle Ford Shale Play, a sedimentary rock formation under an area of south and east Texas. Credit:Eddie Seal/Bloomberg News
The Eagle Ford Shale Play is one of the biggest oil bonanzas in American history. In southern Texas, thousands of rigs are tapping it but drilling into the formation on the Mexican side of the border has been slim. That’s about to change due to a landmark energy bill approved by Mexico’s Congress in December that has opened the country’s oil industry to private and foreign investment for the first time in 75 years.
Industry estimates say Mexico’s shale formations hold the energy equivalent of 60 billion barrels of oil, an amount exceeding the entire volume the country has pumped out by conventional means since 1904.The problem is that the Eagle Ford underlies territory run by the Zeta drug cartel that specializes in kidnapping and extortion. When Mexican geologists and survey crews need to look for new well sites, they often travel in the company of a military escort.
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“You can hire private security to keep workers safe, but all of that implies cost and slows down business,” said Duncan Wood, an energy expert and the director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington.
“And if a company has a shipment of supplies hijacked, that’s lost time,” Wood said. “It’s something they wouldn’t have to deal with in Texas.”
Industry experts say the current rate of return on the Eagle Ford shale is so high, and the backlog of pending drilling permits so large, that it may take years for U.S. companies to begin moving crews into Mexico.
“The first step will be getting land in the right places, and the rest of the operation will follow,” said Chris Robart, a consultant at PacWest Consulting Partners in Houston. “It’ll depend how interested people are in bringing equipment over the border.”
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