Mexico courts Canadian energy expertise

CALGARY — Mexico is laying out the welcome mat for Canadian companies to participate in its energy sector, which is opening up to outside investment after more than 75 years of government control.

CALGARY — Mexico is laying out the welcome mat for Canadian companies to participate in its energy sector, which is opening up to outside investment after more than 75 years of government control.

A delegation of Mexican government and business officials came to Calgary on Monday to court Canadian expertise and investment. The country has huge untapped oil and gas potential in tough-to-access shale formations, but its state-run oil firm, Petroleos Mexicanos (PEMEX), doesn’t have the financial wherewithal or technical know-how to exploit it.

Mexico’s production has been in sharp decline for the past decade, and the reforms are meant to ensure it can export more than it imports in the years ahead, said Leonardo Beltran Rodriguez, Undersecretary of Planning and Energy Transcription at Mexico’s energy department.

“Mexico is fully committed to the transformation of the energy sector and if we are to take advantage of these resources, we can do it with many people,” he told a Calgary business crowd Monday.

“But better we do it with friends.”

The energy reforms were passed by Mexico’s Congress in December, but still require a raft of secondary legislation to become fully implemented.

Calgary was the first city in which the Mexican officials made the pitch — even before stops in Houston or New York.

The reforms aim to end PEMEX’s monopoly over oil and gas development and Comision Federal de Electricidad’s control over the power sector by the end of next year. Both will still be owned by the government, but the goal is for them to operate more like corporations.

A report by the Canada West Foundation and Mexican economic think-tank Insituto Mexicano Competitividad released Monday says the biggest opportunities for international players can be found in Mexico’s shale oil and gas frontier, potentially drumming up business for Canadian service and equipment companies.

“Canada’s strong position in the energy sector and its political, geographic and economic ties to Mexico could benefit Canadian companies across the value chain,” said the report.

Last year, Mexico produced 2.5 million barrels per day of oil, down from 3.4 million barrels in 2004. But its potential to grow its crude production from so-called tight oil plays — where it’s difficult to make the oil flow to the surface by conventional means — is formidable. It’s believed to have the fifth-largest tight oil resource potential in the world, according to the report.

Meanwhile, Mexico imported 1.3 billion cubic feet per day of natural gas last year to meet burgeoning demand from the energy sector. It’s currently the world’s 18th largest producer, but that, too, has the potential to grow significantly thanks to technological advances. Mexico is believed to have the world’s sixth largest technically recoverable shale gas resources.

Mexico is aiming to complete new environmental regulations for shale oil and gas within the next two or three months, said Galo Galeana Herrera, director general of energy and extractive activities.

It’s drawing some lessons from the U.S. experience with hydraulic fracturing, or fracking — the controversial method used to extract oil and gas from rock formations deep underground. For instance, baseline studies are being done on air quality, aquifers, biodiversity and soil ahead of time, he said.

There’s a lot about Mexico that could be attractive to Canadian firms, said Carlo Dade, with the Canada West Foundation.

“Mexico’s something we’ve had our eye on for awhile as an opportunity,” he said. For instance both countries are members of the North American Free Trade Agreement and are neighbours with the United States.

However, the report flags some risk factors, such as uncertainty over how the energy reforms will be executed. Crime and violence is also an issue in some of the areas with shale potential.

An “unintended consequence” of increased Mexican production could be more intense competition with Canadian oilsands crude in the market, the report said.

One of the rationales for the stalled Keystone XL pipeline, cited by its supporters, is its potential role in displacing waning Mexican and Venezuelan heavy oil imports to the U.S. Gulf Coast with a steady supply from Canada.

U.S. imports from Mexico are down 41 per cent over the past six years, while imports from Canada are up by 25 per cent.

“If Canadian services help to rehabilitate the Mexican industry, Canadian sales expectations to the U.S. might have to be revised,” the report says.

Follow (at)LaurenKrugel on Twitter

Just Posted

WATCH: Red Deer teacher engages students with “cool” science experiments

On Thursday, he made fire dance to the beat of the music

Province purchases land for new Red Deer courthouse

Construction to begin in the fall of 2019

Parking costs in Red Deer are going up — so are parking tickets

City council raises parking rates by 25 per cent starting July 1

WATCH: Alberta Party leadership candidates in Red Deer

Three people vying to be the leader of the Alberta Party were… Continue reading

In photos: Get ready for Western Canadian Championships

Haywood NorAm Western Canadian Championships and Peavey Mart Alberta Cup 5/6 start… Continue reading

WATCH: Red Deer city council debates cost-savings versus quality of life

Majority of councillors decide certain services are worth preserving

Got milk? Highway reopened near Millet

A southbound truck hauling milk and cartons collided with a bridge

Stettler’s newest residents overcame fear, bloodshed to come here

Daniel Kwizera, Diane Mukasine and kids now permanent residents

Giddy up: Red Deer to host Canadian Finals Rodeo in 2018

The CFR is expected to bring $20-30 million annually to Red Deer and region

Ice dancers Virtue and Moir to carry flag at Pyeongchang Olympics

Not since Kurt Browning at the 1994 Lillehammer Games has a figure… Continue reading

Beer Canada calls on feds to axe increasing beer tax as consumption trends down

OTTAWA — A trade association for Canada’s beer industry wants the federal… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month