Mexico faces contentious shale gas bonanza

Mexico faces a contentious natural gas bonanza as it weighs options for developing vast reserves of shale gas amid fears of huge environmental costs. Shale gas extraction involves fracturing, known in the industry as \"fracking,\" of rock formations and is feared to affect both the scenery and underground water resources. The process has spawned angry political movements elsewhere in Latin America where the reward of greater access to resources comes at a price. Peru is battling protesters over plans to drill for copper and gold in areas known to contain underground water resources. Like mining, fracking involves high consumption of water and is known to affect existing underground water channels. Despite the warnings and some government reservations, Mexico is considering a greater exploitation of its gas resources as part of plans to secure energy independence. International Energy Agency Executive Director Maria van der Hoeven told the national leaders in November that Mexico could have a bright energy future if it handled its shale gas development carefully and intelligently. \"Mexico is sitting on very large natural gas fields that could allow it to end gas imports and could give it energy independence,\" van der Hoeven said. Mexico has the world\'s fourth-largest shale gas reserves with some 680 trillion cubic feet of the fuel. Shale gas is extracted from unconventional geological formations and requires different extraction methods, including the use of pressurized fluid to cause fractures in rock layers holding shale oil or gas. Mexican Energy Secretary Jordy Herrera said the shale gas fields could assure the country\'s energy security. \"With the shale gas potential and reserves and the gas associated with crude, we should become a country with sufficient energy resources, both fossil and renewable, to achieve independence, and we could eventually export, all we need to do is make decisions in favor of the Mexican people,\" Herrera said. Although Herrera said developing the country\'s gas resources was an \"urgent\" need the project is fraught with controversy. While industry planners estimated investment of up to $10 billion would set Mexico on course for an energy bonanza, opposition to gas extraction by fracking is only just developing into a movement. The state-owned oil giant Petroleos Mexicanos is looking at various options, Herrera said. Pemex has also been in touch with Mexico\'s congress to determine if additional legislation will be required to get the ambitious plan going. Officials say incentive-based contracts that are possible under existing energy industry rules should be sufficient to govern future ventures in the field. Mexico is also in talks with U.S. officials on how best to approach legal aspects of its exploitation of deep-water gas fields in the Gulf of Mexico. Pemex officials said that Mexico initially would concentrate on developing deeper water gas reserves away from the U.S.-Mexico maritime boundary.