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SHALE GAS MEXICAN PERSPECTIVE

SHALE GAS MEXICAN PERSPECTIVE. Felipe de Jesús Cantú Rodríguez September 2012. N atural Gas D emand . In the period 2000-2010, the domestic natural gas production grew at an average annual rate of 4.8% and domestic demand was 6.0%.

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SHALE GAS MEXICAN PERSPECTIVE

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  1. SHALE GAS MEXICAN PERSPECTIVE Felipe de Jesús Cantú Rodríguez September 2012

  2. Natural Gas Demand • In the period 2000-2010, the domestic natural gas production grew at an average annual rate of 4.8% and domestic demand was 6.0%. • The prospective natural gas by the Government in 2010, estimated a 2.4% annual growth in demand for this hydrocarbon. • Based on this prospective, in 15 years the country will require at least 5,000 mmcfd* additional to those currently consumes. • In 2009, Mexico imported about 1,258 mmcfd of gas. *Millions of cubic feet per day (of gas).

  3. Demand Projection Estimated demand for natural 2025: 11,063 mmcfd Additional supply of natural gas required: ≈5,000 mmcfd Natural gas production observed 2010: 5,916 mmcfd

  4. Estimates of Shale Gas in Mexico • The deposits are located to the northeast and east-central Mexico, along the land portion of the Gulf of Mexico. • The deposits have similar geological age to producers in the U.S. (Eagle Ford, Haynesville, Bossier and Pearsall). • Preliminary estimates of the volume in place (at risk) of the 5 watersheds analyzed resources located in 2.366 mmmmcf*. • The technically recoverable amount is estimated at 681 mmmmcf (at risk). • The structural complexity (faults and folds), too deep (> 5,000 m) and minimum deposits thickness, restrict the evaluation of resources. *Trillions of cubic feet.

  5. Considerations Shale Gas in Mexico • Economic considerations: • Extraction cost: Depends on the type of deposit and volume, range of 2-5 USD / mcf • Price: 4-5 USD / mcf • Location of exploration • Pemex drilled a test well in Coahuila (Emergent 1). Plans to invest $ 15 million in study and 3 wells by 2013. The scope of this investment would assess the feasibility of a project than 4,000 wells, U.S. $ 8 billion in investment and production of up to 1,000 mmcfd. • Requirements: • Geological and petro-physical, environmental impact assessment and social • Infrastructure and implementation capacity; application of new and existing technology. • Contracts with companies specialized

  6. Regulation • Taxation applies to oil and gas exerted on the total value of production of hydrocarbons. • There are slight distinctions in deductions for gas: • Additional US$0.50 for each MFC non-associated natural gas extracted, extracting additional volume to register for 2006. • For costs, expenses and investments of non-associated gas extracted, not exceed the value of 2.70 USD for each MFC is not associated with the total volume in the year in question. • 5% of the original amount of the investment in pipelines, terminals, transportation or storage tanks. • Possible modifications • Given the saturation of the National Pipeline System (NPS), the regimen should be more lax in a matter of deductions for pipelines, terminals, transportation or storage tanks. • Because of shale gas production is capital intensive, the tax must create the necessary incentives for the industry to be able to exploit. • The production costs of shale gas are higher than conventional gas currently produced (not even including deepwater), the regime could increase the maximum of 2.70 USD / Mfc.

  7. National Pipeline System NPS Private NPS saturated In process Pre-bid Analysis Planned NGL Terminals PEMEX. - 9.043 km pipeline.Private.- 3.437 km pipeline in development (21 permits)

  8. Opportunities • New regulation for non-associated gas. • Investment in development pipelines. • Supply chain development • Creation of new jobs and regional development

  9. SHALE GAS MEXICAN PERSPECTIVE Felipe de Jesús Cantú Rodríguez September 2012

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