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Inside Mexico

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Mexico Balances Energy Reforms with Environmental Concerns

December 20th 2013

In the heady debates over energy reform that riveted the Mexican Congress earlier this month, one crucial issue was glaringly absent from the central points of discussion that underpinned the changes to the Constitution: the environmental impacts of increased gas and oil production. At a time of historic declines in Mexico’s production of conventional oil, the geologic and economic realities of the energy sector strongly suggest that any serious surge in fossil fuel exploitation will take place in the environmentally sensitive ecosystem of the Gulf of Mexico or on land through the controversial method of hydraulic fracturing, popularly known as fracking.

Numbers cited by Mexican energy consultant Jose Luis Apodaca Villareal, former director of the Federal Electricity Commission’s Gulf of Mexico division, report at least 14 billion barrels of proven crude oil. Apodaca adds to his estimate projections of 13 billion barrels of shale hydrocarbons and 545 billion cubic feet of natural gas. Other reports, including data from the International Energy Agency, put conventional natural gas reserves in the order of 61 billion cubic feet and unconventional, unexplored reserves at nearly 10 times that amount, or 600 billion cubic feet.

Deep sea oil deposits in the Gulf of Mexico, site of 2010’s massive Deepwater Horizon spill, are calculated in the 29.5 billion barrel range, or more than 50 percent of Mexico’s recoverable petroleum resources, according to a Mexican press report.

If the current energy resource mappings are accurate, it’s clear that non-traditional methods of extraction like fracking combined with the use of expensive exploration and production technologies, which analysts like Rice University economist Kenneth B. Medlock contend are only economically viable if foreign energy companies are brought into the game, will steer a new Mexican energy boom.

Already enjoying outsourcing contracts with the Mexican national oil company Pemex, transnational corporations are reportedly waiting in the wings.

In this emerging scenario, some environmentalists are sounding the alarm bell. In a statement released just days prior to the Mexican Congress’ votes to approve the Pena Nieto administration’s energy reform package, the Mexican Alliance Against Fracking warned of the danger to the nation’s fragile water supplies by the practice of injecting toxic chemicals along with water and sand to break up shale rock or coal beds and access energy reserves. The environmental group asserted that such fracking in the United States had left wells commercially useless.

“Attracted by the deceptive boom of shale gas, the political class of the country proposes to approve an energy reform with blinders on and without an analysis of the impacts that the extraction of this resource will entail,” the Alliance stated. “Mexico should follow the example of other countries, such as France and Bulgaria, where hydraulic fracturing is currently prohibited under a strict precautionary principle…”

Alliance member Beatriz Olivera earlier raised the issue of greenhouse gases and climate change. According to Olivera, methane releases from shale gas production are 30 percent higher than comparable releases from conventional natural gas.

“Given that methane has a global warming potential 21 times greater than carbon dioxide, serious doubts exist of an adequate energy transition,” Olivera said.

Yet another concern, as a New York Times report detailed this week, is the mounting evidence linking fracking and wastewater disposal wells with earthquakes.

The December 2013 energy reform invites shale gas extraction in different regions of the country, including energy-rich enclaves located in the northern border states of Sonora, Coahuila and Chihuahua.

Critics like Senator Dolores Padierna of the PRD political party contend that the new reform will permit mining companies, principally but not exclusively Canadian, to exploit not only the precious metals and minerals underneath the ground but the deposits of shale gas in their concessions, as well.

“What is going to happen with the people who live there?” Padierna questioned. “We are returning to the times of the landed estates and the company store.”

According to the Mexico City politician and other reform opponents, the constitutional changes enacted by the Mexican Congress now place oil and gas under the purview of the North American Free Trade Agreement (NAFTA). The trade pact contains investor guarantees of closed door arbitration panels that decide disputes in which a foreign company stands to lose money.

As an example of what could be in store for Mexico, the Mexican Alliance against Fracking cited the case involving Lone Pine Resources, which filed a $250 million lawsuit over a fracking ban in Quebec, Canada.

Going against the grain, the Alliance urged an energy reform that “reduces the extraction of and dependence on fossil fuels, diversifies the energy matrix and accelerates the energy transition by giving priority to clean, renewable and sustainable sources of energy.” Based on Mexican constitutional guarantees of water access and a safe environment, the green group called for a total ban on hydraulic fracturing in the Aztec Republic.

While environmental issues remain decidedly in the background of the energy debate, conflicts over the steamrolling reform continue to flare, mainly over resource and ownership and profiting issues, even as the Mexican holiday season takes hold.

Under Mexican law, the federal reform must be ratified by 17 of Mexico’s 31 states. The pro-reform PRI, PVEM and PAN parties hold the majorities in the state legislatures of 25 states, virtually guaranteeing fast-track approval at the state level.

With little or no discussion of environmental or other issues, lawmakers in seven states seconded the national Congress' action on Friday, December 13. In the central Mexican state of Queretaro, legislators took only ten minutes to put their stamp of approval on constitutional changes some observers consider as the final nail in the coffin of the 1910 Mexican Revolution.

Protests erupted not only in the states where the local legislatures voted, but also at Mexican consulates in El Paso, Texas, and other U.S. cities where the Mexican diaspora is well represented.

“We’ve already warned the Chevron company that doing business with Enrique Pena Nieto is doing business with pirates,” said Juan Carlos Moera, foreign policy secretary for the U.S. branch of Andres Manuel Lopez Obrador’s National Movement for the Regeneration of Mexico.

Additionally, PRD leaders Jesus Zambrano and Dolores Padierna pledged to bring the matter before the nation’s Supreme Court and international legal tribunals if necessary because of alleged constitutional violations in the way the reform was approved.

President Pena Nieto, meanwhile, expressed his pleasure at the passage of his administration’s energy reforms. The constitutional changes, he assured, would bring extra revenue to Mexico and harvest “great progress and development” in the coming years.

Kent Paterson edits Frontera NorteSur: on-line, U.S.-Mexico border news provided by the Center for Latin American and Border Studies at New Mexico State University.

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