Mexican President Andres Manuel Lopez Obrador on Wednesday canceled a Pemex shale pilot well in the Tampico-Misantla Basin, citing his long-standing objection to fracking.
"Early today, we discussed the issue and the correspondent orders where given. Pemex's director is now taking the matter into his own hands," Lopez Obrador said in a webcast press conference. "We are not going to use fracking in petroleum production," he added.
Pemex could not be reached for comment.
Mexico's National Hydrocarbon Commission (CNH) Tuesday approved Pemex's plan to drill and frack the Laxix-1EXP well in 2020 in the Humapa block at TMB. CNH also approved the drilling of the Pixcuy-1EXP shale well under an incremental work scenario in 2021.
CNH earlier this year approved Pemex plans to drill up to eight shale wells across four TMB blocks: Mihuapan, Soledad, Pitepec, and Amatitlan. However, Pemex at the time did not request approval to frack these pilot wells.
Shale could be key for Mexico's future oil and gas production as half of the country's 60 billion boe of prospective resources are locked in shale formations. Pemex has estimated that TMB alone holds over 20 billion barrels of prospective light crude oil.
Shale could be a powerful lever to reverse Pemex's crude oil production decline. Pemex oil output has fallen to 1.63 million b/d in May, under half the volume it produced in 2003, company data showed.
SHALE'S OIL POTENTIAL IS 775,000 B/D
CNH has said shale oil could boost output at the TMB to 775,000 b/d by 2032 from less than 90,000 b/d in 2018 if Mexico embraces fracking.
Pemex under the previous administration of Enrique Pena Nieto planned to appraise Mexico's shale resources with the aim of developing unconventional oil and gas project by 2023-2024.
However, the fate of Pemex's shale plans has been surrounded by uncertainty as Lopez Obrador promised to ban hydraulic fracturing after taking office. So far this pledge has not materialized in the form of a legislative or regulatory ban. Wednesday's order shows such a ban may not be necessary to achieve his aims.
Last week at the Mexican Petroleum Congress, Pemex announced it planned to restart shale projects in four years. The state company disclosed it expects to book 2.4 billion boe in resources from onshore areas in Northern Mexico where the TMB and the Burgos Basin are located.
Under Pemex's 2019 budget, the state company has assigned $170 million to evaluate non-conventional plays.
The Laxix and Pixcuy drilling was expected to reach a horizontal depth of over 3,400 meters with a horizontal length over 2,500 meters. Drilling and completing each well would have cost $19 million. The combined expected reserves to book in the area are 66 million boe.
The Humapa is a new shale frontier play within the TMB. Pemex is also evaluating the Chali, Argilo, and Tacharin prospects in the Humapa block.
Pemex awarded a service contract to Halliburton for the Humapa Block in 2013. However, it is now unclear if the company will assist Pemex in these shale wells.
