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Ohio Utica Shale

Foreign oil producers may have to wait two years in Mexico

By Bob Downing Published: January 16, 2014

From Bloomberg News:

By Adam Williams

Oil majors from Exxon Mobil Corp. to Chevron Corp. will have to wait another two years before investing an estimated $20 billion in Mexico’s recently opened oil and gas industry.

Foreign crude producers will be allowed to bid on fields for exploration and begin developing infrastructure and operations as soon as late next year, Deputy Energy Minister Enrique Ochoa said in an interview at the ministry in Mexico City. Prior to granting the operating licenses, the legal framework has to be determined and state oil producer Petroleos Mexicanos must select the fields it plans to continue to develop, he said.

"We estimate that by the end of 2015 or beginning of 2016, we could be in the stage of implementation," Ochoa said. "We must be professional and careful with the necessary institutional development prior to the following rounds."

President Enrique Pena Nieto ended the 75-year production monopoly held by Pemex, as the state oil company is known, allowing foreign companies to produce crude in the largest supplier to the U.S. after Canada and Saudi Arabia. The overhaul could bring an additional $20 billion foreign direct investment as soon as 2015, according to Bank of America Corp.

Ochoa’s forecast lags behind the prediction of Victor Herrera, Standard and Poor’s Latin American Managing Director, who said pipeline and shale gas investment could be seen "very quickly" in a Dec. 20 interview. Herrera said Mexico could see economic growth from the reform as soon as the second half of 2014.

’Wishful Thinking’

"If anyone was predicting that actual deals would be getting signed tomorrow or next month, that was classic wishful thinking," said Pavel Molchanov, an analyst with Raymond James Financial Inc., in a telephone interview. "This is not something that can be done overnight."

Exxon, Chevron, Royal Dutch Shell Plc and Repsol SA are among major producers that have expressed interest in Mexican oil fields.

Pemex has right of first refusal on the production areas it will maintain and is well positioned to seek joint ventures in mature oil fields to replenish diminished production, Ochoa said. The new law also opens joint venture opportunities with Pemex and private companies in refining and petrochemicals.

"There is a sufficient amount of mature fields to consider association options to be able to extract more oil and gas," Ochoa said. "Reactivating mature fields could bring national and international investment."

Pemex, the world’s fifth-largest oil producer, pumped an average of 2.52 million barrels a day in 2013, the ninth consecutive year of declines. The energy industry overhaul is forecast to increase annual output at Pemex to as much as 4 million barrels a day by 2025, according to the overhaul bill passed in December.

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Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.