Fractured Progress: Why Mexico’s Shale Resources Remain Untapped
Mexico is home to some of the world's largest unconventional oil and gas resources. With basins like Tampico-Misantla, Burgos, Sabinas, and Veracruz, Mexico’s shale and tight oil potential rivals prolific U.S. regions like the Permian Basin and Eagle Ford. Estimates place technically recoverable shale gas at 545 trillion cubic feet (Tcf) and recoverable shale oil at 13.1 billion barrels—a resource base significantly larger than Mexico's conventional reserves.
Mexico’s Oil and Gas Production Challenges
Mexico's oil production peaked in 2004 at 3.4 million barrels per day (MMbpd) but declined by over 50% by 2019, bottoming out at around 1.6 MMbpd. While recent years have seen a slight recovery, driven largely by offshore fields, the decline of mature giants like Cantarell has left a significant gap. Gas production has struggled as well, despite abundant reserves, as underinvestment and the focus on liquids-rich plays have stalled progress.
Source: EIA
The Key Unconventional Plays
The Tampico-Misantla Basin stands out as the most promising area for unconventional development, often described as the "Permian Basin of Mexico." This super basin contains both shale and tight oil resources, particularly in the Tithonian Pimienta and Turonian Agua Nueva formations. Together, they represent nearly 100 billion barrels of oil equivalent (BOE) in place. The basin’s reservoirs are relatively shallow, between 2 to 3.5 kilometers deep, making them potentially more accessible and economically viable.
To the north, the Burgos Basin extends the Eagle Ford Shale trend southward from Texas. Covering approximately 24,200 square miles, this basin contains an estimated 343 Tcf of gas and 6.3 billion barrels of oil recoverable. With total organic carbon (TOC) content as high as 5% and overpressured zones that enhance production, Burgos remains a significant but largely untapped resource.
The Sabinas Basin, though geologically complex, holds substantial shale gas potential. Its primary targets include the Eagle Ford Shale and the deeper Tithonian La Casita Formation. Despite challenges posed by higher clay content, the basin’s recoverable gas resources are estimated at 124 Tcf, with TOC values ranging from 2% to 4%.
Further south, the Veracruz Basin offers additional unconventional opportunities. Though smaller in area at just over 9,000 square miles, it contains Cretaceous and Jurassic shales with recoverable resources of 28 Tcf of gas and 6.8 billion barrels of oil. TOC values average around 3%, making it another area of interest for future development.
Source: AAPG Explorer
Why Mexico's Potential Remains Untapped
Despite this vast resource base, Mexico’s unconventional oil and gas potential remains unrealized. Regulatory uncertainty has been a major hurdle. The 2013 energy reforms initially opened the door to private investment, but subsequent policy shifts, including a moratorium on hydraulic fracturing, have stalled progress. Much of Mexico’s unconventional resources are also gas-weighted, particularly in Burgos and Sabinas, but limited domestic demand and infrastructure for natural gas have constrained development.
High costs and technological challenges further complicate the outlook. Early shale exploration wells drilled by PEMEX were prohibitively expensive, often costing between $20 and $25 million, with only modest production rates. Meanwhile, security concerns, particularly in northern regions like Burgos, add another layer of risk for investors.
The Current Outlook
The future of Mexico’s unconventional development hinges on a mix of policy, technology, and market shifts. Reopening the sector to private investment and revisiting the ban on hydraulic fracturing could reignite activity. Advances in horizontal drilling and fracturing techniques, informed by lessons learned in the Permian Basin, may also help reduce costs and improve production rates. Expanding domestic gas infrastructure could unlock the potential of gas-heavy basins like Burgos and Sabinas, aligning supply with growing demand.
Among all regions, the Tampico-Misantla Basin offers the most immediate promise. Its shallow reservoirs, substantial oil content, and favorable geology position it as a key candidate for development if conditions align. For now, Mexico’s unconventional resources remain a massive opportunity waiting to be realized—one that could transform the country’s oil and gas industry with the right mix of policy support, investment, and technology.
Sources and Further Reading