US is extracting gas and oil from Mexican deposits

Mar 31, 2004 02:00 AM

President Vicente Fox said the United States is extracting natural gas from the Burgos Basin [located in the northern states of Nuevo Leon, Coahuila and Tamaulipas] in Mexican territory.
"They take it from us down below and we buy it from them up above," said Fox while witnessing the diversion of the Santiago River to build the El Cajon hydroelectric dam. This confirms reports issued by Mexican petroleum experts, such as Fabio Barbosa, who a few years back commented on the risks of the famous "operation drinking straw", that is, that the United States would be able not only to extract natural gas, but also oil from Mexican deposits.

However, the risks grow greater and greater as long as Mexico continues not to invest in the industry. Fox said that there are those who say they (in Texas) have started to drill their wells on a diagonal slant in order to "take our natural gas from the Burgos Basin".
Meanwhile, he said we are "here waiting to see if the Congress might, one of these days, seefit to approve the electricity reform for us, as well as the reforms we have submitted in the way of energy, in order to use our natural gas." The president also added that Texas is a region in which natural gas prices are the highest in the world.

Mexico does not buy natural gas from anywhere else because "we have a natural gas pipeline to buy gas, but we can only do it in Texas". Fortunately, "we have decided to move forward", said Fox, after warning that if the law and reform in question are not approved, things will be done another way. "At this time, $ 5 bn are being invested in the Burgos Basin. Some 5,000 wells will be dug. The first ones are already extracting natural gas."
Furthermore, plants to process the natural gas were installed, and they are currently sending the fuel to the National Natural Gas Distribution Network. A natural gas regasification plant is also being built in Altamira, Tamaulipas, which will bring the fuel in ships and then distribute it throughout the country. This plant belongs to the Shell oil company, which, is association with France's Total, will invest some $ 300 mm, according to reports from the companies themselves.

During the event, Fox said work on the El Cajon hydroelectric plant could end before the planned date in 2007. With regard to this, Alfredo Elias Ayub, the director-general of the Federal Electricity Commission [CFE], said the plant already has the funding needed for completion.
It represents an investment of $ 800 mm and is part of the Santiago hydroelectric system, which comprises 27 projects with a potential for 4,300 MW. The El Cajon dam has a 184-metre bank, which is 4 metres taller than the Latinoamericana tower in Mexico City and one of the largest in the world. The work is 14 % done and the dam will be operational in 2007.

Eugenio Laris Alanis, the director of financed investment projects at the CFE, dismissed the possibility that the dam could be done in 2006, stating that "the project is to be finished in 2007".
Laris Alanis announced that over the next six years, $ 1.8 bn will be invested in the construction of two new hydroelectric plants. They are La Parota and La Yesca, both in the state of Nayarit. Tenders for the first one will be sent out at the end of this year and the beginning of 2005, the CFE official said.

"We are speaking with all those affected in the area to see if there is a willingness to have the work done."
The capacity of the hydroelectric plants will be in excess of 750 MW. There is interest on the part of national and foreign investors to bid on the new plants. The amount of national financing will be determined based on what is stipulated in international treaties. In the case of El Cajon, this number was 40 %. Laris Alanis said it is hoped that Brazilian construction companies will take part in the bidding processes.

Source: BBC Monitoring Americas
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