ENERGY MATTERS © VOL. 11
an opinion editorial written exclusively for ANZMEX
6 January 2020
By Chris Sladen
Energy matters – Mexico’s new year energy wish list?
I received many messages in recent weeks from colleagues that said ‘Best wishes for 2020!’ So I replied to them by asking ‘What is your wish for Mexico’s energy sector in 2020?’ I have compiled some of their replies below:
1. A comprehensive plan enacted to reach zero net emissions of greenhouse gases in Mexico by 2050. Action to reduce emissions, combat climate change and remove pollutants is urgent, and requires total government and industry commitment, as well as all people. The hydrocarbons sector has to move quickly to remove methane emissions, sulphur and mercury, eliminate flaring, improve operational efficiency and use waste heat recovery. Biofuels and cleaner fuels are needed including ultra-low sulphur diesel. The power sector needs to eliminate releases of the highly damaging sulphur hexafluoridegas (SF6), and reduce CO2 emissions from gas fired power stations. Development of renewable energy is essential as a central pillar of a new green economy.
2. A series of offshore wind power generation licensing rounds. These would kick start a new industry in Mexico and build upon the positive experience of offshore wind power which has been growing rapidly and very successfully in the UK, Denmark, Germany, Portugal & China. This new industry would create many thousands of quality jobs in engineering, utilising Mexico’s offshore operations expertise.
3. Plastic recycling programs to reduce and clean up the debris already in the environment. A nationwide ban is needed on single use plastics such as plastic bags, straws, cutlery, plates, and stir sticks. More than 75 million plastic bottles and drinks cans are sold every day in Mexico and over 100,000 are littered every day! To help reverse this tide of rubbish, all drinks containers whether metal, glass or plastic should have a deposit return scheme with a small cash sum for consumers when they return them to retailers. This would speed up the adoption of recycling technologies. This would also reduce deadly micro-plastic particles that are entering Mexico’s rivers and water supplies every day, as well as its oceans and directly into food and the food chain. No one wants to keep eating micro-plastic particles.
4. An end to high gasoline prices. In the G20, Mexico’s prices are currently higher than the USA, China, Russia, Argentina, Indonesia, and Canada. Reducing gasoline prices will act as a stimulant to Mexico’s stuttering economy, also help enable rural connectivity and avoid low income households from slipping into energy poverty. Better traffic and roads management would reduce congestion and traffic jams, resulting in less fuel wasted by vehicles sitting idle in traffic, making a major contribution to reduced emissions.
5. Upstream (exploration & production) bid rounds reintroduced. One friend wrote to suggest that there should be 3 bid rounds per year and these could help guarantee the government’s production targets and replenish the resource base.
My friend went even further, suggesting the contents of bid rounds that could build on the three previously successful rounds, as follows: Round 4 – undeveloped shallow water oil discoveries; Rounds 5 & 6 – onshore & offshore mature giant oil field farm-outs; Round 7 – onshore mature gas field farm-outs; Round 8 – enhanced oil recovery (EOR) & specialist technology dependant discovered fields; Round 9 – unconventional gas & liquids; Rounds 10 & 11 – shallow water & deep water exploration areas; Round 12 – previously unexplored frontiers, such as possible offshore gas hydrate accumulations.
6. Electrification of offshore production platforms. This can be achieved by using low cost power generated onshore and connecting this to the platforms by power cables. This would eliminate the need for each platform to have its own power plants and electricity generation, and maintenance. This would enable offshore platforms to be lighter and smaller, with lower cost, or have more space to improve production processing. This could significantly reduce greenhouse gas emissions.
7. Unconventional oil & gas regulations that allow for safe and effective exploitation. These would enable safe fracking, and groundwater conservation covering vast potential shale resources. With the right regulations in place, this could enable a set of, say, 10 pilot projects each aiming to start production within 2020. In addition to creating new production, these pilot projects would also establish ‘proof of concept’ for shale oil and gas production in Mexico and bring the latest advanced well technologies. This could lead to a new shale energy industry employing over 300,000 people.
8. A program to make use of abandoned or no longer used offshore platforms. For example, nearshore platforms could be converted to house wind and solar power generation, together with large banks of lithium-ion battery storage. These batteries can smooth the daily operation of Mexico’s energy grid, selling power to avert blackouts and managing peaks in demand, or provide power for other offshore activities. Perhaps some platforms could be renovated to become manned centres for monitoring shipping lanes and fishing activities, piracy prevention, rapid response security and sea rescue facilities, as well as oceanic environmental studies & research.
9. Power generation using hydrogen as a fuel can create emissions free electricity. The CO2 which is a by-product of the process of creating hydrogen from methane in natural gas could be captured and stored underground or used for enhanced oil recovery projects at existing oilfields. Government support for Carbon Capture and Underground Storage (CCUS) projects would accelerate the technology application and understanding of how to unlock commercially viable projects. This would be a transformational step for Mexico making it a global leader in both large scale hydrogen use and CCUS.
And last but not least…
10. Autonomy of all energy regulators. This will create confidence amongst investors (both Mexican and overseas) that the energy sector has clear and transparent rules, with regulations that create level playing fields, fair pricing and tariffs, and procurement practices.
My thanks to all of you who contributed to this article. Here’s hoping that during the coming year your wishes come true and you can reach all your goals in Mexico’s energy sector, be safe and find happiness and fulfilment along the way.
About the author:
Mr. Chris Sladen runs an advisory service offering insights to inform, shape a decision, and guide the next steps for energy ventures. Chris has a unique global experience having worked in the energy sector of over 40 countries. This is underpinned by extensive knowledge of petroleum systems and where best to find oil and gas, notably in the Gulf of Mexico & nearby areas, and NE & SE Asia, as well as the development of midstream, downstream & renewables investments in many emerging economies. Chris has extensive experience acquired on the Boards of companies, subsidiaries, business chambers & organisations. Chris has a career of over 40 years in the energy sector living in Mexico (2001-2018), Russia, Vietnam, Mongolia, China & UK.
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ANZMEX ORG A.C. is a politically neutral business council with no political affiliation. The views expressed in this column are not necessarily representative of the official views of ANZMEX or any of its officers or staff.