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By Emily Pickrell
March 16 — Mexico's Environmental Ministry issued recommendations for the regulation of hydraulic fracturing, focusing on drinking-water protection as the country inches closer to allowing the unconventional drilling method for natural gas so popular and controversial north of the border.
While non-binding, the recommendations mark the first fracking-related guidelines in Mexico.
The country's binding fracking regulations will come from a different part of the government: the newly formed Security, Energy and Environmental Agency (ASEA). Those regulations are expected to be released sometime this year.
As the agency, which officially opened its doors March 1, starts to take over the responsibility for developing regulations, environmental groups have raised concerns that any such environmental rules be legally binding before hydraulic fracturing begins. But some said the Environmental Ministry announcement was a welcome first step.
The ministry recommended that 90 percent of the water used in hydraulic fracturing come from recycled water and that monitoring be adopted to ensure that nearby aquifers are not contaminated.
It also called for steps to protect biodiversity, air and soil quality, and to monitor for any resulting seismic activity. The recommendations were included in a publication, “The Environmental Criteria Guide for the Exploration and Extraction of Hydrocarbons in Shale,” dated March 4.
“What they have issued are recommendations, but there is no requirement for Pemex [the state-owned petroleum giant] or for individual companies to honor these recommendations,” said Ana Mendivil, an analyst with the Mexican Center for Environmental Law. “We are looking for ASEA to take these recommendations and make them obligatory.”
At this point, hydraulic fracturing is mostly theoretical in Mexico. The country plans to hold its first private auction later this year and offer private investors the opportunity to develop shale plays in Northern Mexico.
The published guidelines are a first effort to provide environmental oversight over how the process will develop and include both general criteria to ensure the protection of the environment and specific issues in the exploration, drilling and termination of a well.
“It gives us a deeper sense of the thinking of the Mexican government,” said Pablo Zarate, a consultant with FTI Consulting and former senior energy official. “It is very important as the Mexican authorities are looking into this that they balance both sides' needs. They need to ensure this industrial practice is carried out safely and that it follows best practices, and that it guarantees the safety of the communities. On the other hand, you don't want to put an incredibly complicated regulatory yoke that won't allow Mexican companies to be competitive.”
Industry watchers give the ministry high marks for developing standards based on international best practices, but said the next hurdle will be tailoring them more specifically for Mexico.
“These are guidelines that have been put in place based on what folks have learned by studying what the industry standard is at a global level,” said Duncan Wood, the director of the Woodrow Wilson Center's Mexico Institute. “They will need to take into account Mexican law and country-specific conditions.”
U.S. operators agree that having a baseline set of environmental regulations is a needed step to give those eyeing the market some idea of the possible associated costs of complying with regulations, such as 90 percent water recycling.
“It may be an issue,” said Brian Kalinec, a Houston-based independent geologist who consults for several small, independent oil and gas operators. “Operators would be looking at the cost and the challenge of having access to that much recycled water or being able to recycle that much water on a practical basis. It could slow the whole process down.”
Environmentalists also have compiled a list of concerns they would like to see included in the final regulations, such as a guarantee of complete restoration and remediation for areas contaminated by hydraulic fracturing.
Many expect that negotiations with regulators on the business and the environmental implications will take place in the coming weeks, with both sides giving input on how this draft could be fine tuned.
“They haven't taken the time to discuss the guidelines with the industry itself and others and receive feedback,” Wood said. “This is probably the beginning of the conversation. It will develop over time.”
Environmentalist also are urging ASEA to include regulations that will provide the human rights protections that Energy Ministry officials have promised will be part of the opening of the energy sector.
“In the [Environmental Ministry] document, there is no mention of the indigenous communities,” said Gabriela Nino, an analyst with the Mexican Center for Environmental Law. “Hydraulic fracturing does not only have environmental implications–there are also societal consequences. What is missing is an acknowledgement of the need to ensure that human rights [of impacted communities] will be protected.”
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The Environmental Ministry recommendations are available, in Spanish, at http://biblioteca.semarnat.gob.mx/janium/Documentos/Ciga/Libros2011/CD001945.pdf.
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