This article identifies the governance challenges of shale gas development. Mexico has vast shale gas reserves and production and exploration of natural gas were liberalised after the energy reform was adopted into law in 2014. This reform established the governing system that will rule the upstream oil and gas sectors. This governing system consists of a regulatory setting composed of federal institutions that lack human resources specialising in shale development.
In early 2018, the first competitive bidding process for shale fields will be conducted. The local communities have not yet been consulted and cannot fully oppose shale development in their land. The production of shale gas on a commercial scale could help Mexico achieve security of gas supply under increasing demand for gas in oil and electricity production and increasing gas imported from the United States. However, some of the largest shale reserves are located within states characterised by high levels of violent crime and increasing returns of criminal practices of state governments. These conditions make environmental impacts more likely and commercially viable shale gas development less likely.
Note: José encourages attendants to read this article in advance.
About the speaker
José Alberto Hernández Ibarzábal is a Visiting Fellow researching in the areas of socio-economic, governance and environmental challenges of unconventional gas development. His current focus is a research project on the Mexican case, which includes the lessons from unconventional gas development in Australia. He is a strong advocate for consulting with local communities, implementing best regulatory practice in order to lessen the environmental risks associated with fracking and creating an energy career civil service in Mexico.
José Alberto has conducted research in natural gas infrastructure regulation, governability and investment since 2005. The study in practice of factors that have proved relevant in panel data studies in private investment in utilities’ infrastructure led to the creation of a model to study investment in natural gas infrastructure. Generating knowledge in these areas of study has been the main aim of his research, synthesised in five articles alongside two doctoral theses and one Diploma of Advanced Studies thesis.