Fracker Aubrey McClendon Signs Deal in Mexico with Firm Led by Former Mexican President

Aubrey McClendon, former CEO of hydraulic fracturing (“fracking”) giant Chesapeake Energy and current CEO of American Energy Partners (AEP), has signed a joint venture with a private equity firm led* by former Mexico president Vicente Fox.* 

In a joint press release, AEP and EIM (Energy and Infrastructure Mexico) Capital announced a “long-term, landmark partnership to explore the vast exploration and development opportunities offered by Mexico's abundant oil and gas energy resources.” The deal serves as another case study of U.S.-based companies cashing in on the Mexico energy sector privatization policy the U.S. State Department helped make possible under both the Obama Administration and the Bush Administration.

New Records Show More US Involvement in Mexico Oil, Gas Privatization Efforts as Mexican Government Says "100%" Its Idea

New records obtained by DeSmog shed further light on the role the U.S. government has played to help implement the privatization of Mexico's oil and gas industry, opening it up to international firms beyond state-owned company PEMEX (Petroleos Mexicanos).

Obtained from both the City of San Antonio, Texas and University of Texas-San Antonio (UTSA), the records center around the U.S.–Mexico Oil and Gas Business Export Conference, held in May in San Antonio and hosted by both the U.S. Department of Trade and Department of Commerce, as well as UTSA.

They reveal the U.S. government acting as a mediator between Mexico's government and U.S. oil and gas companies seeking to cash in on a policy made possible by the behind-the-scenes efforts of then-Secretary of State Hillary Clinton's U.S. State Department. State Department involvement was first revealed here on DeSmog, pointing to emails obtained via Freedom of Information Act and cables made available via Wikileaks.

Exclusive: Hillary Clinton State Department Emails, Mexico Energy Reform and the Revolving Door

Emails released on July 31 by the U.S. State Department reveal more about the origins of energy reform efforts in Mexico. The State Department released them as part of the once-a-month rolling release schedule for emails generated by former U.S. Secretary of State Hillary Clinton, now a Democratic presidential candidate.

Originally stored on a private server, with Clinton and her closest advisors using the server and private accounts, the emails confirm Clinton's State Department helped to break state-owned company Pemex's (Petroleos Mexicanos) oil and gas industry monopoly in Mexico, opening up the country to international oil and gas companies. And two of the Coordinators helping to make it happen, both of whom worked for Clinton, now work in the private sector and stand to gain financially from the energy reforms they helped create.

The appearance of the emails also offers a chance to tell the deeper story of the role the Clinton-led State Department and other powerful actors played in opening up Mexico for international business in the oil and gas sphere. That story begins with a trio.

“There Could Be Trouble” As US Fracking Revolution Prepares to Go Global

A new report showing the U.S. overtaking Russia as the leading producer of oil and gas in the world should put to rest any doubt that the fracking revolution that has occurred in the U.S. is for real, or as BP’s chief economist put it, “profound.”

And now with the recent Environmental Protection Agency report on the impacts of fracking on drinking water being touted by the American Petroleum Institute as proof that fracking is safe, the industry’s insatiable greed got another boost. More recently,  the Harvard Business School has also joined in the discussion calling for the end of the ban on exporting U.S. crude oil and warning about the implications of missing the “opportunity” offered by fracking.

Mexico and American Oil Companies Want a Crude Swap to Open Loophole in the Oil Export Ban

As politicians from oil-producing states work to draw up bills to end the ban on oil exports, Mexican officials are “confident” that the country will soon be importing American crude through a backdoor loophole in the law.

Back in January, Mexico applied for a crude swap that, if approved, would allow the U.S. to export 100,000 barrels of oil per day to Mexico. This would be unrefined crude — refined products such as diesel and gasoline are not subject to the ban — likely from the Eagle Ford and Permian shale fields, where fracking has produced a glut of light, sweet crude in recent years.

Showdown in Trans Pecos: Texas Ranchers Stand Up to Billionaires' Export Pipeline

Mexico’s landmark energy reforms are already having impacts north of the border, and nowhere more acutely than Texas. One pipeline project in particular is raising hackles in some Far West Texas communities, where residents are troubled by the prospect of hosting a pipeline that would be built for the express purpose of exporting natural gas across the border.

Mexico's Pemex Plagued By Deadly Offshore Explosions and Major Pipeline Spills

It's been a disastrous year for Pemex, the state-owned Mexican oil company at the center of the nation’s landmark energy reforms.

In just over a month, Petroleos Mexicanos (Pemex) starred in three tragic incidents, two fatal. 

Open for Business: First Major Deal Since Energy Reforms Will Bring Fracked Gas to Mexico

For the first time in 76 years, a piece of Mexico’s oil and gas infrastructure has been sold to a foreign investor, and the deal will help bring fracked gas from Texas’s Eagle Ford shale region into Mexico. In this first major deal since the country’s landmark energy reforms, Pemex—the state-owned oil company that had kept domain over the country’s vast petroleum and natural gas reserves since they were nationalized back in 1938—sold a 45-percent stake of a prospective natural gas pipeline project to the United States-based investment funds BlackRock and First Reserve.

New Report Highlights Fracking's Global Hazards

A new report, issued the same day the latest round of global climate negotiations opened in Peru, highlights the fracking industry's slow expansion into nearly every continent, drawing attention not only to the potential harm from toxic pollution, dried-up water supplies and earthquakes, but also to the threat the shale industry poses to the world's climate.

The report, issued by Friends of the Earth Europe, focuses on the prospects for fracking in 11 countries in Africa, Asia, North and South America and Europe, warning of unique hazards in each location along with the climate change risk posed in countries where the rule of law is relatively weak.

“Around the world people and communities are already paying the price of the climate crisis with their livelihoods and lives,” said Susann Scherbarth, climate justice and energy campaigner at Friends of the Earth Europe. “Fracking will only make things worse and has no place in a clean energy future.”

The 80-page document describes plans for fracking in Brazil's Amazon rainforest (and the deforestation that would go along with that drilling), highlights the hazards the water-intensive process poses to already-disappearing aquifers in arid regions of northern Africa, and notes that licenses for shale gas drilling have been issued in the earthquake-prone zone at the foot of the Himalaya mountains in India.

It comes as representatives from 195 countries gathered Monday in Lima, with the goal of negotiating new limits on greenhouse gasses and staving off catastrophic climate change. Prospects for those talks seemed grim, with The New York Times reporting that it would be all but impossible to prevent the globe from warming 2 degrees.

"No Turning Back:" Mexico's Looming Fracking and Offshore Oil and Gas Bonanza

After generations of state control, Mexico’s vast oil and gas reserves will soon open for business to the international market.

In December 2013, Mexico’s Congress voted to break up the longstanding monopoly held by the state-owned oil giant Petroleos Mexicanos — commonly called Pemex — and to open the nation’s oil and gas reserves to foreign companies.

The constitutional reforms appear likely to kickstart a historic hydraulic fracturing (“fracking”) and deepwater offshore oil and gas drilling bonanza off the Gulf of Mexico.

“This reform marks a major breakthrough in Mexico’s economic history only comparable to the signing of the North America Free Trade Agreement (NAFTA) in 1992,” international investing and banking giant Banco Bilbao Vizcaya Argentaria (BBVAwrote in a January 2014 economic analysis.

What does this mean for the oil and gas industry in Mexico? And for the workers and those who live above these oil and gas plays or along the pipeline routes that will funnel the liquids to refineries? And how about for the Earth’s atmosphere?

Can Mexico’s fossil fuel infrastructure handle the boom? Can the country spare the precious freshwater supplies needed for thirsty fracking operations in an era of increasingly severe droughts and drinking water shortages? Can environmental, safety and public health regulations possibly keep up with this industrial boom?

DeSmogBlog will examine all these issues and more as Mexico opens its fossil fuel reserves to international exploitation in the weeks and months ahead. But, first, an overview of the state of play in Mexico’s energy reforms.


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