SPP/NAEWG: U.S.-MEXICO MEETING ON GAS HYDRATES

UNCLAS SECTION 01 OF 02 MEXICO 002897

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/MEX, WHA/EPSC, EB/ESC
STATE FOR EB/ESC MCMANUS AND IZZO
DOE FOR INTL AFFAIRS KDEUTSCH AND ALOCKWOOD
DOE FOR A/DAS WARD AND A/S HARBERT

E.O. 12958: N/A
TAGS: ENRG EPET ECON MX
SUBJECT: SPP/NAEWG: U.S.-MEXICO MEETING ON GAS HYDRATES
RESEARCH COOPERATION

Introduction and Summary
--------------


1. (SBU) Department of Energy (DOE) and U.S. Geologic Survey
(USGS) officials discussed cooperation on gas hydrate
research with Mexican Energy Secretariat and Petroleos
Mexicanos (Pemex) officials under the auspices of the North
American Energy Working Group (NAEWG) and the Security and
Prosperity Partnership for North America (SPP). The Mexican
officials suggested that Mexico host a conference on gas
hydrates in the fall of 2007, in Mexico, as a way to more
closely examine the work the U.S. has done, especially
through the DOE's Joint Industry Partnership (JIP). While
Mexican officials would like to cooperate more closely with
U.S. efforts on gas hydrates, they remain concerned over the
role of industry in the U.S. program as well as how
proprietary Mexican seismic data would be treated by any
North American or other international partnership.

What are Gas or Methane Hydrates?
--------------


2. (U) Gas hydrate is an ice-like crystalline solid formed
from a mixture of water and natural gas, usually methane.
They occur in the pore spaces of sediments, and may form
cements, nodes or layers. They are found in sub-oceanic
sediments in the Polar Regions (shallow water) and in
continental slope sediments (deep water) including in the
Gulf of Mexico, where pressure and temperature conditions
combine to make them stable. Natural gas hydrates contain
highly concentrated methane, important both as an energy
resource and as a factor in global climate change.

Mexico and Gas Hydrates
--------------


3. (SBU) Rafael Alexandri, the Director General for
Hydrocarbons at the Mexican Energy Secretariat told the U.S.
side that while he saw many good reasons for Mexico to join
the Joint Industry Project (JIP) for research on Methane
Hydrates, he was not sure that joining would be in their best
interests. As far as Mexico was concerned, it would rather
work less with foreign industry and more on a trilateral
basis (U.S.-Mexico-Canada). Nevertheless, Mexico was
interested in cooperation.


4. (SBU) Discussing the background of Mexican Methane
Hydrates research program, Alexandri said that Pemex had 'let
a contract' with Western Geophysical, an exploration
subsidiary of Schlumberger, to do work on the Shamit offshore
field in the Gulf of Mexico. As the company processed the
data, they recognized a possible gas hydrate layer. After
reprocessing and taking a closer look, Pemex asked Nader
Dutta, Chief Geoscientist for Schlumberger to study the
result. He confirmed the presence of hydrates.


5. (SBU) Following the discovery, the GOM formed a group of
representatives of the Mexican energy sector to study gas
hydrates. The group included representatives from Pemex, the
Mexican Petroleum Institute (IMP),and the Mexican National
Autonomous University (UNAM). The group is led by the
Secretariat of Energy (SENER). Two years ago, the Mexicans

SIPDIS
spoke with the Indians based on experience that Mexico had
with the Indian firm Reliance to compare work by the two
countries on hydrates. Alexandri also noted that 2-3 months
ago a research vessel took samples along the Mexican Pacific
coast.


6. (SBU) Alexandri added that Dr. Dutta suggested to him
that the Mexican Hydrates Group travel to Houston to discuss
joining the Joint Industry Program (JIP),the group formed
through the auspices of the DOE and the USGS for cooperative
research on gas hydrates, but the Pemex group was told at
that meeting that joining the JIP would require a USD 230,000
membership contribution.


7. (SBU) Alexandri noted that Mexico does have seismic data
it could provide to the JIP, though the presence of industry
representatives in the JIP does make Mexico's participation
more difficult politically. Mexico would not be able to pass
geophysical data to outsiders without a technology transfer
agreement to govern the exchange. Alexandri added that many
of the JIP member companies do have formal agreements with
Mexico. Alexandri also noted that under the terms of the

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SPP/NAEWG the Canadians would also participate, though he
added that Canada was coordinating much of its Methane
Hydrate work in the arctic with Japan. The group speculated
that since Japan was paying for 90% of the research, Canada
would likely be unable to include arctic hydrate issues in
any participation with Mexico and the U.S. through the NAEWG.
Canada should, however, be free to openly collaborate on
marine gas hydrates issues.

Presentation of U.S. Research Efforts
--------------


8. (SBU) DOE/National Energy Technology Laboratory Manager
for Methane Hydrates Research and Development Ray Boswell
noted that the JIP is DOE's main focus for Gulf of Mexico gas
hydrates research. The USG funds 80% of the JIP's cost. The
data that members provide is kept confidential, but all
results are made available to the public. The U.S. has a
contract in place with the JIP that could allow up to USD 20
million of USG funds to be spent on research, drilling
cruises, and other activities.


9. (SBU) Boswell indicated that the JIP project manager (Dr.
Emrys Jones) had indicated recently that the current fee to
join the JIP was USD 189,000. Regardless of whether Mexico
paid the fee, Mexican representatives were very welcome to
attend and participate in the JIP's public meetings. Joining
the JIP, however, would entitle Mexico to participate in
executive board deliberations and vote on the direction of
the research proposals the group would forward for approval
to the DOE. That said, there was also flexibility within the
JIP. Investment was important to the group -- but so was
involvement and data donation. Boswell suggested there might
be flexibility on the fee in this regard. All the members of
the JIP would vote on such a change.


10. (SBU) Boswell suggested that in the interim, if Mexico
were to work with the JIP group, a partnership could be
started with SENER, the USGS, DOE and the JIP. The group
could also ask Pemex, Western Geophysical and other companies
to participate. On the Mexican side, the IMP and UNAM would
also participate as they also have data. Alexandri suggested
that the Canadians could also be invited to join. He thought
the Canadians would be more comfortable in a group with the
U.S. Alexandri suggested that as a first step, the Mexican
Government put together a robust seminar on Methane Hydrate
research inviting a broad list of participants. Boswell
agreed that a seminar with all interested participants would
be a good idea, and suggested that DOE hydrate project
representatives would be encouraged to attend.

Next Step: Mexican Gas Hydrate Conference
--------------


11. (SBU) Alexandri suggested that Mexico would work first
with the U.S. to lay out the basics of the seminar to be held
in September 2007 and then follow-up with Canada as suggested
by the NAEWG framework. Alexandri closed reiterating the two
problems with the JIP as far as Mexico was concerned.

-- Industry participation in the program created problems for
Mexico as far as data sharing, though, Alexandri suggested,
Mexico already has data sharing arrangements with many of the
JIP industry members.

-- Mexico would also have to examine the making public of
data as a result of the work of the JIP to determine whether
it could be in compliance with Mexican law.


Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity and the North American
Partnership Blog at http://www.intelink.gov/communities/state/nap /
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