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Mexico’s oil and gas regulator expects 43 new wells to be drilled by private sector operators

Oil and gas exploration in Mexico’s offshore will reach record levels in the next three years, the country’s energy regulator said February 15, but the search will mostly be for crude oil.

The National Hydrocarbon Commission (CNH) said that, between now and 2021, 24 offshore exploratory wells will be drilled each year, based on committed investment programs. That’s the highest annual average since exploration began in the shallow Gulf of Mexico 30 years ago, the commission said.

The most active previous offshore exploratory pace was set in the 2001-2005 period, when an average of 18 wells were drilled each year.

CNH said 43 of the wells that will be drilled over the next three years will be drilled by new, private sector operators. That represents 11 wells – three in shallow waters, eight in deep water – each year.

But the offshore activity won’t likely bring new gas reserves to Mexico, since state-owned Pemex, in its annual hydrocarbon reserve reports, has consistently said that most of the country’s gas will be found onshore.

Its most recent report said proven in-place hydrocarbon reserves at year-end 2016 totalled 13.017bn barrels of oil equivalent (boe), 75% crude oil, 8% condensate and 17% dry gas. It estimated that 72% of the total proved hydrocarbon reserves are located offshore, while 56% of total proved natural gas reserves are located onshore.

Overall, proved, probable and possible (3P) hydrocarbon reserves totaled 37.4bn boe, 69% oil, 8% condensate and 23% dry gas. The vast majority of Mexico’s 3P gas reserves lie onshore, largely in the unconventional Chicontepec reservoir in the states of Veracruz, Puebla and Tobasco.

Overall, Pemex estimated 3P gas reserves at some 54.9bn ft3, 68% of which is associated gas.

While Pemex remains a big player in Mexico’s shallow offshore, where it has historically made most of its discoveries, majors such as Royal Dutch Shell plan to be significant operators in the country’s deep offshore.

Shell won nine of 19 blocks awarded in a January 31 auction of deepwater offshore rights, while other majors active at that sale included Spain’s Repsol and a subsidiary of Indonesia’s Petronas.

CNH head Juan Carlos Zepeda Molina said the successful bidders will eventually invest $93bn in the awarded blocks. Total cash commitments of $525mn were pledged, with commitments to drill 23 wells.

Onshore blocks with significant natural gas potential will be made available to bidders on July 25: CNH recently announced that blocks covering 9,513 km2 in the gas-prone Burgos Basin, located south of the Eagle Ford shale play in Texas, as well as in the state of Tabasco, would be made available in the auction.

Source: NGW

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