The fruits of Mexico’s labor

Mexico’s energy reform efforts have been realized with recent successes from prior bid rounds. Now, Mexican national Pemex has added a steady schedule of farm-outs in shallow and deep water. Audrey Leon surveys the plays on the agenda.

Juan Carlos Zepeda, president commissioner, CNH, speaks at the Pemex Farm-out day event. Photos from Pemex Flickr.

Mexico has worked tirelessly over the last three years to bring its energy reform to fruition, and the last piece of the puzzle was its own national oil firm, Pemex. In December 2016, Pemex finally found its first joint venture partner (BHP Billiton) for the Trion field, in the deepwater Gulf of Mexico, through a competitive bid process. Now, Pemex is ready to do the dance again.

At its first-ever farm-out day in Houston, CEO José Antonio González Anaya reiterated his company’s and the Mexican government’s commitment to making the energy reform work. And one of those ways is through seeking more partnerships to develop existing resources, on- and offshore.

“We have a historic opportunity to use all the instruments and flexibility available from the energy reform, he told the audience. “Before, [only we] were able to explore and produce and commercialize anything to do with oil. Now anyone can touch it, foreign and domestic. Now Pemex can partner with anyone – foreign and domestic – to do this.”

At the farm-out day event, Mexican officials announced four new farm-out opportunities: two onshore Tabasco, one in shallow water – Ayin-Batsil, in the Campeche Basin, and one in deepwater – Nobilis-Maximino in the Perdido Basin, adjacent to Trion. Mexican regulator, the National Hydrocarbons Commission (CNH), will again run the bidding process for the farm-outs, as they did in 2016 when determining a joint venture partner for Trion.

“Our role is to run the bidding process, and to ensure that this is a transparent and fully accountable process,” said Juan Carlos Zepeda, CNH president commissioner, at the Pemex farm-out day in Houston.

Map from Pemex.

Ayin-Batsil

Pemex E&P Director General Gustavo Hernandez was on hand to add more detail on the plays added to the farm-out agenda. The Ayin-Batsil area, he says, offers 359 MMboe of undeveloped 3P reserves, mostly heavy oil, in shallow water, with multiple fields to develop.

Pemex CEO Jose Antonio González Anaya speaks at the Farm-out Day event in Houston.

“It’s an important field,” González Anaya said. “There’s a lot of oil.

“Why didn’t do this field [Ayin-Batsil] on our own,” González Anaya asked. “The water is a bit deeper than we are used to. We are an expert in shallow water, but most of our fields are in 80-120m water depth. That’s why we left it there to be done.”

The total area of the complex is 1096sq km in water depths ranging 150-170m, deeper than the shallow water fields in which Pemex normally operates, he said.

González Anaya added that there is infrastructure nearby – the Litoral-A central processing platform, which is 24km from Ayin-Batsil and 50km from shore – to plug into production and take production onshore. “You still have to build a 50km pipeline from where we are to the existing infrastructure Pemex has. But the infrastructure is there. That’s why we waited,” he said.

Ayin was discovered in 1991. Initial production rates from Ayin-Batsil, Hernandez said, were between 1200 b/d and .32 MMcf/d (Batsil) and 8200 b/d and .33 MMcf/d (Ayin). There were 10 exploration and appraisal wells drilled, from 1988 to 2015, that intended to characterize the block, Area E-0027-M, he added. There are two other fields that comprise the Ayin-Batsil area, including Makech and Alux.

Hernandez said that Ayin is the most relevant field with 60% of the total 3P reserves. Batsil is second in size with 20% of the 3P reserves. Alux and Makech could potentially be developed as subsea tiebacks to Ayin and Batsil, he said. The nearby Litoral-A facility has a storage capacity of 200,000 b/d and 600 MMcf/d, which, as of 2016, had a 75% utilization rate, Hernandez said. Also in the same area, there are two Dos Bocas gas and oil pipelines with 600 MMcf/d capacity, at 80% utilization rate, and a 200,000 b/d capacity with a 10% utilization rate, respectively.

There are also three additional exploratory opportunities, which could offer 224 MMboe of prospective resources (average, unrisked) – Ichal, Ken, and Chelpul – all which have 25-26° API oil.

Map from Pemex.

Nobilis-Maximino

Another opportunity, this time in deepwater, is Nobilis-Maximino, which sits in 3000m water depth in the Perdido Fold Basin, adjacent to previous discoveries Trion and Great White. A total of nine wells have been drilled on the Nobilis-Maximino.

When Maximino was drilled in 2013, Pemex then-described the find as the “crown jewel.” The Maximino-1 probe was one of Pemex’s deepest wells, at 9515ft water depth. Nobilis was discovered later in 2016. The Nobilis-1 exploration well, on the eastern flank of the Maximino field, is 220km off the coast of Tamaulipas at 3000m water depth. Pemex said both exploration wells (Nobilis-1 and Maximino-1) proved light oil of 40° API.

According to Pemex, the main reservoir in Nobilis is in the lower Eocene Wilcox. The Nobilis-101 exploration well, drilled in 2017, tested a separate structural closure to the northeast in the Wilcox. Pemex said it discovered oil in the upper Eocene and Oligocene reservoirs.

The 1524sq km Nobilis-Maximino area has 3P reserves of 502 MMboe of light oil, and estimated production of 300,000 b/d. Nobilis-Maximino is 26km from Great White, and 40km from Trion.

In addition to Nobilis and Maximino, there are two other discoveries: Supremus and Mirus. Pemex said a further 627 MMboe could be had in prospective, unrisked resources in three additional exploration prospects – Chachiquin-1, Maximino-1001, and Maximino-3001.

Maximino, which Pemex called the most second important of the block, has 41 API light oil, with 187 MMboe in 3P reserves. Nobilis is 42 API light oil with 315 MMboe in 3P reserves. Supremus, the only find with heavy oil (28 API), has 98 MMboe contingent resources in the Oligocene. Mirus has 41 API light oil with 73 MMboe contingent resources. Pemex believes that Supremus and Mirus could be developed as subsea tiebacks to Nobilis-Maximino.

The farm-out for Nobilis-Maximino is expected to run in parallel with the next deepwater round 2.4, in January 2018, Pemex said.

A future so bright

Left to Right: Aldo Flores-Quiroga, deputy secretary of energy for Hydrocarbons Mexico (SENER); Pemex's González Anaya; Miguel Messmacher Linartas, Secretary for Income, Ministry of Finance (SHCP); and Juan Carlos Zepeda, president commissioner, CNH.

SENER’s Aldo Flores-Quiroga highlighted the success Mexico has already enjoyed since the reform passed. “We have done in three years what no other country has in terms of reform,” he said. “Today, we have 54 companies working in Mexico’s E&P sector.”

As a result of the first five bidding cycles, Flores-Quiroga said that Mexico expects US$57 billion in investment. They have already signed 49 new contracts and have participation from 17 countries.

Flores-Quiroga also mentioned that the new five-year plan will offer 509 exploration and production blocks, and 82 production fields. “The aim is to present these at auctions by 2019,” he said. “We will announce six months before the round. We aim to make the process more standardized.”

Of the 509 blocks, Flores-Quiroga said 119 are deepwater blocks with prospective resources of 6594 MMboe and an average block size of 1000sq km. The blocks are in three basins, the Salina del Istmo, Cordilleras Mexicanas, and Perdido. The next deepwater rounds will be scheduled for January 2018 (Round 2.4) and October 2018 (Round 3.2), he said.

There are also plenty of shallow water blocks up for grabs. Flores-Quiroga said that there are 112 blocks with prospective resources of 3555 MMboe with an average block size of 400sq km. The shallow water blocks are in three basins – Burgos (near the US/Mexico maritime border), Tampico-Misantla (offshore Veracruz), and Sureste (offshore Tabasco and Campeche, and home to Eni’s Amoca and Talos' Zama discoveries).

Historic finds

No doubt Mexico’s energy reform efforts will not only be measured in monetary success but in production volumes as well. Two days after Pemex’s farm-out day in Houston, Talos Energy announced it made an estimated 1.4-2 billion bbl, “world-class” light oil discovery at the Zama-1 exploration well, offshore Mexico. Wood Mackenzie called it one of the 20 largest shallow water finds in the past 20 years, and the first for the private sector.

Zama-1 was drilled in 166m water depth, about 37mi (60km) off Tabasco, in the Block 7 in the Sureste Basin, using the Ensco 8503 semisubmersible.

The well reached an initial shallow target vertical depth of approximately 11,100ft (3383m). Talos said it hit a 1100ft (335m) oil bearing interval, with 558-656ft (170-200m) of net oil pay in Upper Miocene sandstones with no water contact. The firm said initial gross original oil in place estimates for the Zama-1 well range from 1.4-2 billion bbl. Oil samples indicate light oil, with API gravities between 28-30° and some associated gas.

On the same day as Talos’ announcement, Italy’s Eni said its Amoca field, inside Area 1 in the Sureste Basin, has 1 billion boe of resources in place. Eni said that the Amoca-3 well proved the presence of multiple significant oil levels in the Orca and Cinco Presidentes Formations. Amoca is 1200km west of Ciudad Del Carmen, in the Bay of Campeche in 25m water depth. The Amoca-3 well was drilled to 4330m total depth and encountered 410m of net oil pay (25-27° API), in several high-quality Pliocene reservoir sandstones, of which 300m were found in the deeper sequence of Cinco Presidentes, in various cluster levels of Pliocenic age with good reservoir characteristics.

The total resource base estimate for Area 1 is 1.3 billion bbl of oil in place, according to Eni. The Italian explorer plans to submit an accelerated and phased development plan in 2017 targeting an early production phase with a plateau ranging from 30-50,000 b/d, with the start of operations planned for early 2019.