/
Analysis

Addressing the Production Challenge in Chicontepec

Wed, 01/22/2014 - 09:28

Stretching from the north of Veracruz to the northeast of Puebla, the Chicontepec paleochannel covers 3,785km2 over 12 different municipalities: nine in Veracruz and three in Puebla. The paleochannel is located between the southern province of the Tampico-Misantla Basin and the western areas of the Tuxpan platform, and consists of numerous hydrocarbon-bearing reservoirs created millions of years ago during the Tertiary, namely Early Eocene and Late Paleocene formations. Within the boundaries of the region known as Chicontepec, the first commercially successful wells were drilled in 1926, producing small quantities of oil. A major field was discovered in 1973, containing extra-heavy crude that was considered commercially unviable for extraction due to special refining needs. While most of the reserves within Chicontepec have a viscosity lower than 15°API, pockets of light oil and natural gas are also found within the basin. Today, the importance of Chicontepec for Mexico rests in the amount of reserves still nestled within its geologic formations. The asset is believed to hold around 10.95 billion barrels of possible (3P) oil reserves and 28.40tcf of probable gas reserves, as of January 2013. The complexity of the basin lies in converting possible and probable reserves into proven reserves (1P), of which the paleochannel only has 806.30 million boe, divided between 606.75 million barrels of oil and 948.75bcf of natural gas, as of January 2014. PEMEX has made distinct efforts to push production in Chicontepec to match its potential. The national oil company has tendered field labs to test new technologies in the area and included six blocks in the third round of integrated service contracts, but it has so far not found a way to get close to the previously set production targets for Chicontepec, although oil production has been steadily increasing since 2009. Back then, it averaged just below 30,000b/d, but reached an average production of 66,202b/d during 2013. For the first quarter of 2014, Chicontepec’s oil production has seen a slowdown to 53,865b/d. The average gas production for 2013 roughly accounted for 167.01mcf/d, which has seen a similar slowdown that is the result of a strategic change in PEMEX’s drilling program in the second quarter of 2013.

Corralillo, Tajín, and Presidente Alemán are Chicontepec’s top three oil producers at 10,847b/d, 7,501b/d, and 6,999b/d respectively, while the main gas producing fields were Corallillo, Agua Fría, and Tajín, accounting for 36.7mcf/d, 24.5mcf/d, and 18.5mcf/d, in 2013. Presidente Alemán saw a significant decrease in production throughout 2013, from 10,570b/d of oil and 19.75mcf/d of gas in January 2013 to 5,376b/d of oil and 9.75mcf/d of gas in December of the same year. Production levels have already begun dropping in 2014 as the average went down to 4,844b/d of oil and 9.55mcf/d during the year’s first quarter.

In 2010, five different field laboratories were awarded to experienced companies in production-enhancement solutions, in order to test new technologies for eventual implementation in the Chicontepec project. At the time, the now Acting Director General of PEMEX E&P, Gustavo Hernández García, explained that PEMEX was looking to work with top-notch service companies to figure out which technologies would work better in Chicontepec. “Each field lab had different degrees of success with several technologies being used, ranging from multifracking, water injection techniques, drilling horizontal wells, and different combinations of these being used by each of the five companies assigned to the labs. The field labs at Chicontepec proved that enhancing production in the area would not be achieved through one unique formula,” says Hernández García. The same technologies cannot be applied at all the different wells across the field, since different geological conditions are present and would see a variety of results being yielded. The second lesson the company learned was how to increase overall production in the field. Through different technologies, PEMEX and its partners identified which unconventional wells would most broaden its understanding of the unconventional reservoirs and plays within the asset. Hernández García summarized the results of this strategy as such: “PEMEX is finalizing the learning process of how to produce better at Chicontepec, while implementing technologies based on these experiences that effectively deliver hydrocarbon production increases.” The Coyotes field lab was awarded to Tecpetrol, a subsidiary of the Techint Group that is in charge of executing exploration and production activities for oil and gas fields in Argentina, Bolivia, Colombia, Ecuador, Mexico, Peru, Venezuela, and the US. Tecpetrol executed surveys, drilling, and well repairs in Coyotes, as well as field operation and maintenance, achieving an average production increase from 1,178b/d of oil production in 2009 to 2,591b/d in 2012. During the same period, gas production went up from an average of 1.86mcf/d to 5.99mcf/d. Weatherford, one of the largest oilfield service companies, was assigned the Presidente Alemán field lab. Through 2D/3D seismic and log interpretation, static geomodeling, reservoir modeling, production stimulation techniques and engineering, and well planning and drilling, both companies managed to increase production from 2009 averages of 836b/d of oil and 2mcf/d of gas in 2009 to 8,762b/d and 17.81mcf/d averages during 2012. The Remolino field lab was awarded to Halliburton. Through several horizontal drilling techniques and other well completion solutions, the company managed to restart production operations during 2010 to average 4,729b/d of oil and 6.51mcf/d of gas during 2012.