Ignacio Layrisse
CEO
Monclova Prineos Gas
/
Insight

The Beginning of a Second Round of Field Development

Tue, 01/22/2013 - 13:26

With a history of providing services to Pemex under the former multiple service contracts at the Pirineo and Nejo blocks since 2005, Monclova Pirineos Gas is an excellent example for small and mid-sized companies that wish to compete for Pemex’s new integrated service contracts. In the second round of these contracts, which were awarded in June 2012, the company was awarded two of the six areas on o† er, Tierra Blanca and San Andrés. According to Ignacio Layrisse, CEO of Monclova Pirineos Gas, the new integrated service contracts are a positive evolution for service companies, because the tari† that companies are paid for incremental production pushes the service provider to optimize production and e· ciency.

“While the new contracts are defi nitely better, they are still far from perfect,” Layrisse says. “The best way forward would be to have a tari† and leave the contractor to deal with everything, because at this point we have spent too much time establishing the best way to deal with Pemex. We end up hiring too many people to do the paperwork, who in turn hire too many people to revise the paperwork. This should be addressed in future contracting rounds.”

“In the current Mexican oil and gas environment, profi t comes from providing services at a good price,” he adds. “With the new integrated service contracts, having an exploration and production mindset is added as a necessity, because you need to fi nd resources and produce them. Although the winning companies on these contracts do not own the reserves or have to commercialize the oil, if they cannot fi nd hydrocarbons and optimize the production, they will fail.” Layrisse goes on to say that care has to be taken in this activity, since drilling costs are relatively high in Mexico, thanks to the fact that for so many years, there has only been one operator, and additionally, the large service companies have taken a share of the market that would be disproportionate in a more open operating environment.

Monclova Pirineos Gas is a consortium of Mexican, Venezuelan, Spanish, and Colombian interests; Layrisse explains that the combination of a Mexican service providers, Venezuelan exploration and production expertise, Spanish fi nancial backing, and Colombian participation through Vetra make the perfect combination and profi le for the integrated service contracts.

“Like many mature fi elds in Mexico, San Andrés and Tierra Blanca have not seen much investment in recent years, despite the high reserve levels in place. In the past, Pemex exploited the fi elds with the intention of producing as much and as quickly as possible, but these service contracts allow us to develop the blocks with the latest technologies, such as seismic surveys and horizontal drilling, which was previously not an option for Pemex because of the cost.” Layrisse emphasizes the big opportunities that San Andrés and Tierra Blanca represent for Monclova Pirineos Gas, because there are still oil deposits that had been left untouched by Pemex during its initial fi eld development.

Layrisse’s strategy for the development of the two fi elds will focus on optimizing the wells that are currently in production at each of the two fi elds, specifically looking to improve the current artifi cial lift methods that are in place. The company has also identifi ed wells that are not producing in formations that Layrisse believes have a lot of potential. This approach is to be combined with exploration, drilling, and development. “Our strategy is to get the most out of what we have, and then pursue exploration and development opportunities. One of the advantages of the awarded blocks is that there is already some infrastructure in place, which can be used to speed up incremental production,” he explains.

Current EOR methods being used at the field by Pemex include water injection, and Layrisse expects that horizontal drilling will be extremely important in the successful development of the two fi elds. “The greatest challenges at the blocks lie in the geology and the characteristics of the reservoir. We must defi ne a very good strategy, and once we have that we can start drilling the locations we have determined. Our initial calculations show that we will drill between 300 and 400 new wells across the lifetime of the fi elds, but of those, the fi nal locations have only been decided for 50 to 60 wells.”