Craig Steinke
CEO
Renaissance Oil Corp.
/
View from the Top

Continued Commitment to Mexican Market

Wed, 01/22/2020 - 07:49

Q: Renaissance operates the Mundo Nuevo, Topen and Malva blocks, in Chiapas. How are developments on these blocks evolving?

A: General regulatory delays, which have affected all blocks from Round 1.3, have delayed drilling in the Chiapas blocks. However, Renaissance Oil is hopeful of receiving an extension from regulators that will allow us to finish our commitments in the area and drill the wells we planned. Nothing has changed regarding our optimism in terms of profitability for our work program; these are potentially very large wells in a great area and that is why Renaissance is there. 

Q: How has Renaissance Oil’s relationship changed with Lukoil as operations on the Amatitlan block have continued?

A: Lukoil has been a strong, steady and professional partner for Renaissance on the Amatitlan block in Mexico. Lukoil delivers on its promises, is very transparent and has a strong commitment to Mexico with several offshore licenses. Lukoil invited Renaissance to be the operator of the Amatitlan block in January 2017. It took around six months to become fully integrated into the Special Purpose Vehicle (SPA) due to the heavy administrative work required. But once we were in, we acted quickly to implement a US$50 million work program, of which 95 percent was completed by the end of 2018. Renaissance successfully drilled and completed 17 Chicontepec wells and drilled one shale well, in just 13 months. These wells are now producing. Our work program was so extensive that it accounted for 11 percent of all wells drilled in Mexico in 2018. PEMEX was impressed by the speed and professionalism that Renaissance delivered and we are now working diligently on migrating our Amatitlan agreement into a license together with Lukoil.

Q: With the administration reconsidering its stance on unconventional resources in Mexico, how could Renaissance help develop these possibilities?

A: Renaissance hopes that the possibility of developing Mexican unconventionals can move forward. The potential of unconventional sources in Mexico is world class. It is a national treasure and could become a shale play tantamount to the Permian or Eagle Ford fields. The upper-Jurassic shale in the Tampico-Misantla Basin, we believe, is a hybrid between these two fields. The Tampico-Misantla Basin is composed of the same rock as the Eagle Ford but is three times as thick, meaning it may well contain more oil and gas. Unconventionals offer the quickest and most direct way to achieve the government’s goals of doubling oil production.

Q: Why should unconventional resources be reconsidered by Mexico’s new government as a potential energy source and how can unconventionals be developed?

A: The advance in shale technologies over the last decade has made the fracking process far safer and cleaner. For example, while companies once used fresh water for their shale operations, formation or brackish water is now being used in its place. Brackish water may be reclaimed wastewater and is not suitable for human consumption. This is important because it illustrates that the oil and gas industry recognizes its role in the responsible use of resources and lessening the environmental impact of our activities.

The common criticisms are of older legacy technologies, which are being faded out. Less is known about the modern, clean techniques now used in the industry. Overcoming this means properly distributing knowledge about these newer, more efficient and environmentally-friendly technologies. We hope to address the political elements of this discussion and believe we can help develop unconventionals in Mexico, considering the country imports fracked gas from the US. Renaissance is committed to employing the latest clean technologies to support Mexico’s economic advancement and to help move toward Mexican energy sovereignty. Renaissance is aware that the new administration is closely analyzing migrating from licenses to service contracts and while the company understands that service contracts may work for some horizons, they will not work for ours in developing unconventionals.

 

Renaissance Oil Corp. leverages the technologies to improve production in mature onshore fields and develop the potential of unconventionals. It works with Lukoil in the Amatitlan block and operates the Mundo Nuevo, Topen and Malva blocks in Chiapas.