Critical Success Factors for Production Optimization in 2024-2030

Mexico’s oil and gas industry is facing a different context than what was expected a decade ago. With PEMEX increasingly focusing on shallow waters, the development of new areas, including deepwater fields, now relies importantly on partnerships between the NOC and private operators. The pressure to increase production has also led the industry to develop new solutions for mature fields. 

Despite a decline in production from 3.38MMb/d in 2004 to 1.72 MMb/d in 2018, PEMEX reported a rebound to 1.88 MMb/d in 2023. PEMEX's focus remains on known areas and mature fields, such as Tupilco Profundo, where continuous drilling and enhanced recovery methods have extended the well's production. 

“The issue of mature fields is critical in Mexico, as over 90% of the country's reserves are in these fields. PEMEX has implemented hydrogen and water injection methods, but no more sophisticated secondary or enhanced recovery systems have been applied yet,” notes Óscar Roldán, Director Oil and Gas Division, R9 Holdings.

James Buis, District Manager Mexico, ChampionX, emphasizes that mature fields constitute most oil fields in Mexico, making their optimization essential. Effective modeling can identify the extractable resources and the appropriate recovery methods. Javier Estrada, Founder and Director, Analítica Energética, highlights that data analytics must be supported by a solid strategy, organizational structure, and suitable contracts to achieve optimal production.

Operators are encouraged to adopt advanced technologies toward digitalization, enhanced oil recovery techniques, and automation to optimize production, improve efficiency, and minimize environmental impact. Investing in R&D and collaborating with academic institutions and research centers will also be essential for driving innovation and adapting to market changes, especially because of the importance of mature fields for PEMEX’s production.

Beyond mature fieds, over this administration, PEMEX has developed 54 new fields, both offshore and onshore, including deeper wells such as Tupilco Profundo, Quesqui, and Ixachi. The construction of marine structures has also seen significant improvements in time, weight, and cost. Deepwater fields are on the horizon, albeit through partnerships between PEMEX and major operators like Hokchi, Wintershall, Woodside, and Talos to leverage their international expertise for Mexican projects. 

Nonetheless, the halt on licensing rounds remains a major concern for the industry. Experts suggest that bidding rounds and granting areas to private players could be vital for sustaining production levels. “We hope to engage in open discussions about contracts to find mutually beneficial solutions. We cannot afford to waste time, as delays prevent oil from being extracted,” says William J. Waggoner, CEO, Mexico Petroleum Company.

Future success in Mexico’s upstream sector depends on strong public-private partnerships, attractive fiscal terms, reduced bureaucratic hurdles, and data transparency. “Securing contracts with experienced operators can lead to faster development and quicker returns on investment (ROI), limiting PEMEX's spending,” highlights Buis. “A tax regime with lower taxation than the current one is necessary, along with a tax reform to attract private investment and make contracts more appealing,” adds Roldán.

Roldán advises the incoming government against attempting to create new types of contracts and instead recommends focusing on established industry practices. “Mexico is not currently in a position to innovate in sensitive areas like this,” he added.

Experts highlight Mexico’s potential for unconventionals, as they represent several promising areas, which are close to the United States, which has developed a strong industry around these projects, including fracking technology. Buis noted that fracking technologies are widely utilized in United States reservoirs, whose geological formations extend into Mexico. This suggests the potential for similar projects in Mexico, especially as fracking technologies have evolved to minimize water usage. “In West Texas, for example, where water is scarce, we have learned how to treat and reuse every ounce of water recovered. Mexico will need to adopt similar practices,” Waggoner added.