/
News Article

Deepwater Offers Opportunities but Continuity, Time are Required

By Peter Appleby | Thu, 10/29/2020 - 17:30

You can watch the video of this panel discussion here.

Mexico’s deepwater potential remains large and largely unexplored, according to three major industry players who participated today at Mexico Oil & Gas Summit 2020. The time and investment that deepwater developments represent require political and economic continuity, however. “We cannot underestimate the impact of government policy on investment from IOCs in Mexico’s deepwaters,” said Bud McGuire, COO at Alpha Deepwater Services (ADS Consultoría Petrolera).

“The potential of Mexico’s deepwaters is enormous. It is an unexplored region. The exploration success ratio in deepwater is really high for this reason,” McGuire told the audience.

During the panel titled “Unlocking Mexico’s Deepwater Potential,” McGuire was joined by Raúl González, E&C Offshore Mexico Country Manager at Saipem, Cesar Vera, Chief Commercial Officer of Naviera Integral and moderator Jesús de la Garza, Director General of API Tamaulipas, to discuss the future road ahead for deepwater projects in Mexico.

IOCs deepwater projects have been criticized by the Mexican government and President Andrés Manuel López Obrador. The president is a staunch opponent of the Energy Reform and says that IOCs are taking too long to deliver on what they promised. However, as the panelists pointed out, deepwater projects are extremely costly and require years of planning, engineering and execution. All panelists believed that deepwater will be a vital space for Mexico’s energy future.

Deepwaters have traditionally been off limits for PEMEX, which is a world leader in shallow water and onshore production. Though it embarked on a few deepwater developments following the Energy Reform, those it went at alone were abandoned, while Trion, undertaken jointly with Australian IOC BHP, remains ongoing. Yet, a recent change in tact from government officials including those from SENER, point to a change in direction, González said. 

“Even before the pandemic, PEMEX stated that it did not want to go into deepwater. Lately, it has changed their tune, recognizing deepwater might be inevitable. The south of Mexico is largely lacking in gas, which deepwater developments could bring,” he said.

While the Zama reservoir is the standout deepwater discovery since the Energy Reform and will require the country’s deepest-ever fixed platform to be brought to production, PEMEX will likely head to the Cuenca Salina area because it is shallower, requires less investment, is quicker to bring to production and is located in the south of the country where gas storage is most acute. But even in the Cuenca Salina, PEMEX will be moving into depths it has very little experience in and will require new ways of employing technologies. “The technical definition for deepwater is 500m and PEMEX has never completed a development deeper than 180m,” Gonzalez said.

New ways of working will be essential for PEMEX if it is to carry out costly deepwater developments in a financially-efficient manner, Vera said. “Technology will be a critical factor in determining deepwater’s ability to compete with onshore shale. Exploration analytics to increase recoveries is one of those technologies, as well as digital applications to improve operating efficiencies and predictive maintenance analytics for critical pieces of equipment.”

Associated costs are also important to think about, according to Vera. He highlighted his own company’s involvement with Shell and noted the ways that Naviera Integral is streamlining transport costs to platforms that are very far from shore. “We need to start breaking paradigms and that is what we are doing. For the first time, we are using vessels to transport personnel for crew change rather than helicopters. Instead of transporting six people at a time, we are transporting 35. It is a longer run but we ensure greater fuel efficiency and reduced emissions.”

Though deepwater projects take time and patience, panelists had no doubt that it will continue to progress. “Stay tuned for deepwater,” said Gonzalez, “it will happen really, really soon.”

Peter Appleby Peter Appleby Journalist and Industry Analyst