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Analysis

Energy Strategy 2013-2027

Tue, 01/22/2013 - 13:03

President Enrique Peña Nieto presented the National Energy Strategy (NES) 2013-2027 at the end of February this year. The NES is the policy guideline for the energy sector, established by the federal government and ratified by Congress. The plan has a long-term vision, taking into account the next 15 years, and establishes the framework for the growth and maintenance of energy supply and exploitation

EXPLORATION

The NES mentions the need to continue investing in exploration projects, technological development, and regulatory definitions. With the help of technological advances made in recent years, one of Pemex‘s objectives is to evaluate the potential of hydrocarbons in the country’s currently unexplored basins, as well as re-evaluating those that have been explored but that might present new opportunities. The NES also underlines the importance of acquiring and processing 3D seismic information in areas that still have not been analyzed using this technology. As for unconventional resources, the NES points to the importance of a detailed exploration program in shale regions, with the aim of reducing uncertainty in the size of the resources and potential productivity of the fields. On the other hand, balancing exploration and production activities is considered essential to maintaining the 100% 1P reserve replacement rate that Pemex has achieved over the last two years. One important way to do this is to move 3P and 2P reserves from possible and probable to proven reserve status.

PRODUCTION

The NES acknowledges that Pemex’s easy oil extraction phase, based on production at the supergiant Cantarell field and the country’s current largest producer Ku-Maloob-Zaap, is over. Most of the NOC’s prospective resources are located in deepwater, mature fields, or in reservoirs where geological complexity makes extraction challenging. New technologies, such as advanced seismic acquisition and processing, non-conventional drilling, and enhanced recovery techniques will play a central role in facilitating future oil production. The NES also recognizes the need to capture the potential of extra-heavy oil and nonconventional resources. The strategy emphasizes the importance of promoting Pemex’s integrated service contracts (ISCs) to multiply the technical execution and accelerate the adoption of state-of-the-art technologies. This is particularly the case at complex reservoirs such as Chicontepec, which are the subject of the third round of ISCs. To be able to maintain production in the medium-term, the current time span of five years between the discovery of a field and first production should be lowered.

DEEPWATER

The NES considers the probable existence of geological structures that contain hydrocarbons in the deepwater Gulf of Mexico and that some structures, called transboundary reservoirs, could be shared with the US. An agreement is currently being negotiated between both governments. It has the aim of allowing e·cient, equitable and environmentally responsible exploitation, to provide legal certainty and respect the sovereign rights of each country to its natural resources.

SHALE GAS

Mexico has an estimated 60.2 billion boe of unconventional reserves, of which 53% is expected to be shale oil, with the remaining 47% proportionally divided into condensate and dry gas. Shale gas could contribute significantly to meeting Mexico’s needs in the long term. However, the NES underlines the importance of understanding the ecological impact of exploiting nonconventional reserves, particularly in reference to the use and recycling of water for hydraulic fracking, the correct foundation of the wells and the e†ects of the chemicals used in the process. It also considers that a part of the resources are in regions with limited water access; therefore, e†ective water management is critical.

REFINING

The NES aims to create a permanent, e·cient, and adequate supply of refined products at competitive prices. In this context, and due to the lack of a functioning market for heavy distillates such as fuel oil, the need to revitalize the production infrastructure of the National Refining System (NRS), and adapt it to current market conditions, is critical. In order for the infrastructure to be able to meet domestic fuel demand, it is necessary to increase the e·ciency of current refineries by reducing the gaps with international standards regarding refining capacity, performance of distillates per barrel of processed crude oil, energy use, and maintenance scheduling. It is crucial for Pemex to renovate its current production infrastructure to develop the capabilities of the NRS. On the other hand, the NES emphasizes the need to identify, promote, and take advantage of the areas where the current legal framework allows for the participation of private players, such as for combined heat and power (CHP), hydrogen supply and water treatment, among others