Miguel Ángel Lozada
Cantarell Administrator
View from the Top

The Future of Mexico's Supergiant Field

Wed, 01/22/2014 - 16:02

Q: How is investment divided between production optimization and recovery factor maximization at Cantarell?

A: Those two objectives are the main priorities for each asset. After all, increasing the recovery factor of the fields leads to optimized total production. Achieving this involves Enhanced Oil Recovery (EOR) and Improved Oil Recovery (IOR), which uses new technologies in artificial lift systems, drilling, well completions, static and dynamic reservoir models, secondary recovery technologies, and other recovery techniques. More than 95% of the Cantarell budget is dedicated to IOR, to improve the recovery factor and optimize production without significantly increasing production costs. Within this approach, pressure maintenance is our first priority and fields without a strong aquifer are supported through secondary recovery methods, either the injection of gas or water. We are also improving the drainage area and the production index by drilling horizontal wells in unconsolidated sandstone reservoirs in the Ek-Balam field and in the Early Cretaceous formations in the Akal field. We are deploying new completions in open hole situations with instrumented tubing tails in the Akal field in order to facilitate gravity drainage and to follow fluid contacts in very thin oil rims. There has also been significant improvement in the drilling geosteering and geophysical logging in very complicated targets. Monitoring fluid contacts has been a key issue in current exploitation conditions with very thin oil rims. We have been working for several years to develop a new EOR method to be applied for long-term exploitation processes at Akal.

We have been working together with IMP and several American universities, including Rice, Stanford, the University of Texas, and the Colorado School of Mines. Together we defined foam injection with surfactants as the best option for the Akal EOR exploitation process. We are now designing a pilot test to be performed as soon as readily possible, and we are also working to define whether injecting surfactants, polymers, or a combination of both in the water flooding process of the Ek-Balam field is the best option. This could increase the final recovery factor of this field by 6-10%. In the near future, we are going to conduct a pilot test there to inject chemicals mixed with water in order to increase the sweep efficiency of water and to reduce interfacial tension on the rock. We are making a lot of progress in our work with Beicip-Franlab, a French company dedicated to developing this kind of products. We still need to work out kinks in these EOR processes as they are not cheap, and add an important cost to the total price tag of production. Under them, the cost of production could go up to US$20 per barrel.

Q: What have been the key developments in extending Cantarell’s life cycle through reservoir management?

A: The approach is to execute the correct exploitation plan according to the reservoir’s nature, rock and fluid characteristics, physical mechanisms, and economical assessment. Applying new technologies in all the exploitation processes and working in multidisciplinary teams are also vital to this purpose. In the case of the Akal field, which has 68% of the total reserves of the asset, the most important physical mechanism is the gravity drainage process. This expels the oil from the matrix rock and makes it flow down through the porous fractured rock within the gas cap. Due to the differences between the oil and gas densities, the gravitational forces surpass the capillary forces. The exploitation plan for this field is to take advantage of this strong process by targeting those wells that can benefit from it. There is also a strategy for monitoring fluid contacts in order to place the wells in the right position for capturing the gravity drainage effect. This process can last for a long time and lead to a recovery factor as high as 60%.

However, the most important long-term project in this field will certainly be the double displacement process. This also involves the gravity drainage, as the main objective is to move the water-oil contact 600m downwards to its original position in order to put the gas cap in contact with this invaded zone. As previously mentioned, this will make it easier for the oil to move down due to the fact that gravity forces are bigger than capillary forces. Currently, the sweep efficiency in the gas cap is 53% compared to only 33% in the water invaded zone, which is due to the gravity drainage being much more effective than water displacement. We think there are still 1 billion barrels of recoverable oil in this invaded zone, which would give us a flat production platform of 200,000b/d in the Akal field for the next 10 years. That is an extraordinary accomplishment for a mature complex field with a small oil rim.

Navigating this process involves huge operational complexity and requires large investments. To apply this double displacement process, we need an investment of around MX$50 billion (US$3.8 billion), which is the entire Cantarell budget for a year. Therefore, this investment will have to be made gradually and allocated over time. We still have around three platforms to deploy, with eight legs each, we need to drill and work over several wells, and we need to produce more water in order to move the oil-water contact point downwards and put the gas in contact with the waterinvaded zone. We are currently producing 130,000 barrels of water per day in Akal; in order to move that water-oil contact down at a rate of 15 meters per year and obtain the gravity drainage benefit, we need to produce around 350,000 to 400,000 barrels of water per day. This means we have to triple the amount of water that we are currently extracting. In order to achieve this, we need to have dehydration and water treatment infrastructure. Continuing to transport the water 180km to Dos Bocas would be a waste of energy and money. Ideally, we would have to install new dehydration and water treatment plants to dispose of that water by releasing it into the ocean.

The second most important booked reserves are in the EkBalam field, which has more than 500 million of barrels of original oil in place. This oil is going to be exploited through water flooding and horizontal wells, due to the fact that it is a thin sandstone reservoir without aquifer support. We are expecting to reach a final recovery factor of more than 43%. The other two most important fields are Sihil and Ixtoc-Kambesah, which have more than 100 million of barrels of oil each. Sihil has a very strong aquifer and its exploitation plan is based on locating the wells in the right position and applying critical rates to avoid coning or channeling or both. Ixtoc-Kambesah is a carbonate reservoir and its exploitation plan is based on a pressure maintenance project and also on extending its reserves with new appraisal wells.

Q: What are your most important production and development goals for 2014?

A: The myth that things in Cantarell went wrong must change. There was a policy of accelerating exploitation in the asset due to the needs of the federal government to continue the country’s development. Our reservoir operates through gravity drainage, so if it happened that some oil was bypassed due to the extraction rates, the same oil that was stuck in the gas cap zone is now being drained to the oil bank. In other words, if the oil was bypassed, thus affecting the past recovery factor in the past, it is now being recovered since the oil is dropping back again. That same oil is recoverable due to our exploitation mechanism. There was no damage done to the reservoir. Our recovery factor expectations border around 50% and we are currently at 42%. No field in Mexico presents similar recovery factors or expectations.

Regarding Cantarell’s future, it remains the second most important asset of the country behind KMZ after having been the first for many years. We expect it will remain in this position for years to come. Its history as Mexico’s main resource provider has given the people that work here a sense of pride and privilege. We remain committed to applying our best ideas to continue increasing the recovery factor. On the Northeast Marine Region, we make up 34% of the total production to KMZ’s 66%. KMZ is at a development stage while Cantarell is already at a mature or declining stage. Our fields started production in 1979 yet we continue to produce at the high level of 446,000b/d, which is around 17% of the country’s total production. Nevertheless, we face real challenges, such as reducing total production costs. We are currently producing at US$10 per barrel, and our goal is to bring that down to US$8 per barrel. We believe it is feasible and that we will soon achieve this goal. If we keep our production levels between 450,000 and 500,000b/d, we will have managed to optimize all our operations and we will secure the needed cost reduction from maintenance and labor. This represents a great potential opportunity to make the asset’s exploitation even more profitable.

We have a production goal of 429,000b/d, which represents a 2% production decline rate since 2011. We are convinced we will fulfill this goal through our two main development areas: Ek-Balam and Ixtoc-Kambesah, both producing around 60,000b/d and aiming to reach 100,000b/d. On the other hand, we will also begin to move the water-oil contact downwards for the double displacement process in 2014. This will give us more flexibility in terms of the production oil rim at Akal. We will continue to deal with Sihil’s inevitable decline, but we have huge prospects with well intervention techniques and gas and water management, for which we already have the resources.

Our objective is reaching a 429,000b/d production level or higher, while maintaining a sustainable decline rate. We will keep growing professionally, in methodologies and discipline, in a way that allows us to reduce overheads and total production costs.