Future Outlook of the Mexican Oil & Gas IndustryWed, 07/22/2015 - 11:43
The CNH Commissioner began by noting that companies will have to present their reserves before CNH. He identified Akal as the field with the largest 3p reserves in the country, followed by Maloop and Zaap. After showing maps and tables with the country’s reserve inventory, he emphasized on the opportunities for improved reserve replacement, farm-outs, and contract migration. “On the production side, the State will keep 17% of the available blocks. The percentage for exploration, however, is much larger, as it consists of most of the national territory, mainly in deepwaters.” Rangel then said the authorities are working on schemes to allow geophysics companies to explore using different kinds of methods and technologies. He mentioned that the largest deepwater exploration project entails a US$1 billion investment and will take place in two years. “A one billion-dollar seismic exploration project is probably the largest project of its kind,” he expressed, adding that this shows interest from service companies in the Mexican market. “Reserves continue to decline, so we need to think of new ways to replace them,” Rangel said as he showed a map of Mexico’s potential reserves.
Rangel moved on to Round One, saying the ideal scenario would be between assigning 15-30% of the contracts. In order to achieve a realistic percentage, the contract models should be revised, as well as the requirements and times companies had to comply with. “There are many factors that should be considered and incorporated into the model if we want to achieve better results.” He said CNH is already working on these matters, as reserve restitution is crucial. Rangel went on to talk about the second tender, explaining that large companies try to produce 1 billion barrels per year, thus reserve replacement should amount to a similar number.
As for the third round, Rangel said the onshore fields that will be tendered amount to 2,500 million boe. He stressed that all the tendered fields have certified 1p, 2p, and 3p reserves. Conversely, most extra-heavy oil fields tend to be certified for 3p reserves only, although Kaya, the fourth largest oil field in Mexico, has certified 1p reserves of 7 billion barrels of actual crude. Regarding heavy-oil fields, Rangel said that today only Ayatsil, which has an average output of 5,500b/d, produces extra-heavy crude.
Rangel told the audience it was important to go over a few aspects of Chicontepec. “Some of the fields in Chicontepec that will be tendered are already under production, which can be attractive for operators. Chicontepec’s reserves amount to 42 billion boe, although recovery factors will be small.” According to Rangel, farm-outs can help raise the 15% recovery factors stated in the development plan to 20%. “The idea behind a farm-out is to find an experienced partner, thus creating a transfer of knowledge, technology, and economic resources, while reducing risks,” Rangel commented and highlighted the potential of farm-outs with exploration and production rounds in increasing production.