William Waggoner
Mexico Petroleum Company
View from the Top

From the Permian Basin to Mexico

Wed, 01/20/2016 - 12:54

Q: How did you get involved in the Mexican Energy Sector?

A: Mexico’s Energy Reform is a tremendous piece of legislation that was seen as improbable just a few years ago. The secondary legislation supporting and effecting the Constitutional Reforms is equally brilliant, as well as are the regulations that serve as the foundation for the secondary legislation. The next challenge, however, is the greater one. It is a question of how to efficiently and effectively interplay the various roles of the different agencies charged with carrying out the reform in the best interests of the people of Mexico From what I can tell, it has been a steep learning curve, but those charged with this task are dedicated, brilliant, ethical professionals who have shown commitment.

Q: How can Mexico Petroleum Company translate the experience of the Permian Basin into Mexico?

A: We have to begin by understanding Mexico and the US from both sides of the border. I was born and raised in the heart of the Permian Basin, which has been resurrected several times. This lifelong experience has provided me with the knowledge of what it takes to make some of these fields in Mexico economical. Our company carries out artificial lifting in the Permian Basin better than anybody and looks forward to bringing that technology and field experience to Mexico. When it comes to secondary recovery techniques, our experience comes in handy because we started to use those methods before modern fracking came into fashion. Depending on the number of assets we acquire, we will determine what amount of resources we will utilize from the Permian Basin. Mexico Petroleum Company is fortunate enough to have some of the best petroleum engineers in the world right here in Mexico, and we offer a compliment of Permian Basin engineers, geologists, and geophysists who bring their years of expertise and experience to the region. They are quite creative when it comes to developing and maximizing production through a variety of modalities, whether it be workovers, remediation, base optimization, or new horizontal and vertical wells, while always aware and sensitive to the environment both below and above the surface.

Q: How is Mexico Petroleum Company’s contract migration process advancing?

A: Patience and commitment are the key ingredients for any company seeking to explore and produce oil and gas in Mexico, and this includes the migration process. I became intimately involved with the CIEPS starting in 2008. I discussed their viability with a variety of operators and service companies in the US, as well as a number of industry leaders here in Mexico for the better part of five years. Their interest was sincere, but the terms were thin and modern day fracking in the US was just taking off. However, major service companies quickly recognized that CIEPS were in essence just long-term service contracts with an added small profit incentive.

In my view, the CIEPS did not achieve their purpose and now pale in comparison to licenses or production- sharing agreements. It is safe to say that operators, service companies, PEMEX, and the Mexican government agree that these CIEPS need to be migrated as soon as prudently possible. PEMEX and existing service companies are working hard to determine how to best make the transition. Regulations need to be stipulated in order to smoothly guarantee the exit and entrance of the parties. Companies must also recognize that after PEMEX approves their migration terms, they will still need the approval of CNH, the Ministry of Energy, and the Ministry of Finance. Agencies and private parties are tirelessly analyzing the most viable ways to create an equitable road that will attract foreign investors. Meanwhile, Mexico Petroleum Company is proud to be one initial players to go through this rather daunting process.