Platforms, Tools Needed to Reach Goals

Fri, 01/17/2020 - 12:59

PEMEX has made it clear that its first priority for the future is to increase oil production during the present administration’s six-year term. Nevertheless, this expansion will prove impossible to accomplish without applying the proper platforms and tools

PEMEX's goal is to reach a production level of 2.6MMb/d by 2024, when López Obrador’s administration concludes its term. Exactly how the government came up with that figure is unclear. What is clear is the difficulty of the challenge ahead given today’s market dynamics.

According to CNH statistics, the last time Mexico produced 2.6MMb/d was in February 2010. Production levels then remained above 2.5MMb/d to March 2014. After that period, production levels never reached 2.5MMb/d again, and by July 2017 they had dropped below 2MMb/d altogether. Levels have never since reached those heights. Given the way in which this timeline aligns with the downturn in oil prices, it is fair to conclude its undeniable influence; even for PEMEX, a public institution that at least in theory give itself some breathing room from the market’s financial cycles, there is no escaping the economics of oil production. Currently, there is no prediction that indicates the oil price per barrel will reach anywhere near US$100 at any time between now and 2024. This indicates the complexity of the new administration’s goal: it is not a matter of reaching a past benchmark, but establishing a new one altogether. 

Using the right tools and platforms, PEMEX must innovate and apply new technologies and methodologies to its production infrastructure and operations if it is to achieve the efficiency necessary to reach its production goals. It is not just a matter of accelerating and increasing the frequency and magnitude of discoveries. It is a matter of making each production well so profitable that it creates a positive reinforcement loop of investment and production. 


Vastly increasing the role that onshore fields play in Mexico’s national production strategy would contribute to reaching the country’s production targets in the middle to long term. If Mexico is compared to the US, which boasts a successful oil and gas production story over the past 15 years, one of the main differences that stands out is that the Gulf of Mexico production, which reached an average of 1.8MMb/d in 2018, only accounted for 15 percent of the US total crude oil production in that same year. This is the opposite in Mexico, where production from shallow water fields has historically outperformed that of onshore fields in an approximate average ratio of 4:1, despite onshore infrastructure and available geological data being much older. While the renowned richness of the Campeche Basin could be to blame, the fact alone does not explain the sheer size of this difference. Onshore production from both conventional and unconventional resources, in mature and newly discovered fields, must increase in a manner that at least represents half, rather than a quarter of offshore production, so that savings can be maximized in part to the larger number of ways in which onshore production can be optimized. PEMEX’s investments in fields such as Ixachi and Quesqui represent a promising move in this direction.


Technological areas that PEMEX is working on as part of its short-term production strategy include extensive EOR, IOR and artificial lift applications, particularly in mature fields where recovery rates can be greatly increased with minimal investment through the use of these technologies. Another crucial technological category that will need investment is digitalization and imaging of production flows, and in this regard one of the main technological innovators committed to assisting PEMEX reach its production goals is renowned software developer Beicip Franlab. Mexico General Manager Rossy Perez explains its strategy: “Although we are interested in applying some of the latest lessons learned internationally on PEMEX’s unconventional fields and field development, we are also focusing on using our experiences in EOR and secondary recovery techniques in the areas where they could apply to help it increase production at its flagship conventional and mature fields.” However, Pérez is also looking at PEMEX’s future production strategy. “We can simulate the conditions of the reservoir in a way that helps us formulate a proposal for the application of these recovery techniques in a manner specifically designed to fit those conditions.” 

The over-stimulation of the Cantarell field in the years leading up to 2003 led to some of the highest production levels ever recorded in Mexico (over 3.4MMb/d at its peak), but also resulted in a sharp corresponding decline shortly afterwards.PEMEX and Mexico must diversify the sources and types of production to make higher production levels a long-lasting reality.