Gustavo Hernández
Acting Director General
View from the Top

Starting Mexico’s First Deepwater Development

Wed, 01/22/2014 - 10:47

Q: What have been the exploration and production highlights of the past 12 months?

A: On the exploration side, we have continued with our drilling program and have been getting positive results in deepwater, both in terms of discoveries and their commercial assessment. Our deepwater strategy consists of both exploration and field development, such as Lakach, where we are excited to be working as it is Mexico’s first deepwater production project. We started drilling the first development well in Lakach with the Centenario rig, and have completed the tendering processes for the eight main contracts. The Board of Directors of PEMEX and of PEMEX E&P approved the acquisition of subsea equipment, and we are moving in the right direction and on schedule. We also recently assigned the international public tender for the construction of the processing plant for the gas coming from Lakach.

Q: What have been the main decisions regarding subsea infrastructure and contractor risk allocation in Lakach, and how will the fields be developed?

A: The infrastructure solution that was sent to the policymaker and regulator was a subsea-to-beach solution. This means we are going to install wet trees subsea installations and we will send the gas through two pipelines to an onshore processing plant, which was recently assigned and will be located next to Puerto de Alavardo, Veracruz. When we launched our first international public tender, it was voided as no one qualified. Besides technical aspects, one of the main reasons for contenders not qualifying were issues related to major responsibilities deriving from potential oil leaks or spills. Given that Lakach is a gas field, the risk of a hydrocarbon spill is limited. The tender has since been adjusted in accordance with international best practices, and we are confident that the assignation of the contracts will meet the participants’ requirements. We invited the same companies that withdrew their initial proposal because of legal issues regarding environmental accountability, and we ultimately received two offers. We decided in favor of a winning party that has already presented the required documentation. The issues that were pointed out by the contenders have been reviewed and the current contractual terms are satisfactory for both PEMEX and the contractor. The information on the wining party will be published once we have the proper documents in place.

As continuously stated, we expect seven wells to produce 400mcf that will be sent to the processing plant where the fluids will be separated before the gas is deployed in a 40- inch pipeline to be used in different industrial applications. As a result of increasing natural gas demand in Mexico combined with more affordable prices, a change is occurring in the industry as fuel oil is being replaced by natural gas. The industry could use gas produced in Mexican fields to complement gas imports from the US, which will ramp up once the Los Ramones pipeline is finished sometime next year. To properly respond to the high national demand for gas, it is crucial to keep developing our gas project portfolio on schedule. We expect the first production in Lakach to take place between the fourth quarter of 2015 and the first quarter of 2016.