Taking on Deeper Drilling Challenges in Mexico’s Deepwater AreasWed, 01/21/2015 - 22:38
Q: How has Seadrill’s relationship with PEMEX evolved since the company’s entry into the Mexican oil and gas industry?
A: In 2011, we purchased Sea Dragon, a Mexican company which had a drilling contract with PEMEX. We also started our deepwater drilling operations in the NOC’s assets with the West Pegasus semi-submersible. This was the first deepwater drilling rig in Mexico and it has been operating in the Perdido Fold Belt since it arrived. Even though there are three other deepwater drilling rigs operating in this segment, as of today, West Pegasus remains the leading driller in Mexico’s deepwater Gulf. With over 90% uptime, the reliability of this platform exceeds that of its competition, which stands at around 75%. By demonstrating our deepwater drilling capabilities, we have been able to develop our business relationship with PEMEX and were awarded five more contracts for jack-ups that are carrying out the NOC’s offshore activities, both in shallow waters and deepwater. These jack-ups were brought exclusively and directly from the shipyard to Mexico in a record-setting timeframe, while being brand new and adapted to PEMEX’s requirements. The jack-ups West Oberon, West Intrepid, West Defender, and West Courageous have been in place for a while, and the last jack-up, West Titania, arrived in August 2014. West Titania and West Oberon are state-of-the-art platforms with the latest technological capabilities, including cyber chairs, and all the hydraulic equipment necessary to drill down to 9,150m. The other three can drill down to the same depth, but they are not equipped with the same technology as the previous two. Regardless, these jack-ups are all less than three years old.
Q: What makes Mexico a hot location in Seadrill’s global portfolio and how will it evolve in future deepwater developments?
A: Mexico’s Energy Reform has evidently sparked global interest. While this is a critical aspect of Seadrill’s perspective on the Mexican oil and gas market, three other important factors should be highlighted. The economic stability that Mexico offers to companies such as ours is certainly an important factor that has attracted Seadrill. Similarly, the government’s foreign relations are very well aligned, thus facilitating the process for any foreign firm to come here. Paired with this, the major hydrocarbon discoveries in the Mexican Gulf not only amount to large quantities of reserves, but also exhibit great crude quality. Given the combination of these three factors, Seadrill has decided to venture strongly into Mexico. We aspire to be the most important partner in PEMEX’s drilling strategy and be ready when IOCs decide to tap into these offshore opportunities.
Seadrill’s semi-submersible West Pegasus and its five jack-ups will allow us to work on PEMEX’s assets over the coming years. We hope to renew these contracts as the NOC strengthens its deepwater capabilities through 2018-2020. We expect that PEMEX will continue to be our number one client in Mexico in the short and medium term. At the same time, given PEMEX’s restructuring, its new drilling division will be beneficial to the company as it will enable the NOC to handle drilling matters more quickly and efficiently. We expect to be working directly with it and replicate our success with PEMEX E&P.
Q: How are Seadrill’s targets changing as a result of PEMEX’s restructuring?
A: Our company’s new operational hub in Ciudad del Carmen opened in January 2015. That integrated center’s total investment will add up to US$10 million over the next six years and will be equipped with the necessary infrastructure to enhance our operations in Mexico. This is a clear example of Mexico’s importance in Seadrill’s global portfolio. We predicted we would have an excess capacity of 150% by January 2015, given that Ciudad del Carmen houses PEMEX’s hub for offshore operations. Our Ciudad del Carmen hub has six units and a twelve-rig capacity. We are already designing our units to be Mexico-friendly so we can cater to the specific conditions that characterize the country’s offshore oil regions. Paired with this, we have a real commitment to be part of the country’s development strategy. As of today, 70% of our employees in Mexico are nationals, and we are working under a recently established agreement to increase this figure by 20% per year. In terms of our fleet, we are currently producing one drillship per quarter and that is set to continue over the next four years. Each drillship’s construction process takes about four years, so we are preparing ourselves for the long term.