Pedro Silva
Subdirector of Technical Resources
View from the Top

Technological Challenges in a Restructured NOC

Wed, 01/21/2015 - 13:15

Q: How will the creation of PEMEX’s procurement division impact the technology development and procurement strategy of PEMEX E&P?

A: So far, the new procurement area has not been fully involved with our efforts and we have not seen changes in that regard. For E&P-related technologies, PEMEX talks to companies, identifies needs, looks for technology, seeks out prospective vendors, and runs tests on certain products and equipment out in the field, with occasional help from IMP. I do not know if, in the near future, PEMEX’s procurement arm will be more focused on technology, as it already has its hands full complying with the company’s operational needs. I do not like the idea of centralizing all of the procurement because we might see slowdowns in the process. If technology procurement becomes centralized as well, we will have to reach agreements on how to proceed so that each team can do its job efficiently. The benefits depend on the strategic vision for the procurement unit. There were initial plans to merge IMP with PEMEX, which justified the creation of a new technology unit. However, Congress did not approve this move, so top management decided to go on with creating a new research and technology area at the corporate level, which will soon be up and running. This will be supported by IMP to adapt or develop the necessary technical solutions to meet PEMEX’s main challenges, in both upstream and downstream. The main focus of this new corporate area will be to help assets become more efficient at implementing technology solutions on a large scale.

Q: How would you connect the procurement function with the actual technology needs in the fields?

A: Having a procurement area supporting technology efforts in the company is very desirable. My main objective is to concentrate on determining the needs in the fields first and then look for support from procurement to access technology solutions more efficiently. This entails upstream and downstream, so we need to think of the best ways to handle procurement across these areas.

Q: What are the main technological challenges facing PEMEX in the fields that were awarded during Round Zero?

A: The challenges now facing PEMEX will remain the same for the next few years, as PEMEX has a highly diversified portfolio. We will be entering deepwater, where joint ventures will be important for accessing the right technology. PEMEX originally requested only a small part of Mexico’s significant resources in unconventional fields in order to concentrate on the more productive fields and attractive areas, but SENER is giving us back some unconventional areas in the Burgos basin and Chicontepec. We still face the same issues with these resources, such as fracking, enhanced recovery methods for mature fields, and field rejuvenation. In offshore extra-heavy oil fields, we will be looking for partners, for which farm-outs are being considered to tackle some of the challenges that those fields present. In exploration, the challenges lie in improving subsurface imaging, dealing with presalt formations, improving the drilling success rate, and defining better well locations, among others.

Q: How do PEMEX and its subsidiaries feel about joint ventures as a way to access new technology and expertise?

A: There is a general feeling of optimism among PEMEX’s senior management about the benefits of joint ventures. We also see these joint venture processes as a real challenge and a good opportunity to learn about what is going on abroad. After all, when companies come to us, they talk about their successes, but seldom mention the things that went wrong. This is not just the case for technology matters; it is the same for operations and the whole production chain. This makes us eager to work sideby-side with these international companies to find out for ourselves what works and what does not. I am sure that, at first, some of these companies will not have an easy time in Mexico because, for example, not many have dealt with offshore extra-heavy crude oil at depths that are not shallow enough to provide comfort, nor deep enough for a determined technology. International operators have some advantages, but PEMEX of course has a lot of knowledge about Mexico’s fields and geology. I would like to see PEMEX become less dependent on service companies. Suppliers bring what they think is best or what they want to test or sell, but their products and services do not always focus on solving our problems. As such, PEMEX needs to adapt to new players with different experiences and learn to manage differing perspectives.

Q: What is being done within PEMEX to make sure that people remain open to suggestions from future partners in order to achieve more from joint ventures?

A: PEMEX got used to doing things on its own over the past 77 years. It relies on service companies, but most of what happens in the Mexican oil and gas industry comes from Mexican engineers. In some cases, people want to see what technologies foreigners bring. In others, Mexican engineers are very proud of their accomplishments and some might actually admit that “you can’t teach an old dog new tricks”. Nonetheless, younger engineers are eager to learn and are curious about other methods, while other groups want to compare themselves to the experienced players that are coming into the country. PEMEX’s senior management will listen to those who have plenty of knowledge about the challenges faced in the main fields. They can provide a lot of insight into what to look for from partners.

Q: What would you look for in terms of technology for the development of a field like Ayatsil-Tekel?

A: The main points are well design, coping with the crude’s viscosity, and flow assurance. Ayatsil-Tekel is a field that might be tricky to develop because of the depth of the reservoir, API gravity, and the amount of H2S and CO2. However, the challenges will not be limited to these issues as it is also important to maximize the reservoir’s energy. Artificial lift through the utilization of electric submersible pumps will be very important. There is also one aspect of concern: we need to prevent water from encroaching on a highly fractured reservoir at early production stages, given the crude’s significant viscosity levels, the reservoir conditions, the mobility ratio, and the presence of a large and possibly strong aquifer. Another undesirable scenario would be to experience a temporary shutdown, as reinitiating production would be problematic. Ensuring the continued operation of the system remains an issue, just like modeling the reservoir, designing the wells, and planning the pipelines. Outstanding issues to be addressed are the need to design unconventional wells and the way they will be completed and operated. Even though we have strong technical capabilities and vast experience dealing with the exploitation of other offshore heavy oil fields, such as Cantarell and Ku-MaloobZaap, we still need experienced operators to come along and help to successfully develop the fields while we are looking for new ways to do things. If Ayatsil-Tekel were onshore fields, it would be easier to get rid of the contaminants and manage this extra-heavy oil, low gas-oil ratio asset, but being offshore, dealing with such challenging conditions on platforms makes the situation more complicated. I do not think that many foreign companies have dealt with similar problems offshore. Those fields are going to be interesting to work in, and we are looking forward to finding out who is going to come along and save the day.

Q: What are the main challenges in Tsimin-Xux, and how is PEMEX planning to address them from a technological perspective?

A: In Tsimin-Xux, we have to be careful with the execution of the development plan. It is a gas and condensate field, so we have to take care of the reservoir energy to prevent condensation from happening. We have learned from operating in adjacent fields, so we have to pay close attention to managing pressure in the reservoir and operating the wells. Another important aspect is related to the proper and timely implementation of secondary recovery processes, such as gas injection or reinjection. Nitrogen injection is a good choice for pressure maintenance, and we have plenty of experience injecting nitrogen in Cantarell, but it might not be the best alternative for managing Tsimin-Xux. As operators, it is important to remember lessons from past experiences.