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News Article

Well Intervention Costs Will Increase

By Paloma Duran | Tue, 11/10/2020 - 15:29

Mexico’s oil and gas wells are aging and as a result, the country will need to spend more money in well interventions and maintenance in the coming years, reports energy consultant Rystad Energy.

The maintenance of 75 percent of the country’s wells could drive costs up to US$3 billion between 2021 and 2023. Thirty percent of this budget will be spent onshore, while 70 percent will be allocated to offshore wells, said the company.  

Within five years (2015-2020) the number of producing offshore wells in the country decreased by 14 percent. Meanwhile, there was a 27 percent decline in onshore wells. This was due to lower drilling activities during these past five years. During this time, the offshore well-drilling activities were at a 60 percent level when compared to 2010-2015. For onshore drilling, the number of completed wells was almost 80 percent less between 2015 and 2020 when compared to the previous five-year period.

As a result, the average age of producing wells has increased. For offshore wells, it went from eight to 11.5 years. Meanwhile, onshore wells went from seven to 13.6 years. According to Daniel Holmedal, Analyst at Rystad Energy, water cuts have also increased in both types of wells and in the next three years, there will be a tendency to intervene in younger fields.

Samaria Terc is the onshore field that will require more spending because most of its 150 producing wells have an average age of eight years and a length of 2,100m. Cardenas and Madrefil have fewer producing wells. However, their length is longer, ranging between 5,800m and 6,600m, respectively. As a result, their interventions will be more expensive than the ones in Samaria Terc.

Regarding offshore wells, four of the five fields have fixed structures. Ayatsil-Tekel and Balam have the deepest wells with 4,300m and 4,900m; the first one has an average age of 2 years and the other has 6 years. Ayatsil-Tekel and Balam will require a more expensive intervention, while Zaap and Maloob will have lighter interventions. The company also mentioned that for service suppliers these fields represent good possibilities of intervention in the next three years.

The Mexican oil and gas industry has seen setbacks as a result of the COVID-19 pandemic, which slashed oil demand, reported Rystad Energy. However, Mexico’s offshore activity should fare better during recovery, reports Mexico Business News.

In an interview with Mexico Business News, Schreiner Parker, Latin America Vice-President of Rystad Energy, said Mexico is fairly well-sheltered against the crisis because of its sovereign oil hedge that may become more attractive because volatility is increasing in oil markets globally. He said the main national vulnerability is in delays in different projects because of the recent downturn and slashed budgets.

The data used in this article was sourced from:  
MBN, Rystad Energy
Photo by:   Wasi1370
Paloma Duran Paloma Duran Junior Journalist and Industry Analyst