The hydrocarbons sector plays an important role in the Mexican economy. In 2010, hydrocarbons contributed 7.4% to the nation’s GDP and made up 14% of the country’s total exports. From 2004 to 2009, oil production fell approximately 800,000 b/d before stabilizing in 2010, according to a presentation by Mario Gabriel Budebo, Deputy Secretary of Hydrocarbons for the Ministry of Energy of Mexico. Natural gas production, meanwhile, has increased in Mexico over the last few years.

State-owned Pemex has grown its investment in E&P over the last decade, which has allowed the company to stabilize oil production and increase reserve replacement rates. Mexico has significant undeveloped hydrocarbon resources and developing the more complex fields will require more administrative flexibility, better procurement tools, and more execution capabilities, Budebo said.

In March 2011, Pemex launched the first tender for three incentive-based E&P service contracts that will allow private companies to operate mature fields in the Magallanes, Santuario, and Carrizo areas in southern Mexico.

Reactivate brownfields, increase production

Reactivating the brownfields is a key component to Pemex’s plan, and reactivation strategies will be implemented to address geological models, completions, workovers, and optimization issues. Mature fields in the Magallanes, Santuario, and Carrizo blocks combined hold 207,000 boe of proved, probable, and possible oil reserves. At a recent press conference, Carlos Morales Gil, CEO of Pemex E&P, said production from the three blocks could be increased to 55,000 to 60,000 b/d within three years.

The onshore Magallanes block in northeast Tabasco State on the Bay of Campeche comprises the Otates and S?nchez Magallanes fields. Of the 782 wells drilled in the block, 60 currently are producing approximately 7,996 b/d of oil. In the Magallanes block, new investments are essential to improving the recovery factor.

The Caracolillo, El Golpe, and Santuario fields make up the 32,106-acre Santuario block, just south of Magallanes. Of the 211 wells drilled, 31 currently are producing:

Caracolillo field: 11 wells drilled, zero wells producing;

El Golpe field: 136 wells drilled, 13 wells producing; and

Santuario field: 64 wells drilled, 18 wells producing.

Current oil production from the block is approximately 5,934 b/d. Again, recovery factor is the issue and the opportunity in the Santuario block. “El Golpe is waiting for a new wave of investments,” said Vinicio Suro, South Region vice president of Pemex E&P, “and a new exploitation strategy will add value to current production.”

The Carrizo block in central Tabasco State covers 3,215 acres with only 43 wells drilled to date and no producing fields. Pemex said the lack of investment in the area has limited the ability to move fields into production. “The way to increase production,” Suro said, “is to initiate it and reclassify reserves.”

Aligning human, economic, and technological resources is key to Pemex’s strategy to produce existing and new reserves in the mature blocks through integrated incentive-based contracts. Companies awarded these contracts will be compensated by means of a tariff associated with each extracted barrel of oil plus partial recovery of costs in addition to bonuses based on productivity and cost reduction.

The data room in Tabasco State, Mexico, can be accessed from March 1 to June 24, 2011. Pemex has scheduled the first project meeting for May 3 and results of the tender will be announced on Aug. 11. For more information, visit www.pemex.com? .

Pemex launched the first tender for three incentive-based E&P service contracts for mature fields in the Magallanes, Santuario, and Carrizo areas in the southern region of Mexico. (Image courtesy of Pemex)

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