INDUSTRY REVS UP INTEREST IN OFFSHORE MEXICO
Energy companies have made oil and gas resources along the Mexican shore the number one priority for expanding revenue. Several energy companies have made plans for deep water development, as well as an expansion of E&P interests within offshore Mexican shallow waters. Tangible evidence of the revving up of development took place on June 19, 2017, as the Comisión Nacional de Hidrocarburos (CNH), which managed the second round of bids, awarded 10 out of the possible 15 contracts of the shallow water development blocks for sale.
More than 30 energy production companies made bids during the development block auction, with seven new entrants winning contracts to develop in Mexico’s upstream sector. Energy company Eni, which won a shallow water development block in round 1, took home three additional licenses during Round 2.1.
Southeastern Basin Area 9 attracted six bids from heavy hitters in the energy industry, such as Chevron and China National Offshore Oil Corp. The area received the most bidding activity, with two companies reaching a tie in their proposal bids. All of the blocks offered in Round 2.1 sits off the coasts of three Mexican states: Campeche, Tabasco, and Veracruz.
Since the unveiling of Mexico’s comprehensive energy reform, the country has hosted five block auctions. The action has landed Mexico 39 contracts, with the total investment in the country almost $5 billion. Mexico achieved a major energy milestone in May of 2017, with the signing of a joint venture contract between Talos Energy, Premier Oil, and Sierra Oil & Gas. With a 35% stake, Talos Energy operates the well, with the other two energy companies offering financing.
Mexican offshore deepwater regions have spurred heavy investment as well. CNH approved the sale of a deepwater block in May of 2017 to PEMEX, with the stipulation that PEMEX must develop the region with a partner that inevitably will manage the project.
A Reuters report quoted Moriera as saying more than half of Mexico’s vast oil resources lie in deepwater regions. “That’s where much our country’s oil future lies,” Moriera said. PEMEX company’s board recently approved the addition of a second company for developing the Nobilis-Maximano block. However, PEMEX has not released the name of its new partner in the project.
The seismic service industry, which generates data analyzing Mexico’s offshore energy resources in the Pacific Ocean and the Gulf of Mexico, recently released several reports that include results from seismic tests performed on the Encontrado multi-client reprocessing project located in the Gulf of Mexico across near the Perdido fold belt.
Improved depth information within the last volume created a better understanding of the offshore Mexican petroleum systems, including the type, volume, timing, and location of the hydrocarbons charging the reservoirs. The improved collection of data translates into a quicker analysis of the economic potential in new energy resource regions.
CGG stated in a press release that the company has started on a JumpStart completely desegregated geoscience program to bolster the data collected from the seismic Encontrado project. JumpStart allows researchers to review, confirm, and interpret well, seismic, and geological data to generate accurate assessments as to where the largest oil resource areas lie near the coast of Mexico.
Who Provides the Equipment?
As energy companies rev up research and development along the Mexican coast, service, supply and equipment companies have enjoyed a corresponding uptick in sales. In May of 2017, Sparrows Group announced the company has recruited large crane service and maintenance company Ginemex to help set up new rigs in one of the massive development blocks. The new partnership allows Sparrow Group to meet all of the production requirements outlined in the contract made with Mexican government-run PEMEX. In a press release touting the new partnership, Ginemex said the company expects to service and maintain more than 60 cranes for Sparrow Group.
Energy Productions Schedule
The increase in shallow water drilling along the Mexican coast and the successful bid rounds 1 and 2.1 suggest Mexico is in the midst of a 21st-century oil boom. With its neighbor to the north setting a gas consumption record during 2016, Mexico is enjoying the new oil boom at the right time. Although most of the production is years away, Mexico has inched closer to regenerating a powerful stream of revenue. Tudor Pickering & Holt asserts shallow water production will be Mexico’s short-term financial contributor, with deep water production ramping up at the start of the third decade of the millennium.