Closing Mexico’s deepwater gap

Fernando C. Hernandez

June 1, 2015

Following Mexico’s historic energy reforms, Fernando C. Hernandez of Reaching Ultra, discusses what is still needed in order to make Mexico a major deepwater player.

Fig. 2: The Perdido Hub as seen from a crew boat. Photos from Reaching Ultra.

Mexico’s national oil company (NOC), Pemex, is in a transitional phase, soon to function as a state productive enterprise following the passage of Mexico’s historic energy reform. The reform was driven by Mexico’s ambitions to increase its waning production output, while positively impacting its economy. But for this to happen, Mexico will require the infusion of foreign capital, and foreign expertise—as noted by Mexican officials and industry experts at Mexico’s first oil and gas summit held in 2014. Additionally, the reform generated great interest—in regards to wells located on- and offshore—by both US and Mexico’s private and public sectors.

Historically, offshore, Pemex has largely focused on shallow water projects; and in particular the Campeche region, illustrated by the Cantarell the field. However, Pemex has made great investments, beginning in the late 90s, to venture into deeper waters. This is highlighted by exploratory drilling, which took place adjacent to the US’s Perdido region: the 2013, 9515ft deep, Maximino find being a prime example. The Perdido region extends from US waters into Mexican waters. Furthermore, Pemex previously referred to this deepwater discovery as “the jewel in the crown.” The US surpassed Maximino’s depth at Trident-2 in Alaminos Canyon Block 903 in 2001 (See Figure 1).

Fig. 1:  A comparative analysis of the gap in deepwater drilling and exploration efforts between US and Mexico.

Understanding the gap

A key difference in regards to the Perdido basin is that Mexico has no producing assets there. Moreover, the basin continues to be a focal point on the US side due to its productivity. This furthers the incentive for Mexico to develop its side. And, because of the US’s close proximity to Mexico, and its familiarity with the deepwater realm, this will require Pemex to tap into the US’s deepwater technologies, methods and experience, along with non-US companies. This is especially true for Lakach—discovered in 2007— set to be Mexico’s first deepwater seabed production scheme, at 3241ft of water, southeast of Veracruz City.

The US made a similar discovery to Lakach at a depth of 3243ft in 1985 via Ram-Powell, which highlights the extent of the deepwater gap. But, to truly understand why such gap exists, we must revisit the 1970s, when a fisherman named Rudesindo Cantarell Jiménez inadvertently discovered what would become Pemex’s Cantarell field.

Pemex’s offshore history

Fig. 3: Installation of a subsea christmas tree in deepwater. Photo from Connect Subsea.

In 1979, the Cantarell complex—named after the aforementioned fisherman—would come online, and by 1981 it would go on to reach 1.16 MMbo/d. Furthermore, Cantarell produced at an almost constant rate of 1 MMbo/d for 14 years. Pemex’s multi-billion dollar investment in Cantarell paid off, and so had the allure of continuing to produce in this shallow water region.

But in the late 1990’s, the field’s output began to decrease at an alarming rate, resulting in Pemex embarking on a nitrogen injection program to boost the field’s production, according to the US Energy Information Administration (EIA).

This, too, would be a multi-billion dollar investment. Pemex began its injection program in 2000, achieving promising results, and catapulting the field onto the global stage when production peaked at 2.1 MMb/d in 2004. In turn, Cantarell contributed to 63% of Pemex’s crude oil production for that year, the EIA said. However, in subsequent years, the field’s production rates began to decrease. The result: Pemex exploring outside of its shallow water assets, and into deeper waters with greater interest. Mexico’s deepwater ambitions ran parallel with Pemex’s nitrogen injections, due to the fact that by 2013, Cantarell’s contribution to Pemex’s totalized production went from 63% to 17%, according to EIA data.

Reaching Perdido: The importance of 2013

From a historical vantage point, Pemex’s deepwater ambitions can be traced back to Chuktah, which was drilled in 1999 at 1259ft water depth, following the planning of drilling and completions for their deepwater program in 1996-1997. After Chuktah, Pemex’s deepwater exploration continued to gain momentum—when Pemex made their then-deepest find at Lakach at a depth of 3421ft in 2007.

And in 2013, Pemex increased their drilling depth by over 6000ft by way of Maximino located in 9515ft of water. The NOC had now made a quantum leap in to the ultra-deepwater category. It is this rapid and unprecedented advancement by Pemex that illustrates the importance of collaborative efforts between the two countries (US and Mexico), so as to ensure Mexico breaks in to the deepwater safely and with a fit-for-purpose philosophy.

In regards to the Perdido basin, the Perdido spar functions as a hub that connects multiple fields back to it. In 2007, the US’s offshore regulatory agency—then known as the Mineral Management Services (MMS)—expressed that, “The oil and gas fields beneath the platform lie in a geological formation holding resources estimated at 3-15 billion boe.” In 2010, it was expected that production would peak at 100,000 boe/d, however, by 2013, Perdido exceeded original production estimates. The hub was outputting over 115,000 boe/d. It is important to note that other projects are coming online nearby Perdido that are equally delivering on expected returns.

Depth increase

Though much emphasis has been placed on the Perdido basin; Pemex’s first subsea production scheme in deepwater will be Lakach, south of the Perdido Basin. The first few wells are expected to enter production later in 2015. Conversely, the Popeye field which is quasi-comparable to Lakach, came online in 1996, creating a 19-year deepwater production gap. Subsea production-wise, Pemex is on-track to make an additional quantum leap.

For all intended purposes, Lakach can be viewed as a pilot project for Pemex from which future seabed production initiatives will be modeled, but future projects in deeper waters can expect to have lessons learned from Lakach incorporated. This too is applicable to engineering and technical adjustments such as, well head design and associated downhole jewelry; the overall composition of underwater christmas trees that are to be installed on top of wellheads to export a well’s content; the way peripheral subsea equipment/assets are interlinked so as to complete a subsea production scheme; the methodology employed to operate a scheme in its entirety, in order to properly export, route, distribute, and control a well’s content; the manner by which flow assurance is approached, so as to prevent hydrate blockages, which can render a scheme inoperable. Some of the additional engineering and technical adjustments include:

The need for dynamically-positioned platforms, which would break away from the stationary jackup rigs commonly used in the Bay of Campeche.

The need to shift away from relying on divers to using work class ROVs for all phases of projects: From commissioning to plug and abandonment efforts.

Conclusion

With the reform passed, and as Lakach nears production, Mexico’s new energy policies will continue to garner global attention, as it positions itself to become the newest member of the deepwater golden triangle, and regain market share. Procuring technological and engineering talent will be fundamental in closing Mexico’s deepwater gap, and will ensure Mexico can successfully and safely produce from deepwater depths. On the other hand, foreign companies that support Mexico’s future oil and gas ambitions equally stand to benefit by having their products and services employed to further Mexico’s ambitions. 


Fernando C. Hernandez
is the subsea technical advisor at Reaching Ultra. Hernandez speaks three languages and has extensive field experience in the ROV tooling, automated controls, subsea and well intervention sectors.