Colloquy: PECOM celebrates 20 years

May 1, 2014

The Petroleum Exhibition & Conference of Mexico (PECOM) recently celebrated its 20th year. The location in Villahermosa, Tabasco’s state capitol, is fundamental to the continuing success of the conference and convenient for many PEMEX personnel. Villahermosa is the center of a wealth of petroleum activity, exemplified by nearby Ciudad Pemex and its gas processing complex, the Centla project area and Port of Frontera on the Grijalva River, and offshore support activities at Ciudad del Carmen on the Bay of Campeche.

At a US Department of Commerce-sponsored lunch briefing the day before the expo opened, Jose Luis Chavez, Planning and Evaluation Manager, gave a presentation about the PEMEX Southern Region: “Exploration and Production Projects and Opportunities, 2014-2018.”

He explained that the South Region produces a diversity of hydrocarbons, with oil ranging from 20°-60° API gravity, comprised of heavy Maya (3%), Istmo (64%), and Olmeca (33%) crudes.

The South Region also hosts 52 separation facilities, and 1395 operating wells. Oil drilling began in 1953, and gas drilling in 1958.

Today, the region produces 482,000b/d of oil and 1592 MMcf/d of natural gas.

In 2014, PEMEX will drill 47 Mesozoic wells in the region. PEMEX is decreasing use of pneumatic pumps and will install electro-centrifugal pumps in more than 40 wells this year. It employs coiled tubing, foam, vapor, nitrogen, and gas injection in secondary recovery operations, and will test air injection in the Mesozoic
later this year.

Gustavo Hernandez, the new General Director of PEMEX Exploration & Production (PEP), opened the conference with a keynote address. He said PEMEX will be proposing a major new reorganization in the following weeks that would be more harmonious and allow the company to face competition.

“The figures give context” to the importance of oil & gas in Mexico, he said. Mexican oil production, at 2.877MMb/d is 7th highest in the world, and 1P oil reserves are 13th. Although many fields are declining, Hernandez said he wants to keep PEMEX crude oil production at ~2.504MMb/d.

The company’s main oil production comes from the Bay of Campeche: primarily the Ku-Maloob-Zaap (KMZ) fields, followed by the Cantarell complex (in production for 35 years as of June 23).

Hernandez said PEMEX natural gas production, at 4.262MMcf/d, is 17th in the world, and 1P gas reserves are 33rd.
The two major sources are the Burgos basin in northern Mexico and the offshore Cantarell fields.

He said the PEP South Region is important because of extensive infrastructure that enables low development costs (US$6.84/bbl to produce in 2013, lowest among IOCs and NOCs), and also because of Mesozoic discoveries in Tabasco.

PEMEX wants to optimize flow and uses pressure injection to increase recovery from wells. Of 120MMbo produced from 14 fields, he said 10% of the production results from injection.

To develop heavier, higher viscosity oil, Hernandez said the company is investigating the use of nanomaterials as catalysts, and microwave heating to reduce viscosity and improve flow.

Air injection (10MMcf/d at 4500psi) into Well 142 at the Cardenas field will be the first in the world, scheduled for October.

“We’ve also been working hard to avoid/ reduce venting gas,” and 98.4% of gas produced in 2013 was captured, rather than flared.

In terms of investment, Hernandez said: “The oil & gas industry needs a big effort to start moving.” PEMEX acquires new seismic data every year, but needs specialists to process and interpret. “Our diversified portfolio allows us to diversify risks” in conventional and unconventional, deepwater, and shale projects.

In 2013, the company drilled 672 development wells and 40 exploratory wells, but still needs execution capacity, including drilling equipment. “The activity is not enough yet,” he said, “but it is exactly what this legislation seeks to accomplish. Together [with outside companies] we will be able to explore the national territory.”

PEMEX exploration strategy is focused on extraction, he said, with more than 55,000 workers to implement the work. Of the company’s top 21 exploration projects, only eight are land-based, so there is cleary a major emphasis on offshore.

Hernandez reiterated that all work is based on the three pillars of PEMEX: Safety, Environmental Protection, and Sustainability.