Yesterday, the Wall Street Journal reported that Juan Carlos Zepeda Molina, President of the CNH, believes that neither Pemex nor the Mexican oil regulator is prepared to deal with the consequences of an ultra-deepwater oil disaster.
The comments come as Pemex prepares to drill two ultra-deepwater exploration wells this year, part of the six deepwater well drilling programme for 2012, the NOC’s most ambitious yet.
As we have previously reported, Pemex has only drilled 15 deepwater wells in its operating history, and none of those have been in water depths classified as ultra-deepwater, over 1828m.
One of the first priorities of the CNH since its creation in 2009 has been safety, and the regulator chose to start drafting its safety policy around deepwater activities, with the ambition to extend this to cover all offshore activities by the end of 2012.
In November 2011, the CNH provisionally approved Pemex’s deepwater plans, on the condition that it provided a contingency plan for dealing with a well blowout of similar proportions to Macondo. So far, the NOC has not proved to the regulator that it has the equipment and the processes in place to deal with such a disaster, according to Zepeda Molina.
The CNH is currently evaluating Pemex’s plans to drill its first ultra-deepwater well at a depth of over 2700m on the US-Mexican maritime border. Zepeda Molina has presumably gone public with the warning to Pemex in order to make them think twice before ignoring the warnings of the regulator.
The development of the CNH has been slow to take off, and it struggles to complete its mandate of assessing and evaluating Pemex’s development plans and projects because of its limited staff and annual budget. Currently, the oil regulator only has around 50 employees and a tiny budget in comparison to regulators in other major oil and gas nations. However, Congress is currently in the process of approving the budget, which will increase the CNH’s spending power to US$5.5 million annually. Over the next few years, the CNH hopes to double its staff in order to move faster in its project evaluations and risk management.
With Pemex’s historically important fields either declining or set to peak in the next few years, it is obvious why the NOC is keen to get these deepwater projects started as quickly as possible, as they have very long development periods. However, the CNH is stepping in to do exactly what it was created to do; to flash a warning sign if it feels that Pemex is moving in the wrong direction, or moving too quickly and unsustainably. Time will tell how Pemex will react to this latest public statement from the CNH, but their limited history of working together shows that even if it might not like to do it, Pemex will listen to its new regulator in these matters.