Courtesy of notyparral.com

In a ceremony held today at Los Pinos, the Mexican President’s official residence, President Felipe Calderón, along with Energy Minister Jordy Herrera and Pemex CEO Juan José Suárez Coppel, announced the discovery of light crude at Pemex’s Trión-1 well, in the Perdido folded belt. The announcement marks the end of Pemex’s unfulfilled search for oil in deepwater, and will allow the company to add 350 million Boe to its 3P reserves.

One of three wells due to be drilled in the Perdido region this year, Trión-1 is the first deepwater well to be drilled by Pemex to contain commercially viable levels of oil. Mexico’s first foray into deepwater exploration began in 2003 with the completion of the Chuktah-201 well at a water depth of 513m, and Nab-1 in 2004 at a depth of 681m. While Chuktah-201 was a dry hole, and Nab-1 had non-commercial quantities of oil, these wells helped Pemex learn the ropes of deepwater exploration.

Finding oil in deepwater was a priority for Pemex, as up until this point no concrete oil discoveries had been made in Mexican deepwater. The exploratory well at Lakach was drilled in 2006, and Pemex expects the gas reserves there could be as large as 1.4 Tcf once the other satellite fields in the region are developed: Ahawbil, Labay, Piklis and Kuyah. The company has also recorded success at Piklis, where 400-600 Bcf of natural gas was discovered in May 2011.

The discovery at Trión-1 follows a large investment in deepwater exploration over the last few years. Between 2007 and 2010, Pemex spent around US$1.8 billion on deepwater exploration, which accounted for around 24% of the company’s total exploration investment during the period. The deepwater exploration budget for 2012 actually dropped a little from 2011, from MX$14.98 billion (US$1.14 billion) to MX$14.06 billion (US$1.07 billion), but activity carried out this year built on existing data gathered from previous years. Using the Bicentenario deepwater rig, Pemex drilled Trión-1 at a water depth of 2.5km, the deepest water the NOC has ever drilled in, but not as deep as the other wells planned for 2012 at Perdido: Supremus-1 is at a water depth of 2.89km and Maximino-1 at 2.933km.

With the price for Mexican crude currently standing at US$102.24 per barrel, it was becoming increasingly important that Pemex find viable oil in deepwater for justifying the cost of exploration in these areas. Now, the company will have to work out the best way to exploit its discovery. There are a number of options available for the company: first, it could try to develop the area on its own, with the help of contracted service providers with expertise in deepwater; second, it could use the integrated service contract model to try and attract a partner with experience in operating in deepwater; however, if this is contracting model is not attractive enough for the companies Pemex would like to attract, which are small in number and selective about the projects they take on, then something may have to be done to make the contracting model more attractive. For many, this means constitutional reform, which currently holds Pemex back from offering deepwater production as an incentive to attract partners. With Mexico’s new president entering office in December this year, constitutional reform for the energy sector may be one of the PRI’s first priorities – and the discovery announced today will only serve as another argument in favour of such reform.

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