Last Wednesday, amidst the rumors about a new deepwater oil discovery, Pemex came out with an official announcement through the media: the ‘Exploratus-1’ well has struck oil – light crude, to be specific. After several reports leaked information on the oil discovery during Monday and Tuesday, Carlos Morales Gil, Director General at Pemex E&P came forward to address the buzz about this finding in deepwater. The Exploratus-1 well is located in the Perdido Fold Belt in the Gulf of Mexico, just in front of Matamoros, Tamaulipas and close to the maritime border with the United States. This well is closer to the Mexico-US transboundary area than previously drilled wells Trion-1, Supremus-1, Maximino-1, PEP-1 and Vespa-1 (of which only PEP-1 turned out to be unsuccessful). This will also mark one of the deepest wells ever drilled by Pemex since it is expected to be completed at more than 6,130m water depth.
For Pemex, Exploratus-1 represents its fifth deepwater success – the kind of success that the company is more surprised to come across. Exploratus-1 was seen as an information well – a well that would help Pemex in its quest to define the geological formation of the Perdido Fold Belt – and a possible gas producer. Yet, the company struck light crude oil at 3,600m water depth. Finding liquid hydrocarbons is a huge achievement in terms of commercial feasibility to develop the well. In a time where gas prices are remarkably low, the presence of liquid hydrocarbons might be the difference between a profitable project and a non-profitable one.
While the initial estimates of the discovery are still vague, the preliminary figures have the prospective resources of the well hovering around 150 million to 200 million boe. However, a more definitive number on the amount of reserves that Exploratus-1 holds will be available by late April this year.
What does this mean for Pemex?
Unlike its northern counterparts, Pemex is still in the initial stages of establishing its deepwater strategy for the future. With the recent approval of the Energy Reform, it is still unclear if Pemex will decide to venture and manage deepwater and ultra-deepwater E&P by itself, or if the company will use the new contracting tools at hand to partner with experienced companies in the sector. Even when the latter possibility seems more likely, Pemex continues to prove that Mexico is capable of being successful in the riskier segment of oil exploration below 500m water depth.
This is also additional proof that the oil pockets in the Perdido Fold Belt extend into the Mexican side of the Gulf of Mexico. With the latest discoveries in deepwaters and ultra-deepwaters, Pemex’s executives are confident that the prospective resources in the Perdido Fold Belt surpass the original estimates, and that the Mexican side of the deepwater geological province has better conditions than its US counterpart.
What does this mean for Mexico?
The Mexican economy will continue to depend – at least on a 30% basis – on Pemex’s results, and this is clearly an opportunity to bring about investment to Tamaulipas. The northern state within Mexico’s geography will be paramount to the continuance of deepwater and ultra-deepwater exploration near the Mexican-US border. The growth opportunities for Tamaulipas continue to expand within each oil discovery made in Perdido and the region is climbing up ranks within the Mexican energy hierarchy.
Currently, Tamaulipas ranks second in power generation in the country, with around 13% of all the electricity produced. The state also ranks first in non-associated gas, with over 37% of the country’s production in this hydrocarbon. With the development of the deepwater segment, the continuous oil exploration projects and the hydrocarbon’s subsequent production, Tamaulipas will continue to grow in terms of its importance to the Mexican energy industry, bringing about more opportunities for public and private investment in the brush up of facilities for E&P operations. The economic wellness of the state has already attracted foreign companies that had not come to Mexico before, such as Pico International Petroleum – which created a Mexican subsidiary called Compañía Petrolera de Altamira in 2012 to start working in the area. The company is already looking at expanding its investment in its facilities at the region, anticipating what could be an economic peak for oil companies in Tamaulipas.