There is no denying that shallow waters are Mexico’s forte. At the height of its production boom, the Cantarell complex was producing 2.1 million b/d, ranking it the second-fastest producing field in the world. The knowledge and experience of the service providers that worked with PEMEX in shallow waters will be invaluable to the new operators entering the arena, according to a panel of experts at Mexico Oil & Gas Summit 2018 at the Sheraton María Isabel in Mexico City on Thursday.
“We know what we know and we don’t know what we don’t know,” said Francisco Noyola, Country Manager Mexico of Talos Energy. “Working with companies that are experienced in Mexico is of tremendous value as they provide information that may not have otherwise been evident. We expect our service providers to guide us toward avoiding potential risks and mistakes because we just didn’t know any better.”
This sentiment was echoed by Luis Manuel Ocejo, President of CAMEINTRAM. “When companies enter Mexico, although they may be used to working globally, they may not be aware of the intricacies Mexico involves,” he explained. “We help our partners deal with these demands and, as a result, they trust us.”
This was in response to a question from moderator Leonardo Cuneo, Energy Director in Mexico at Capgemini, about how to balance responsibilities as an operator. “What is needed to increase shallow-water production in the fastest way while also overseeing safety and environmental issues?” he asked the panel, stressing that shallow water must be sustainable, as the lessons from Cantarell illustrate.
Joining them on the panel was Merlin Cochran, Deputy Director General of Exploration and Extraction of Hydrocarbons at the Ministry of Energy, who stressed the importance of understanding the country’s unique context. “There are carbonates, and then there are Mexican carbonates,” he said. “A company should not just assume that, because it was able to work internationally, it will be able to apply these methods to Mexico.” However, he highlighted the rewards of working in Mexico, saying it has one of the highest success rates in drilling wells globally.
This came as no surprise to Noyola. Talos was part of the consortium that drilled one of the first successful wells in Mexico’s liberalized market with the Zama-1 well, with around 2 billion barrels of oil. But he warned that the supply chain could play a vital role in how fast projects can be put into production. “There will be pressure on the value chain and bottlenecks here may limit how fast we see any development happening,” he said.
Noyola highlighted three distinct categories of companies: those that have spent many years working with PEMEX, and he warned they need to understand that the IOCs may work differently from the NOC and adapt accordingly; international suppliers that have been waiting for international operators to enter, and they too must adapt to Mexico’s unique context and undergo a learning curve to understand it; and finally, the international companies that have worked with PEMEX previously. These are the best positioned, he said.
However, he cautioned that this last group in particular must be prepared to deal with increased demand and bottlenecks. “We are fortunate that we are at the inception of what we believe will be a lot of activity,” he explained. “But there will be very strong demand for people to cover the gaps when we hit bottlenecks. They need to prepare ahead of time and realize what is coming.”
Cochran provided the audience with a tool to do so. He explained that the Ministry of Energy is working with CNH to plan supply chains to meet demand. The Plataforma de Bienes y Servicios is available online and, based on the approved work plans, the Ministry of Energy and CNH have projected how much demand will be experienced, categorized by each good or service. “We have mapped what industry will demand over the next five to six years,” he said. “It is in its infant stages and I would encourage feedback.”
However, he stressed that the platform is based on certain premises. “One of the main considerations is that it is only indicative, not exact,” he said. “In reality, we are only mapping demand and as a service provider this must be compared with supply.”
Although Cochran said the benefits of the Energy Reform have not yet been felt, Ocejo was optimistic about the future. “This year as a service company, business has been very slow and we believe the main reason for that was the change in administration, the uncertainty that brought about and the crude prices that have just started to bounce back,” he said. “Now I am confident things will move faster.”