Pulso Energetico – March 27, 2017
Eni recently announced the successful discovery of light crude from its initial drilling efforts in Amoca-2, part of Contractual Area 1 that was awarded in Round 1.2 in September 2015. Contractual Area 1 of Round 1.2 includes three fields: Amoca, Miztón, and Tecoalli — in the Bay of Campeche’s shallow waters, approximately 15 km northeast of PEMEX’s onshore Cinco Presidentes fields. Eni claims to have encountered 110 meters of net pay, which far exceeds the expectations the CNH had for this field. Eni plans on drilling three more wells in 2017: a second exploratory well, Amoca-3, as well as two delimitation wells in the adjacent fields that make up its contractual area, Miztón-2 and Tecoalli-2. With some folks speculating that the discovery could end up producing upwards of 15,000 b/d (frankly, far too early to gauge with any level of certainty), significant buzz has commenced both within Mexican government and industry circles. Eni officials have said that it is reasonable to think that production could start flowing within two to three years.
The discovery was made in fields that PEMEX had previously explored, dating back to as early as 1959. PEMEX made discoveries in all three fields between 2002 and 2015 but not in volumes that justified its desire to maintain the fields as part of the Round Zero process in 2014, post-reform.
Eni is the first announced discovery but not the only private sector drilling campaign underway in Mexico’s shallow waters. Both the Pan American and Fieldwood Energy-led consortiums, winners of Round 1.2 blocks, are drilling at present. And the Talos-led consortium, winner of the two blocks in Round 1.1, is expected to start drilling in Q2 2017. Following Eni’s discoveries, all eyes and increased expectations will certainly now fall on these drilling campaigns.
The Eni discovery is relevant on a host of fronts that are worth reflecting upon. Eni successfully won a field where hydrocarbons had been discovered but they saw something that PEMEX had not previously seen after assessing data room information. Eni drilled to a total depth of 3,500 meters compared to the 4,000 meters PEMEX drilled in Amoca-1 back in 2002. However, the thrust of the discovery appears to have been made in a completely different horizon than PEMEX had previously explored. That is in no way a knock against PEMEX but rather the very essence of what the energy reform brought to Mexico — a variety of industry players with vastly different experiences, views on geology, ways of doing things, penchants for risk-reward, and capital bases — to harness and better exploit the hydrocarbons potential Mexico is blessed with. It is precisely what provides the elements needed to establish a dynamic and healthy hydrocarbons ecosystem. Eni knew exactly what it wanted to do and where it wanted to drill and was singularly focused on proving up its hypothesis. As a result, they were the first to make a discovery. And given the 83.75% stake they offered the Mexican state to win the contractual area, the discovery is certainly good news and much to celebrate for all parties involved.
The message is clear: if Mexican officials are able to put up good acreage in the context of an ever-evolving and improving contractual structure and regulatory framework, the future for Mexico’s upstream sector looks bright. All eyes will next be on the Round 2.1 shallow water blocks to be awarded in June, and which will now include the Ayin-Batsil farm-down from PEMEX. Meanwhile, the Eni discovery along with all of the other drilling activity taking place noted above, as well as that being undertaken by PEMEX in deepwater has investment bank Tudor Pickering bullish and with expectations of material discoveries in Mexico in the short to medium term. Enough said.
Contribution from John D. Padilla, Managing Director, IPD Latin America
Article in Spanish can be viewed here: https://pulsoenergetico.org/el-descubrimiento-de-eni-lo-que-esto-significa-para-mexico-y-la-reforma-energetica/