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diciembre 9, 2019
English Especiales Gaspar Franco Oil & Gas

The Tools to Increase Hydrocarbon Production in Mexico

By: Gaspar Franco Hernández

Talking about Mexico’s opportunity to boost its hydrocarbon production demands long-term thinking, and achieving this goal will require the use of all the available tools.

One of these tools is, of course, for the government to allocate financial resources to strengthen the State Production Company, especially when there are more than 400 areas for exploration and extraction; however, strengthening is not the same as simply spending more money.

In addition, Mexico has signed over 100 contracts for exploration and extraction with more than 70 companies from close to 20 countries, granting Mexico greater technical, financial and execution capacity. On the other hand, Mexico has over 700 oil fields, of which more than 450 are considered mature, that is, more than half of the estimated ultimate recovery (EUR) has been reached, although they sometimes have recovery factors of 10 percentage points below the international average. This means that the relevant studies and analyses must be made to implement secondary and improved recovery processes in several of these fields and reservoirs.

Additionally, the country has, in the hands of the State, close to 140 fields that have not yet been assigned to any operator (Pemex included). This issue must be addressed, because these are fields with certified reserves, which, if there is no activity, must be written off from the national reserves inventory. Also, handling these fields properly gives Mexico an opportunity to increase production.

Another fundamental tool that must be used once again is the bidding process, in which Mexico has proven itself to be number one. This is a procedure that can, and must, be reactivated both to make migrations (farmouts) of the Petroleum Assignments in which Pemex needs to increase its production capacity and to bid out approximately 500 areas that are identified in the Five-Year Bidding Plan.

This plan covers deep waters, shallow waters, conventional and non-conventional land areas, with which Mexico can increase the certainty of reaching production goals, which will generate the raw material to refine and ultimately provide the petroleum products the country requires.

We have all heard the wisdom of idioms such as «don’t put all your eggs in one basket”, and «wise men sometimes change their minds; fools never do». Hopefully timely decisions will be made for Mexico.

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