Eni finding continues streak of private oil discoveries offshore Mexico

Italian energy company Eni announced a promising oil find on Monday in Mexico’s rich offshore Cuenca Salina region, the latest sign of success by a private firm exploring in mid and deep offshore waters. 

In a press release, Eni said its exploratory well in the Saasken exploration prospect in offshore block 10 indicated the presence of 200-300Mb of oil. 

Eni’s Saasken well turned up “80m of net pay of good quality oil in the Lower Pliocene and Upper Miocene sequences,” the company wrote, and “reservoirs show excellent petrophysical properties.”

Block 10 encompasses 533km2, all of which has been surveyed with 3D seismic data, according to the BNamericas project database. The region’s reservoirs lie in medium-grain sand and fractured limestone.

Based on the extensive data collected for the region, Eni forecasts an operational well yielding “more than 10,000b/d.”

Eni is the operator of the consortium developing the block, holding a 65% stake, with junior partners Lukoil (20%) and Capricorn (15%). 

The Saasken-1 NFW well generated the discovery, and it marked the sixth successful well drilled by Eni in the Sureste Basin offshore region. 

ACTIVITY WHERE MEXICO NEEDS IT MOST

Mexico desperately needs development of its deeper water hydrocarbon assets, given state oil company Pemex’s technical inability to harvest the region and to check the country’s 15-year slump in annual oil output. 

Speaking at an energy forum in November, CNH commissioner Alma América Porres said 63% of Mexico’s potential reserves were unassigned, and most of them are in the deep offshore Gulf of Mexico. 

Over the past year, some private operators have readjusted their footprint in Mexico. 

While some, such as Britain’s Premier Oil appear to be making adjustments as part of a shifting business strategy - in Premier’s case a renewed focus on its North Sea assets - other firms appear to be limiting their exposure because of regulatory changes ushered in by President Andrés Manuel López Obrador (AMLO). 

Since taking office 14 months ago, AMLO has ended private auction rounds for oil and gas partnerships with state oil company Pemex. 

In a report last month, hydrocarbons commission CNH wrote that it expected 35 wells to be drilled in 2020. 

But so far, Eni’s Saasken-1 was one of only two offshore exploratory wells being drilled, the other being Capricorn’s Bitol-1SON. 

Having won block 10 in the round 2.1 auctions, Eni spent over US$50mn exploring the block last year. The Saasken well findings could lead to greater investment.  

“The discovery is opening a potential commercial outcome of block 10 since several other prospects located nearby may be clustered in a synergic development,” Eni said in its press release.  

Despite the growing reluctance of some firms, Eni said that “Mexico is a core country” as part of the company’s “strategy for future organic growth.”  

While the company is currently producing 15,000b/d from its assets in Area 1, it forecast rapidly rising output this year that will plateau in 1H21 at 100,00b/d. 

Along similar lines, Netherlands-based Shell Oil and Spain's Repsol are currently taking steps to drill in Mexico’s deep and ultra-deep waters. 

Eni next plans studies to begin commercial development.