Pemex wins approval for exploratory wells in Llave assignments

Bnamericas Published: Friday, June 26, 2020
Pemex wins approval for exploratory wells in Llave assignments

Hydrocarbons regulator CNH has approved plans by Pemex Exploración y Producción (PEP) to drill two wells in Mexico’s Veracruz state, among the first plans put forward by the NOC since the oil price crash.

The exploratory wells could indicate a change in Pemex’s strategy.

Kusum-1EXP will be in a new field, in the Cuenca de Veracruz, part of the 740km2 assignment AE-0125-Llave. It will cost US$42.7mn and is part of PEP’s development plan for the assignment approved by CNH in December 2019. 

“If this well proves successful, it will contribute to the commercial and strategic value of the area,” CNH technical advisor Israel Hernández said. “There is already existing infrastructure in the area to support an exploration and development program,” he said in reference to two wells in the Ixachi field.  

PEP first presented the plan to CNH on April 30. 

Drilling to a depth of 7,736m, the operator aims for a mid-Cretaceous play where it expects to find gas and condensate at 43°API. 

It is a high temperature and high pressure well, 175°C and 15,646psi. 

Depths and drilling conditions will extend the time horizon and make it a relatively costly terrestrial exploratory well. PEP is scheduled to begin drilling on June 29 and to finish December 31, with final termination expected on February 14, 2021. Drilling will cost US$35.5mn and termination US$7.2mn.  

PEP estimates Kusum contains around 1.39Bboe (billion barrels of oil equivalent), with a recovery rate of 31%. These expectations are informed by correlation to the Ixachi camp, where two wells have shown to be productive in the mid-Cretaceous. 


PEP also won approval to drill Tum-1EXP, an exploratory well in the 1,790mk2 assignment AE-0124-Llave. PEP first solicited CNH’s authorization to drill the Tum well on May 11. 

Source: CNH

The operator is targeting Upper Cretaceous (6,036-6,581m) and mid-Cretaceous (6,631-7,100m) plays. Like Kusum, Tum will be drilled in a ‘J’ trajectory, aiming to find gas and condensate at 40.3°API.  

The well is also classified as high-temperature and high-pressure for both the Upper Cretaceous (154°C and 15,429psi) and mid-Cretaceous (166°C and 16,353psi) objectives. 

“Given that the well is classified as high pressure and high temperature, use of preventers of 15,000psi are adequate for drilling the well,” said CNH technical advisor Juan Carlos Sabido. If the well is full of gas, the maximum expected pressure on the preventers is 13,325psi.  

PEP estimates Tum could yield 1.06Bboe, with a 20% recovery rate. Ixachi is considered a correlation

Total costs will be US$44.6mn, including US$34.8mn on drilling and US$9.8mn on termination. That is above the range prescribed for such a well, according to a recent set of CNH guidelines for commercially-viable well drilling. 

CNH technical advisors reported that PEP explained the cost hikes on the basis of higher engineering costs and the fact that equipment costs were initially based on projections earlier this year at an exchange rate of 20.5 pesos to the dollar; now it expects to have to pay for equipment with a weaker peso of 22.5 to the dollar. 

Unsatisfied, CNH commissioner Héctor Moreira said as the Tum well was more expensive to drill, had lower reserves and a lower recovery rate, priority should be given to Kusum. 

With the authorization, PEP will drill the Tum well from June 26 to October 7. Final termination will occur on December 16.

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