Regulator approves spate of Pemex plans despite objections

Mexico’s hydrocarbons regulator CNH approved plans for eight blocks at two onshore fields operated by Pemex Exploración y Producción (PEP). 

At the well-studied AE-0146 Comalcalco block, the upstream unit of NOC Pemex plans an exploratory well. Meanwhile, at the less studied AE-0147 Comalcalco and six blocks in the Llave field, PEP wants to conduct studies and process the data of prospective plays from 2020-22. 

COMALCALCO STUDIES AND EXPLORATORY WELLS

In 2014-19, PEP conducted a series of geological and geophysical studies across much of the AE-0146 assignment. 

Source: CNH

PEP’s base plan, which narrowly meets the company’s contractual obligation to drill a well in order to satisfy its minimum work requirements, targets exploratory well Jechel-1. 

A decision to scale up activity could see two additional wells drilled in the assignment, including Techiaktil-1 at a nearby site, and Tutupiche-1 further to the east. 

Total costs at AE-1046 could range from US$30.8mn to US$83.5mn, largely for drilling, which could range from US$27.2mn to nearly US$78mn. 

By contrast, AE-0147 has yet to be studied save for 3D seismic over a sliver of the assignment. 

Hence, at AE-0147 PEP plans four studies in its base scenario, either seismic processing or exploratory studies. 

An additional four studies could be carried out in an incremental scenario, beginning this September and carrying on through May 2022.

Total cost of the base scenario is estimated at US$17.8mn, rising to US$57mn with incremental costs – four more studies plus the possibility of an exploratory well.  

LLAVE FIELD

PEP included in its plans a series of 2D and 3D seismic studies at six blocks – AE-124, 126, 127, 128, 129, 130 – in the Llave field, which contains eight blocks in southern Veracruz. 

Investment plans for AE-0124 would range from nearly US$113mn in a base scenario to US$144mn in an incremental scenario with more drilling.    

At AE-126, costs could range from US$80.7mn to US$123mn from 2020-2022, depending on drilling.  

At AE-127, costs could be between US$10.9mn and over US$44mn, depending on whether PEP decides to drill an exploratory well. At AE-128, costs could range from US$9.8mn to over US$30mn. 

Depending on additional geophysical studies, costs at AE-129 could rise from US$7.2mn in a base scenario to more than US$69mn in an incremental scenario. The study-related costs would be incurred in 2022.

At AE-130, costs could range from US$27.1mn to over US$91mn. 

OBJECTIONS RAISED

Although CNH approved the plans, commissioners raised a series of objections. 

Commissioner Alma América Porrés asked for more details on PEP’s plans. “Increasingly we're seeing more plans, but with less content,” she said. 

Referring to AE-1046 Comalcalco, Porrés said: “We cannot now make a comparison between the investments that they're going to make… we're approving in principle the base plan. For sure, we don't have any data on the incremental [plan].”

She cited a lack of detail on vertical depths of potential wells under the incremental plans, as well as their geological properties, and proven or potential hydrocarbons reserves. 

In recent months, Porrés has spoken out over what she sees as lower standards applied to PEP compared to private sector operators. Her objections at times have been shared by fellow CNH commissioner Sergio Pimentel. 

CNH typically reviews plans by private operators on a per field or activity basis, with details including advanced statistical forecasts of hydrocarbon findings, well-drilling configurations and geological plays, for both base plans and potential plans. By contrast, PEP plans often bundle work at several blocks together, offering details on a base plan but skirting details on incremental plans.