Momentum appears to be growing for a proposal that would more fully open Mexico to outside oil and gas investment. The move could offer attractive upstream opportunities to operators and the service sector, and intends to rescue Mexico's steeply declining production. The proposal by Mexican President Enrique Peña Nieto lacks critical details for investors and is politically controversial, but it marks the most significant step to loosen restrictions on foreign investment in decades. Mexico nationalized its oil industry in 1938, and its constitution states that ownership of natural resources belongs solely to Mexico. Oil production and reserves have been falling sharply, however, and now pose a threat to the country's economic health.
New energy legislation in Mexico offers significant exploration and production (E&P) investment opportunities and also promises to transform Mexican state oil company Pemex, said participants at one of several special sessions at OTC Asia focusing on individual countries. OTC Asia offered eight country sessions during the conference, providing in-depth coverage of issues and developments in various countries around the globe. The Mexico session featured representatives from Pemex, the Mexican government, and Ernst & Young. "All of a sudden, Mexico is a very attractive investment environment. Things are beginning to change very rapidly," said Pedro Silva Lopez, deputy director of technical resources for Pemex Exploration and Production.
In a session titled, "Mexico Energy Reform: Challenges and Opportunities," Gustavo Hernández García, state oil company Pemex acting director of exploration and production, spoke about the future of the company. Mexico has begun the reform in large part because of the country's decline in production over the past several years. Domestic demand for petroleum has remained steady, but the drop in production threatens the country's growth and has highlighted the fact that Pemex does not have the resources to develop the country's rich reserves. Deep water, shallow water heavy oil, shale, and enhanced oil recovery in mature fields are four places where Hernández García said the company plans to capitalize on opening up certain leases to outside operators and partners. According to Hernández García, Mexico still has 13 billion bbl of proven reserves in place, not counting prospective resources.
BHP Billiton lost billions during its foray into US shale, but that doesn't mean it has soured on oil and gas. Since the Melbourne-based firm announced in July the sales of its assets in the Permian Basin, Eagle Ford Shale, and Haynesville Shale, many have wondered if it would leave oil and gas altogether. But Skip York, BHP head of strategy and market intelligence, petroleum, assures that "BHP is still very bullish on the petroleum story as a natural resources company." That's because there will continue to be value in conventional assets driven by natural declines and the oil supply-demand imbalance, he explained. While demand may peak, its decline will be much slower than that of supply, which tends to take steep dives.
Interview conducted by TWA editors Carter Clemens, Li Zhang, Nii Ahele Nunoo, and Bruno S. Rivas. Before that he was the director of development and production for the company. He has received several awards, including the Miguel Angel Centeno Prize and the National Petroleum Engineering Award. Pemex is one of the world's largest oil producers in shallow waters. What role has technology played to get to this point?
Situated in central Mexico, Mexico City sits at a minimum elevation of 7,217 ft in the Valley of Mexico, a fitting location for one of North America's most important financial centers. It is truly a global city, in every sense of the term, with its rich background and the continuing diversity of its population. Human history in this area stretches back to nearly 8000 BCE, when agriculture (focusing on crops like squash) was first being implemented in the Americas. The Olmec were the first major civilization in Mexico, and gave rise to some well-known groups such as the Maya, Teotihuacán, Toltec, and Zapotec. Contact with early conquerors and settlers entirely changed the Aztec, the final of these civilizations, and eventually led to the creation of a city ripe for international trade.
The Mexican government continues to update its environmental regulations as authorities prepare for the first exploration and production (E&P) auction to feature blocks with unconventional oil and natural gas resources since the energy reforms of 2013. The National Water Commission, or Conagua, published in the official gazette on 30 August rules detailing water conservation and protection measures that E&P companies must carry out during exploration and development phases of unconventional reservoirs. The water-use rules implement previously issued regulations from the Agency for Safety, Energy, and the Environment (ASEA) and the National Hydrocarbons Commission (CNH). "Prior to the reforms, we didn't have as robust a regulatory framework as we do today," CNH Commissioner Héctor Moreira said. "Among other things, it's important to note that the reforms gave origin to ASEA itself."
BHP Billiton's signing of a contract with Pemex on 3 March marks the beginning of its work on the Triton discovery offshore Mexico and the potential to boost Mexico's oil production to meet its growing demand. The company bid on the field last December in Mexico's auction of 10 deepwater blocks in the fourth stage of the Round One bids since the country's Energy Reform in 2013, which opened its offshore and unconventional fields to international companies. Once the field is fully appraised, BHP Billion expects it to be in the top 10 fields discovered in the Gulf of Mexico in the past decade. Pemex estimated the gross recoverable resource to be 485 million BOE. The development of the Triton project is estimated to require an investment of USD 11 billion, with production beginning in 6–7 years.
Edgar Rangel-German, SPE, commissioner of Mexico's regulatory agency National Hydrocarbons Commission (CNH) and one of the key members behind the implementation of Mexico's recent energy reform for hydrocarbons, died 23 March. Rangel-German was a thought leader in Mexico's energy reform, which brought about constitutional changes in 2013 to open the country's oil and gas market to private investments and technical expertise to increase production. He was appointed CNH commissioner for a second term in 2013 by Mexico President Enrique Peña Nieto, when constitutional changes charged CNH with regulating, overseeing, and evaluating all hydrocarbons exploration and production activities in Mexico. CNH oversees the tenders the country is offering under the reform. On the success of the second tender in Round One in September last year, he commented in a JPT article, "We believe that our mandate of obtaining the best conditions for the Mexican state was achieved. It seems to me that materiality ruled the tender."
The Mexican government continues to update its environmental regulations as authorities prepare for the first exploration and production (E&P) auction to feature blocks with unconventional oil and natural gas resources. The oil industry will be able to draw water from the Little Missouri State Scenic River for hydraulic fracturing after North Dakota officials lifted an 8-week-old moratorium on industrial water permits, raising concerns from some conservationists about the effect on the Badlands.