Mexico’s hydrocarbons regulator CNH approved in a 3:2 vote Pemex's plans to explore three assignments that would entail fracking.
In the session on Thursday, CNH technical director Rodrigo Hernndez Ordez said “34.3% of the potential reserves that the country has are found in the Tampico-Misantla basin, in particular through the unconventional part.”
Hernndez added that “one must add that Pemex has competitive advantages in carrying out activities in this basin, they have many decades [of experience] there,” easing the identification of plays and incorporating reserves.
Xanati, Yuban and Chuyan in Veracruz state are the three areas the energy ministry (Sener) submitted to CNH for a technical opinion on Pemex’s exploration and development plans.
Yuban and Chuyan have prospective reserves of 428 and 415Mboe (million barrels of oil equivalent), respectively, while Xanati may contain 352Mboe.
Under an incremental scenario, Pemex could drill 14 wells at Chuyan and Xanata, and 20 wells at Yuban.
In this scenario, Pemex estimates to spend 2.43bn pesos (US$110mn) on each area for studies and wells.
A chronogram relating to future exploratory activities was not provided. Instead, Hernndez presented a graph that showed oil and condensate production rising at Chuyan and Yuban from 2021, peaking around 50,000b/d in 2025, and remaining productive until the early 2040s.
A similar graph displayed for Xanati showed a more gradual rise in oil and condensate production to eclipse 35,000b/d in 2025, followed by production declining to zero around 2038.
In past sessions, Pemex’s estimates for exploration and drilling campaigns led to questions from CNH commissioners. And on Thursday Hernndez highlighted another point, saying “Pemex’s cost evaluation assumes a 100% success” rate, which was statistically unlikely.
However, the spitball figures went unremarked upon in light of a larger concern.
Xanati, Yuban and Chuyan are either Jurassic Tithonian or Oxfordian plays, shallow-depth formations that require fracking for 'unconventional' extraction of hydrocarbons.
FRACKING PLANS
Fracking is a politically charged issue in Mexico, one that set off heated comments from CNH commissioners. Although Pemex began limited fracking in 2010, since coming to office in 2018 President Andrs Manuel Lpez Obrador (AMLO) has said that fracking will not be allowed.
“This is the first occasion where they are going to go in areas where I consider, in a very personal way, that they are not aligned with the energy policy,” CNH commissioner Alma Amrica Porres said.
“Basically, in these areas 98% of the reserves…that is 3.8Bboe [billion barrels of oil equivalent] belong to unconventional reserves,” she said, adding that exploration and extraction in the region required fracking.
Commissioner Sergio Pimentel agreed, saying that Pemex’s plan raises questions about Mexico’s support for the NOC. “How much will it cost to maintain the petroleum activities that today are assigned to Pemex?” he asked. “And how much will it cost in addition to assign them these three areas?”
Both commissioners voted against the plan. Yet, most of the five commissioners also expressed concerns about Pemex’s financial state and expertise to launch wide-scale fracking campaigns, especially given that it is presently barred from bringing in private partners via farmouts.
More friction appears on the horizon, with potentially another 18 such assignments coming up for review by CNH in September.