Pemex executive sees oil output of 3 million b/d by 2016-17

Crude oil production from Mexico’s state-owned Petroleos Mexicanos will increase to more than 2.6 million b/d by yearend and could rise to 3 million b/d by 2016-17, according to the firm’s top executive.

Pemex Chief Executive Officer Juan Jose Suarez Coppel told a congressional hearing that if the “pace of investment in defined projects in the southeast and other regions is maintained, we can reasonably aspire to achieve 3 million b/d once again by around 2016 or 2017.”

Coppel said the increase in production by yearend will bump up Mexico’s average oil production for the year to 2.57 million b/d—the same as in 2010.

Such a result would mean that “the production shortfall that began in 2005 with the decline…of the Cantarell field will finally have been halted,” Coppel said.

Coppel acknowledged that oil production in this year’s first half averaged 2.56 million b/d, down 1% year-on-year but that by yearend 2012, “we estimate production will reach 2.7 million b/d.”

Coppel said such results will require Pemex to “invest in improved recovery technologies” in mature fields and to “continue developing production at new fields.”

The executive said “important steps” are needed to improve Mexico’s oil production, whether at the technically complex onshore Chicontepec basin or in deepwater areas.

Meanwhile, Pemex’s head of E&P subsidiary PEP said the firm plans to invest $1 billion in 2012 to explore the Perdido Fold belt in the Gulf of Mexico near the US border. The figure could rise to $10 billion if oil is found.

PEP Chief Executive Officer Carlos Morales Gil said the $1 billion figure includes the drilling of three wells in the area, in addition to costs associated with delimitation of the field.

Gil said the Perdido Fold belt contains 3 billion boe of prospective hydrocarbons resources, representing about one tenth of the 29.5 billion boe which Pemex believes is in its sector of the gulf.

The estimate represents the company's long-term hope for sustaining production that has progressively fallen since 2004, largely due to the natural decline of Cantarell.

Pemex was expected to begin drilling the Perdido Fold earlier this year, but delayed until new regulations for operations in deep waters off the coast of Mexico had been issued.

Pemex could use the Bicentenario semisubmersible rig, which drilled its first well, Talipau-1, in midyear. Pemex awarded the 5-year rental contract to consortium Industrial Perforadora de Campeche and Grupo R Exploracion Marina in 2007.

However, Pemex also could use the West Pegasus semi, formerly known as Sea Dragon, having signed a 5-year contract for the rig this year with offshore driller Seadrill.

Analyst Juliet Kerr of IHS Global Insight said that water depths exceed 2,000 m in the Perdido Fold—deeper than other areas in which Pemex has drilled date, “making this exploratory campaign a technical challenge for the company.”

Kerr also said Perdido Fold’s proximity to the US maritime border means that Pemex will be under pressure to “observe the highest international safety standards.”

Meanwhile, Kerr said that the development of any future discoveries in the area may have to involve “discussions over the unitization of reserves with fields discovered on the US side of the border.”

The US and Mexico began formal negotiations over a transboundary agreement in August.

Contact Eric Watkins at [email protected].