You are on page 1of 24

Building a New Regulatory

Framework for E&P in Mexico
Javier Estrada
1
August 2010
1. The CNH
2. Regulations adopted and next steps
Subjects
2
The CNH
1
3
4
Declining reserves and oil production
The super-giant Cantarell reached its peack production in 2004
Risks of “holes” in the public finances
Years with low investments in exploration translated in low reserves
Mexico has ample petroleum ressources offshore and in land
Pemex needed a profound reorganization:
Several simultanous projects upstream and downstream
Consensus about the need to restructure the financial framework
Imperative to expand Pemex’s capacity to execute large projects
Governing structure and legal framework adapted to the oil business
National R&D in the petroleum sector were insuficient
Financial needs in univerities and research institutions
Development of companies ofering petroleum services
The E&P sector before the reform
Energy Reform
•To execute Nation’s rights
related to Hydrocarbons’
topics.
•To define production’s platform
trajectory.
•Reserves’ restitution definition.
•To authorize exploration and
production projects
•To approve, refuse, modify,
revoke and/or cancel
hydrocarbons’ exploration and
exploitation grants.
Technical and
regulatory agency in
the hydrocarbon
sector -check and
balance system
between PEMEX and
The Energy Ministry.
5
Mexican E&P Outlook
Mature
fields
Hydrocarbons
Policy
Exploration
Highly
technical
fields
6
Mature fields
Mexican E&P Outlook
México has 223 oil and associated gas fields with production and reserves, from
which 177 are already declining or will be in the next 2 years. From the 46 fields
in development, 29 are Chicontepec fields.
Status of oil and associated gas fields**
*Size: Supergiant original 2P reserves > 5,000 MMBPCE; Giant > 1,500 MMBPCE; Big > 250 MMBPCE;
medium > 80 MMBPCE.
** Status: Declining if production is less than 85% of the max; plateau if production reached its peak
but hasn’t declined more than 85% of the peak.
Size* Declining Plateau Development Total
Supergiant 1 0 0 1
Giant 5 2 0 7
Big 44 8 3 55
Medium 32 7 7 46
Small 62 16 36 114
Total 144 33 46 223
7
Highly technical fields: Chicontepec
Mexican E&P Outlook
Large reserves
but big
technical
challenge
Veracruz
Hidalgo
Puebla
Golfo de
México
8
Exploration
Mexican E&P Outlook
World’s sedimentary basins with 2,000 exploratory wells in the last 25 years
In the whole country, PEMEX has drilled 1,228 exploratory wells in the last 25 years.
SOURCE: Article by Leonardo Maugeri, Scientific American.
9
Exploration
Mexican E&P Outlook
0
20
40
60
80
100
120
140
160
180
1
9
3
8
1
9
4
0
1
9
4
2
1
9
4
4
1
9
4
6
1
9
4
8
1
9
5
0
1
9
5
2
1
9
5
4
1
9
5
6
1
9
5
8
1
9
6
0
1
9
6
2
1
9
6
4
1
9
6
6
1
9
6
8
1
9
7
0
1
9
7
2
1
9
7
4
1
9
7
6
1
9
7
8
1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
Located with no 3D
seismic
Old technology
80%
4,844 Wells
Exploration wells
10
Exploration: Prospective Resources (MMMOBE)
Mexican E&P Outlook
Onshore and Offshore shallow waters(< 500 m) resources account for 51% of
total prospective resources (28.9 MMMBOE).
Offshore
43.8
Onshore
12.8
56.6
MMMOBE
43.8
MMMOBE
19.7
3.7
4.3
16.1
> 1,500
< 500
500 – 1,000
1,000 – 1,500
Depth
(m)
Deep Waters
27.7
MMMBOE
Total Offshore
11
Exploration: The Gulf of Mexico
Mexican E&P Outlook
White-1
Trident-1
Baha-1
Jack-1
Tamha-1
Lalail-1
Noxal-1
Tamil-1
Chuktah-201
Golfo de
México
Sur
Área
Perdido
Lakach-1
Nab-1
Chelem-1
Golfo de
México “B”
Simbología
Extra-heavy oil (<12° API)
Heavy oil (13-22° API)
Heavy oil (22-27° API)
Light oil (28-37° API)
Extra-light oil (38-42° API)
Dry gas / Extra-light oil
CRETACICO SUPERIOR
Turbiditas laminares
no confinadas Lutita
CalcáreaPiso
de Cuenca
Flujos de
Brechas
Turbiditicas
MIOCENO MEDIO
Turbiditas laminares
no confinadas
Lutita
CalcáreaPiso
de Cuenca
Apron piso de Cuenca
Arenoso Pobre
información
Sísmica
Complejos
Canalizados
Turbiditicos
Complejo
Cañón-Abanico
Apron Piso de
Cuenca
Source: Ing. Carlos A. Morales Gil. “El Potencial Petrolero de México”. 24 November 2008.
12
Exploration: Not explored areas (subsalt province)
Mexican E&P Outlook
0 100 200 300
km
Poza Rica
Veracruz
Reynosa
1
Cd. Carmen
Subsalt
Belt
Salt Gulf Province
Plegado Perdido
Belt
13
Increasing production costs
The “maturing” of our producing fields, together with the incorporation
of new production from highly technical and complex fields, implies an
increase in lifting costs.
Young Mature
1990
Acum. Prod.
Cost/bbl
“Maturing ” of oil fields
2010
C
1990
C
2010
Incorporation of more complex fields
Cost/bbl
“Easy”
fields
“Complex”
Fields
14
Acum. Prod.
Regulations adopted and next steps
2
15
17,319
14,961
6,667
4,568
Chicontepec Declining In production Without production
Defining the hydrocarbons policy
To identify the opportunity areas for the proper exploitation of our
oil and gas fields: hydrocarbon reserves
74% of our reserves
require secondary
recovery and improved
recovery.
The reserves not being
exploited are spread in
medium size and small
fields
Our reserves are in fields
of smaller size than the
declining fields
Distribution of the oil and gas reserves*
(% - MMBOE)
11%
40%
34%
15%
16
Salina
del Itsmo
Litoral de
Tabasco
Chiapas-
Tabasco-
Comalcalco
Tampico Misantla
Opportunities: 239
MMBOE: 2,435
Sabinas
Opportunities: 92
MMBOE: 438
Veracruz Opportunities:
361 MMBOE: 1,570
Yucatan Shelf
Opportunities: 40
MMBOE: 1,389
Burgos Opportunities:
512 MMBOE: 2,719
Sureste Opportunities:
1,108 MMBOE: 16,703
Gulf of Mexico
Opportunities: 640
MMBOE: 31,485
17
Defining the hydrocarbons policy
To identify the opportunity areas for the proper exploitation of our
oil and gas fields: prospective resources
Salina
del
Itsmo
Litoral de
Tabasco
Chiapas-Tabasco-
Comalcalco
Salina del Itsmo
Opportunities: 321
MMBOE: 6,824
Chiapas-Tabasco-Comlacalco
Opportunities: 379
MMBOE: 5,379
Litoral de Tabasco
Opportunities: 190
MMBOE: 3,047
Macuspana
Opportunities: 218
MMBOE: 1,453
18
Defining the hydrocarbons policy
To identify the opportunity areas for the proper exploitation of our
oil and gas fields: Subsalt potential
Regulation and supervision
Examples of regulation enacted by the CNH:
19
Rules to reduce the flaring and venting
of natural gas
Guidelines to acknowledge the certification
of oil and gas reserves
Technical guidelines for the design of
new projects
December 4, 2009
December 21, 2009
August 4, 2010
Guidelines for the design of new projects
(FEL methodology)
Design phase
V
a
l
u
e
Conceptualization Definition Execution Operation
Time
Value Identification
Identificaction of valuables
Performing the values
Operation Execution Plan Plan approval
Evaluation of
options
Identification of
opportunities
Poor
Definition (limited scenarios)
Good
Definition (several scenarios)
Poor
execution
Good
execution
D
D
A
B
C
Visualization
20
Oil Production scenario (illustration)
Expected production by type of
resource or reserve
(thousand bbl day)
Associated investments
(million US dollars)
0
5,000
10,000
15,000
20,000
25,000
30,000
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0
2
0
1
2
2
0
1
4
2
0
1
6
2
0
1
8
2
0
2
0
2
0
2
2
2
0
2
4
Reserva Total
Recursos
Prospectivos
Observed
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0
2
0
1
2
2
0
1
4
2
0
1
6
2
0
1
8
2
0
2
0
2
0
2
2
2
0
2
4
Probada
Probable
Posible
Recursos
Prospectivos
Observed
21
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
Reforma Inercial
Gas production scenario
(illustration)
• A stable supply of natural gas is expected in the future
Natural gas production
(million cubic feet per day)
Source: SENER
22
Forthcoming regulations and evaluations
fromthe CNH
23
Guidelines for deep water projects (1
st
package)
Metering
Recovery factors
October, 2010
March, 2011
December 2010
2P and 3P Reserves 2010
Renewal of Pemex E&P assignments (project
evalautions)
September, 2010
September 2011
to July 2013
CNH Approach
Internal standards of
Pemex
3 Tier Strategy
Design specific regulation
Technical assessment of the
E&P projects
ACTIONS
Assess all the E&P to:
•Revise the internal standards
and procedures of Pemex, as
well as the management
systems to enforce them.
•Introduce specific technical
regulation.
• Provide technical
assessments and follow up.
Regulation hybrid approach towards
Performance Based – Case Assessment
1
2
3
Regulation is complemented with supervision, inspections (and drilling permits, when required)
24