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The Mexican oil and gas industry has undergone significant changes over the past decade, including the market’s opening and the entry of major international players, followed by the reversal of the energy reform, in addition to challenges posed by political tensions and extraordinary situations such as the pandemic. In this context, the oil and gas supply chain and service sector remain robust, expecting different challenges with the advent of a new administration.
To address these challenges, during the Mexican Petroleum Congress (CMP), OPEX organized Drill Talks, a space where industry experts discussed the most relevant topics for the industry and its players. In the session The Future of the Oil Industry in Mexico, experts addressed the exploration and production priorities of the new government, as well as the challenges the industry will face, particularly considering the decline in production and mature fields. Oil and gas leaders also discussed the role of technology in tackling increasingly challenging fields and wells, emphasizing its importance in enhancing sustainability in essential production and exploration practices amid an energy transition that demands reliable energy sources.
William Antonio, Managing Director of Mexico and Central America, SLB, identifies three main challenges that will be the top priorities for the next administration’s oil and gas strategy. In first place is the decline in production. “Drilling activity must be very intensive. The next administration will have to drill more wells and increase reserves. With the current production rate, adding new reserves will be one of the priorities,” Antonio highlighted. The second priority is related to what all major companies strive for: cost reduction, plus guaranteeing cash flow. Lastly, as sustainability has made its way into PEMEX’s agenda, its suppliers will also have to look for ways to reduce emissions.
Regarding PEMEX’s efforts to maintain production, César Granados, CEO, OPEX, considers that the services sector is understanding of the challenges identified by experts, especially the urgency of the decline in reserves and the difficulty of maintaining production objectives in this scenario. “Mexico not only needs to maintain mature fields but must develop new ones, which implies investing in exploration and production of wells. A point in Mexico’s favor is that its exploration success rate is quite high compared to other countries, which can guarantee energy security,” Granados mentioned. Granados identifies that Mexico will continue investing in exploration and in the maintenance of mature fields. “The development of the 54 new fields during this administration speaks of the intention to follow this much-needed strategy, in addition to leadership to guide these efforts,” he added.
Hermes Aguirre, Country Vice President of PEMEX, Halliburton, identifies that PEMEX has followed a clear path to add reserves and accelerate production. However, he highlighted the challenge presented by reservoirs and wells with globally unique characteristics, especially the deepest wells. He noted that although technologies have demonstrated certain limitations, the great opportunities lie in how to assimilate new technological
developments and the potential of artificial intelligence to better understand fields. This approach would allow drilling and optimization plans to be more efficiently incorporated to achieve the desired results. He also highlighted the scope of digitalization and technology to overcome current barriers.
Jesús Rosas, Director of OFSE in Mexico and Central America, Baker Hughes, highlighted that the marine region continues to offer some of the best prospects for exploration in the coming years. Rosas also pointed out the possibility of exploring deep waters, a task that, although promises to change production figures, also implies facing significant technological complexities. Rosas emphasized that extreme depths present numerous technological challenges that must be addressed. In the face of these challenges, Gustavo Torres, Vice President of International Operations - Latin America, Weatherford, pointed out that the industry also has to unlearn its processes to find new and better solutions for increasingly challenging reservoirs and wells.
Regarding how new technologies can reduce the environmental impact of exploration and production activities in Mexico, Antonio believes that the industry in Mexico is not ready to pay a premium just to reduce emissions. “However, although we are far from that, there are many ways in which the service chain seeks to reduce environmental impact. The easiest way is that any technology that reduces operation time will also reduce environmental impact,” he said, identifying this as an area of opportunity for supply chain and service companies.
Regarding the changes or continuity expected from the next administration in terms of exploration and production, Granados considers that, due to the great challenges identified in the industry, service companies anticipate that activity will continue. “It is not an easy situation for PEMEX, because if reserves are not replenished, oil revenues will also fall. It is a challenge of great optimization, new technologies, and digitalization, making things better than they were done before and, hopefully, obtaining new deposits. We think that activity will be maintained; we believe that it will be so and that is why we continue investing in Mexico.”
Another challenge, no less important for the industry, is to continue captivating young talent to replenish the workforce in the sector, experts agree. For this, Mexico also presents a great opportunity: “One of the best oil engineering schools is to work in Mexico. Mexico has all types of deposits, everything imaginable in the industry from the point of view of drilling and completion of wells,” Granados mentions.
PEMEX struck an agreement with CME Oil and Gas to revitalize the Bacab and Lum oil fields in the Ku-Maloob-Zaap complex as part of the NOC’s broader strategy to boost production by leveraging private sector expertise. This move comes at a critical time for PEMEX, which is grappling with nearly US$100 billion in debt and declining output from its aging fields.
The agreement with CME, which includes its subsidiaries OPEX Perforadora and Perforadora Profesional Akal I, aims at extending well depths in the Bacab and Lum fields, which are located in approximately 200ft of water, according to Bloomberg. Under the terms of the deal, CME is expected to invest around US$1.65 billion over the next 15 years, with the goal of increasing production tenfold to 40Mb/d by 2028. The project is anticipated to produce 73.4MMboe, generating revenues of US$4.3 billion, with more than half of the proceeds earmarked for government accounts.
The Ku-Maloob-Zaap complex saw its production peak over a decade ago. This partnership is part of PEMEX’s strategy to redevelop aging assets through private sector collaboration, a departure from the company’s previous approach of maintaining full control over its fields.
The agreement also comes as PEMEX faces its worst financial loss since the onset of the global pandemic. Financial strain adds pressure on president-elect Claudia Sheinbaum, who will take over the presidency in October. Although Sheinbaum has not yet revealed her plans for PEMEX’s leadership, public-private partnerships are expected to continue under her administration.
The move toward greater private sector involvement also aligns with comments from Rogelio Ramírez, Minister of Finance, who emphasized the need to increase PEMEX’s reserves in the upcoming presidential term. A similar approach has been taken with companies like Woodside in the Trion deepwater project, where the private firm assumes the majority of the risks.
Although the current administration has largely rolled back the 2013 Energy Reform, which opened Mexico’s oil sector to private investment, the incoming government might revisit these policies. According to Reuters, the new administration could encourage PEMEX to pursue more farmout agreements and joint ventures with private companies. These partnerships, which were a key feature of the 2013 reform, allow private and foreign oil companies to collaborate with PEMEX on exploration and production projects.
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The potential for such a policy shift has raised speculation that Mexico’s Hydrocarbons Law could be amended to give PEMEX’s board more authority in selecting partners. There is also the possibility of CNH being dissolved if a constitutional reform, supported by López Obrador and Sheinbaum, is approved. This would mark a significant change in how Mexico’s oil sector is regulated and could further open the door to private sector involvement in the country’s energy industry.
To boost Mexico’s production of liquid hydrocarbons in shallow and deep waters, PEMEX is partnering with private companies through financial and operating models aimed at reducing the NOC´s operational costs and public risk.
One example is PEMEX´s recent US$1.650 billion agreement with CME Oil and Gas and Opex. The Comprehensive Services Exploration and Extraction Contract (CSIEE) is for the development of the Bacab and Lum fields. CSIEE contracts and farmout models have generated opportunities for private providers to continue supporting the development of the Mexican oil and gas industry, and according to experts, these will continue during President Claudia Sheinbaum’s administration.
The agreement aims at extending well depths in the Bacab and Lum fields, considered mature fields located 104km northeast of Ciudad del Carmen, Campeche, within the Ku-Maloob-Zaap reserve, in the shallow waters of the Gulf of Mexico. Over the next 15 years, CME Oil and Gas, a subsidiary of the Mexican business group CME, alongside Opex Perforadora and Perforadora Profesional Akal I, plans to invest a total US$1.65 billion to increase crude oil production by up to 10 times from these mature fields.
The investment will primarily focus on optimizing the productive profile of the existing wells and developing new wells, both productive and exploratory, due to the presence of adjacent plays within the perimeter of the same assignments.
The contract includes positive incentives for CME based on results from actual increases in production or project profitability. The Minimum Work Plan will contribute to an accelerated increase in crude oil production at Bacab and Lum, enhancing the total recovery factor.
The Plan includes:
+ Drilling and completion of nine producing wells
+ Drilling of two injector wells
+ Two major workovers
+ Procurement and installation of infrastructure to meet the production commitments established in the program
It is estimated that production will peak at more than 40Mb/d by mid-2028, approximately 10 times the current level.
The most important strategies of this project include the application of new technologies to implement well repair and drilling programs, as well as the installation of state-of-theart artificial systems to enable early production under strict standards of operational excellence.
It is important to highlight that more than 10 national and international companies participated in the assignment process for this contract, which began in May 2023. Of the
companies invited, eight showed interest, and only two met the technical, legal, and financial capacity required by PEMEX. After fulfilling all financial, technical, legal, and operational requirements, PEMEX awarded this contract to the consortium of Mexican companies led by CME.
Alfredo Miguel Bejos, chairman of the Board of Directors at CME, stated, “We are confident that the results will show that, if accompanied by the right technical and field management capabilities, the CSIEE contractual model is an effective formula to rapidly increase production in Mexico and take full advantage of the oil resources in mature fields that are part of PEMEX’s reserves. CME and its subsidiaries have proved that it is possible to increase drilling time efficiency and lower average costs compared to industry benchmarks.”
In recent months, PEMEX reached two agreements to develop fields with private companies using the CSIEE model. This framework, derived from Article 9 of the Hydrocarbons Law, allows the state-owned company to partner with private investors to reduce risks and costs without relinquishing operational control or ownership of the reservoirs.
CME and OPEX’s CSIEE partnership with PEMEX to develop the Bacab and Lum fields is one of these examples. CME, in partnership with international allies such as the American firm SLB, will implement various innovative technologies to advance well drilling programs. The installation of stateof-the-art artificial systems is also planned to enable early production under strict operational excellence standards.
Currently, the mature Bacab and Lum fields produce 4 Mboe/d and have 3P reserves of up to 174.36 MMb. CME, through its subsidiaries, aims to increase the current production of Bacab and Lum tenfold through a multibillion-dollar investment of its own resources, focusing on optimizing the production profile of existing wells and developing new ones, both productive and exploratory, due to the presence of adjacent plays.
In the same manner, the CSIEE contract scheme enabled PEMEX and subsidiaries of Grupo Carso to reach an agreement for the exploitation of the deepwater natural gas field Lakach. This PEMEX assignment, located 90km from Veracruz, has yet to produce natural gas, despite the state-owned company investing over US$1.4 billion in its development for the drilling of up to eight wells, according to data from PEMEX and the National Hydrocarbons Commission (CNH).
To complete the development of Lakach, Grupo Carso has committed to PEMEX with a minimum work plan and an investment program that will reach US$1.88 billion. Lakach holds a reserve of 900Ncf of natural gas, and it is expected that, following this alliance, the field will commence gas production in 2026.
As the Sheinbaum administration prepares to address Mexico´s most pressing issues for the next six years, PEMEX continues to forge partnerships with private companies that are helping accelerate production in both shallow and
deepwaters. These agreements are based on financial and operational models aimed at reducing costs and risks for the public company.
The CSIEE model is just one of the mechanisms that PEMEX is using to partner with private companies on hydrocarbon exploration and production projects, while remaining the operator and retaining ownership of the assets and reserves.
However, PEMEX has also pursued another scheme to partner with private companies through assignments stemming from tenders or oil rounds promoted by the National Hydrocarbons Commission (CNH) following the approval of the 2014 Energy Reform.
The projects for the development of the Lakach, Bacab-Lum, Trión, and Zama fields exemplify the partnerships that PEMEX has established with private companies to enhance production through advanced technologies, lower costs, and shared risks. These collaborations intensified in the second half of President Andrés Manuel López Obrador´s administration.
Each of these recently announced collaborations features specific characteristics and legal specifications. While the agreements between PEMEX and the Mexican business groups CME and Grupo Carso for the development of the Bacab and Lum fields, as well as Lakach, were reached through CSIEEs, PEMEX’s partnerships with the Australian company Woodside and the American company Talos Energy to develop Trión and Zama resulted from tenders associated with the oil rounds promoted following the 2014 Energy Reform. These agreements take the shape of farmouts.
The Public-Private Partnerships in Trión and Zama
To develop the Trión field, located in deepwaters off the coast of Tamaulipas, PEMEX partnered with the Australian company Woodside, which serves as the operator and will invest approximately US$4.8 billion in private resources to extract 479 MMboe.
Another case is Zama, a shallow-water field located off the coast of Tabasco. After years of litigation, PEMEX agreed to partner with the American company Talos Energy to develop this asset, which has reserves of 700MMboe. Talos Energy, a company in which businessman Carlos Slim also participates, is estimated to invest, along with PEMEX and its partners, over US$9 billion for the development of this field.
In the coming years, considering PEMEX’s liabilities and the financial restructuring focus that the administration of President-elect Sheinbaum will promote through the Ministry of Finance and Energy, led by Rogelio Ramírez de la O and Luz Elena González, it is likely that the company will continue to seek agreements with private firms to accelerate crude oil production using advanced technologies while minimizing time, costs, and financial and operational risks.
In its financial results report for the second quarter of 2024, PEMEX reported that its financial debt reached US$99.4 billion. While PEMEX indicated that its debt decreased by 1.8% compared to the end of 2023, the reality is that the state-
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owned company faces significant financial pressure from its creditors, which affects its liquidity for new exploration and production projects.
Therefore, strengthening and multiplying PEMEX’s partnerships with private companies without compromising energy sovereignty will be a priority for the next federal administration, especially when multibillion-dollar investments are needed to develop fields that can counteract the natural decline of existing fields. This decline has already led to a decrease in production of 119Mb/d in the second quarter of 2024 compared to the same period last year, as liquid hydrocarbon extraction fell from 1.90MMb/d in 2023 to 1.78MMb/d in 2024.
CNT New Technologies | Digital Solution Coordinator
The reduction of non-productive time (NPT) using digital tools, has become a trend in industries such as automotive and oil, known for their high operational efficiency standards and rapid technological transformations. Software that integrates solutions based on machine learning, big data, or artificial intelligence is increasingly common for reducing invisible time drains that may not be obvious but which significantly impact operations in these highly competitive and innovative sectors.
A success story of invisible NPT reduction can be found in Formula 1 races, where tire changes and fuel refills for competing cars have dropped from long three-minute stops in the 1950s to an astounding two seconds today. Red Bull set the record for the fastest Formula 1 pit stop in 2019, with a time of just 1.82 seconds.
Minimizing tire change and refueling times has become a crucial strategy in Formula 1, where even a millisecond can make a substantial difference in the competition’s final standings. Over the years, optimizing these inactive periods in the pits has turned into an obsession for teams eager to push technical and operational limits, adding valuable points in each Grand Prix.
Formula 1 reduced these times by increasing trained personnel in the pit area, improving equipment, and adopting strategies that eliminate each second of vehicle inactivity on the track. This approach not only improved race performance but also created methods and practices that ensure process optimization in every race, through precise standards.
This approach has also influenced the automotive industry and inspired the methodology behind Drillit, a specialized software for the oil and gas industry that identifies invisible NPTs in oil well drilling operations. CNT New Technologies Company, a subsidiary of Mexico-based CME group, developed Drillit to reduce drilling times and costs by anticipating delays.
In the oil industry, as in Formula 1 racing, every second counts; in one case, it determines final position, while in the other, it impacts profitability in oil field development. Drillit adopts this philosophy to optimize drilling operations, identifying and measuring invisible NPTs that often go unnoticed in routine activities.
Invisible NPTs became a focus in the oil industry when significant time differences were observed across drilling rigs operating under similar conditions. Monitoring and analyzing these rigs revealed invisible NPTs in routine activities, explaining disparities in operating times among comparable rigs. Drillit uses advanced algorithms to calculate, in real time, the duration of various operations, both macro and micro, during well drilling and completion. These operations include pipe connections, tripping speeds, casing running times, blowout preventer tests, log runs, BHA assembly and disassembly, and cementing operations.
Routine activities like tripping, BHA assembly, or blowout preventer tests can consume up to 30% of a well’s productive time. Drillit helps optimize these times by automatically identifying invisible NPTs, applying international performance
indicators, and industry parameters, while issuing realtime alerts for underperformance in each operation. The software also documents root causes, allowing for immediate corrective action.
Drillit enables drillers at the wellsite, monitoring specialists, and operations engineers in the office to view real-time performance of all operations through an interactive platform and display infrastructure. This capability facilitates immediate decisionmaking, ensuring constant optimization of operational time and fostering a culture of operational excellence and consistency. Once progress is achieved in improving the efficiency of a land or offshore drilling crew, Drillit’s discipline in tracking these gains sustains performance over time.
Additionally, the tool developed by CNT enables operators and leaders of each drilling operation team to identify root causes while taking proactive actions immediately. The platform is designed with artificial intelligence and machine learning, applying data science to continuously improve as drilling and well completion operations progress.
This tool is highly valued among oil companies in Mexico for its disruptive impact, which not only saves time but also significantly reduces costs. A day of deepwater well operations costs around US$500,000, or approximately US$380 per minute, while shallow water operations cost US$300,000 per day, or roughly US$250 per minute.
Any reduction in seconds or minutes during simultaneous drilling operations can translate to hours or even days saved, amounting to millions of dollars saved annually for oil companies. The time and money saved can be reinvested into drilling additional wells each year, bringing forward the production of barrels of oil for earlier-than-anticipated commercialization.
Drillit serves both public and private clients in Mexico, such as PEMEX and Opex, and is active in 29 drilling projects monitored from its operations center in Villahermosa, Tabasco. There, engineers and specialized technicians closely coordinate with field operators to track well progress. CNT’s data confirms that the software has helped reduce drilling time by up to three days per well, demonstrating the potential of this technological advancement to optimize well interventions in the country.
This innovative technology platform, developed by a highly specialized team in drilling and software development, centralizes all well information into a single data source. The tool provides real-time access to reports and comparative charts with various sensitivities, documenting causes of underperformance so users from different specialties can view appropriate analyses, improve efficiency, and maintain operational consistency for each drilling team.
The platform is designed to aid on-site decision-making through color-based patterns and alerts. Automatically detecting NPTs, the software empowers operators to make more efficient decisions aligned with the initial drilling plan. Like Formula 1, which continuously evolves, Drillit is also in constant technological transformation, offering increasingly efficient and safe solutions.
Drilling Design Engineer | OPEX
High-pressure, high-temperature (HPHT) wells represent one of the greatest challenges in modern petroleum engineering. These extreme environments challenge not only technology but also human creativity and ingenuity to ensure safe and productive operations. One of the most critical phenomena in these conditions is annular pressure buildup (APB), a thermohydraulic effect that can compromise well integrity.
When fluids confined in the annular spaces of a well experience a temperature increase due to heat transfer from the reservoir, they expand. This phenomenon, known as thermal expansion, generates a particularly critical pressure increase in the first hours of production, when thermal variations are most pronounced. This can lead to catastrophic failures such as pipe collapse and bursting; casing failure due to combined stresses; lifting of head and surface control connections; and/or environmental hazards.
The challenge lies in predicting and mitigating this pressure increase to avoid operational and environmental risks.
To address this phenomenon, several innovative strategies can be implemented. Some of these strategies are:
1. Effective cementing: Ensure cementing to the surface to eliminate confined annular spaces.
2. Annular fluid selection: Use fluids with low coefficients of thermal expansion. For example, synthetic foams or highly compressible fluids.
3. Pressure relief valves: Incorporate controlled relief systems at critical points, such as relief valves or rupture discs.
In field B, located in the southern Gulf of Mexico, the thermal and mechanical behavior of an HPHT well was evaluated throughout its production life. The analysis was carried out using Wellcat software, an advanced tool that evaluates critical scenarios, such as thermal expansion of fluids confined in annulus spaces, providing detailed pressure and temperature profiles.
This well, with a reservoir pressure of 8,960 psi and a bottomhole temperature of 167°C, presented a critical pressure buildup scenario in the 9 5/8” casing annulus, reaching a pressure surge of 9,119 psi.
The model revealed that the confined annular spaces, especially in the 9 5/8” TR, experienced a significant pressure increase due to heat buildup. This phenomenon compromised previously established design factors, jeopardizing the mechanical integrity of the well.
Furthermore, the 13 3/8” TR showed vulnerability to bursting, while the 9 5/8” TR presented a risk of collapse. In both cases, the VonMises envelopes indicated that the loads exceeded permissible limits, which could result in catastrophic structural failure.
The redesign of well B-1 included the implementation of a Tie-Back seccion, ensuring complete cementing of the 9 5/8” TR and eliminating the confined annulus. This, along with the incorporation of best practices, helped us guarantee the mechanical integrity of the well. This approach allowed us to maintain safety factors even in the most critical scenarios, significantly reducing the risk of structural failure.
Elimination of confined annular spaces : Pressure buildup in vulnerable sections was prevented.
Ensuring good cementing at the production packer level: This redesign ensured good cementing behind the production packer.
Increased operational safety: The well could operate safely even under extreme pressure and temperature conditions.
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Thermal expansion of fluids in HPHT wells is a technical challenge that requires innovative solutions and a multifaceted approach. Implementing strategies such as annular pressure control with appropriate technologies, the use of specialized fluids, and advanced modeling are key to ensuring safety and efficiency in oil-field operations. This case not only highlights the importance of engineering in problem-solving, but also the commitment to safety and sustainability in the energy industry, ensuring successful hydrocarbon exploitation in extreme environments.