Pemex plots ambitious E&D spending increase

Pablo Cruz-Helu,Javier J. Meneses-Rocha
Pemex Exploration-Production
Mexico City

Petroleos Mexicanos has been exploring Mexico for nearly 60 years with significant results.

Ever growing domestic demand, the need to remain in the world market, and the advantage of having in its territory part of one of the world's three largest oil producing provinces (Gulf of Mexico) have encouraged the government owned company to develop a visionary exploration plan.

This plan, while respecting environmental rules and guidelines, will consider near and long term production scenarios in both Producing Provinces and New Areas. The plan would result in an overall increase in spending of as much as 300% in exploration and production activities compared with outlays in recent years. A large share of the increase is dedicated to the Cantarell enhanced oil recovery project (OGJ, Oct. 20, 1997, p. 38)

Producing provinces

Mexico has nine producing provinces (Fig. 1 [144,103 bytes]). Sabinas, Burgos, Veracruz, and Macuspana produce only nonassociated gas. Tampico, Misantla, Cordoba, Salina del Istmo, Reforma, and Sonda de Campeche produce oil and gas.

Gas provinces

The major role that gas is playing in Mexico's industrial recovery places the gas provinces in a strategic position in Pemex Exploracion y Produccion's (PEP) investment portfolio. Sabinas, Burgos, and Macuspana hold 49% of the country's gas reserves. Contributions to the country's proved reserves are Burgos 38%, Macuspana 10%, Veracruz 7%, and Sabinas 2%.

The Burgos Province is the geological extension of the South Texas Rio Grande embayment. Its producing plays are Paleocene, Eocene, and Oligocene sandstones associated with rollover structures aligned along a system of down-to-the-basin listric growth faults.

Up to January 1997, 2,818 wells were drilled in Burgos. Considering its proved reserves, large area, and the number of wells and discovered fields, Burgos is Mexico's largest gas province.

PEP has begun a revitalization plan there that seeks to boost production rates, improve operating practices, and develop new reserves.

The Sabinas Province discovered in 1974 is part of the Mexican northeastern fold belt. It offers producing plays of sandstone from the Upper Jurassic and Lower Cretaceous. Its 102 exploration wells have led to discovery of 17 fields.

Our current understanding of the Sabinas Province places it low in the investment projects portfolio. However, a multidisciplinary working group is being maintained that is re-evaluating its exploration possibilities.

The Veracruz Province, discovered in 1956, represents a depocenter with a sedimentary section of about 9,000 m of conglomerate, sandstone, and carbonates from Mid-Eocene-Upper Miocene.

Five fields were discovered in 1956-68; four of which are in the southwestern part of the basin. These fields produce from sandstone and conglomerates of Middle and Lower Miocene.

Since no more recent fields have been discovered, the production/reserve ratio has dropped to a low level. In the early 1990s a study of this province was undertaken and new exploratory concepts were introduced. These studies are yielding spectacular results, such as a wildcat well that is producing 22 MMcfd of gas from a previously untested sandstone horizon.

The Macuspana Province is located in southeastern Mexico in eastern Tabasco. It extends offshore to the edge of the continental platform. This province is a large basin filled with sandstone and carbonates from the Mio- cene-Pliocene deposited in a marine, nearshore shelfal environment.

In 1940-62, 14 fields were discovered, two of which (Jose Colomo and Chilapilla) represent 70% of the proved reserves and two more of which (Hormiguero and Usumacinta) represent another 25%. The reservoirs of these fields are Upper Miocene-Pliocene sandstones. The area's undiscovered potential is large, and this province is high in our exploration priorities.

The exploration effort in the gas provinces is following a strategy centered on looking at deeper horizons in identifying and delineating new prospects and in testing new horizons not tested or tested with outdated technologies.

All of this is being done using new concepts and exploration models as well as incorporating the latest technology in seismic, interpretation, geochemistry, stratigraphic interpretation techniques, drilling and completion, as well as a streamlined work organization.

Oil and gas provinces

The oil and associated gas provinces have allowed Mexico to become a leading oil exporting country. These provinces divide into mature and moderately explored.

Mature provinces

The provinces in order of discovery are Tampico-Misantla 1904, Salinas del Istmo 1905, and Cordoba 1953. The percentage of success and size of fields discovered have dropped progressively.

In the Tampico-Misantla Province, Mesozoic and Tertiary plays have produced 5 billion bbl of oil equivalent since the beginning of this century.

There are two fractured carbonate plays in the Ebano-Panuco region, one from the Cretaceous and the other in oolitic carbonates of the Upper Jurassic. Both are located over horsts produced by fault inversions during the Laramide orogeny.

The most productive region in those plays is located onshore with only small portion of the San Andres play extending onto the continental shelf (Aranque field, 1968).

In the Tuxpan platform there are two main plays: platform carbonates highly karstified (Golden Lane or El Abra trend) and carbonate debris breccias (Poza Rica or Tamabra trend). These plays are associated with a Middle Cretaceous isolated platform in which the fields are a combination of stratigraphic closures and paleoreliefs with different oil-water contacts.

West of the Poza Rica trend is the Chicontepec paleochannel trend. The paleochannel is part of the foreland basin associated with the Laramide Sierra Madre Oriental. The channel is filled with fine-grained turbidites shed from the Sierra Madre during the mid-Paleocene to Eocene. These turbidites form tight, low productivity reservoirs with several billion barrels of oil in stratigraphic-structural traps, with low per well productivity.

The Cordoba Province constitutes the tectonic front of the Laramide belt of the Sierra Madre Oriental. It produces from both shelfal and slope carbonates in the Upper Cretaceous. Its production comes from Middle-Upper Cretaceous plays, representing two different depositional environments: carbonate shelf and slope.

In the Salinas del Istmo Province, the first giant oil fields of the Tertiary in Mexico were discovered over irregularly shaped salt structures.

Prospecting in the three mature provinces by focusing on the traditionally productive plays will be difficult as substantial profit margins are more and more difficult to attain. A development strategy has been designed that focuses on two main objectives in conjunction with new concepts and application of new technologies.

The two objectives are: Identify the lateral extension of producing plays in subtle traps, and carry out deeper drilling under existing plays. This strategy was applied in the Tampico-Misantla Pro- vince in the early 1990s. The plays in the southern part of the Ebano-Panuco area are currently being re-appraised, and characterization of the Chicontepec paleochannel is also under way.

Moderately explored

These provinces are located in the Neogene belt in the southeastern Mexico and are characterized by linear structural trends that detach above the Mid-Jurassic salt. The Reforma Province was discovered in 1972, and its offshore counterpart, Campeche Sound, in 1976. Since then, both provinces have become Mexico's most important producing areas.

In the Reforma Province the main plays are located in the Cretaceous and Kimmeridgian Jurassic section, where dolomitization and fracturing have enhanced reservoir quality. After 10 years of exploration and development, the focus of attention has moved toward the coast and the Sierra de Chiapas foreland, resulting in a range of significant discoveries of light oil, condensate, and gas.

Plays in Campeche Sound are in Kimmeridgian Jurassic, Cretaceous, and Paleocene, related to compression and plays associated with normal faulting in the northeastern region of the province. In the mid-1980s, exploration efforts moved to the northeast, southeast, and northwest of existing fields, resulting in oil discoveries in Oxfordian sandstones in the northeast part, gas and condensate along the Tabasco coastline, and oil and gas in a field located offshore in more than 100 m of water.

Pemex E&P tailored a short and medium term strategy for each of these provinces, focused on the following goals:

Reforma: Increase the amount of drillable prospects in the coastal region and in the foreland of the Sierra de Chiapas, and outline and characterize the fields discovered in these two regions.

Campeche Sound: Identify the lateral extension of the Oxfordian play in the northeastern region of the province, increase the amount of drillable prospects along the coastline of Tabasco state, outline and characterize the fields discovered in this last region, and identify and drill new prospects in 100-200 m of water offshore.

All of this new activity is being conducted with newly acquired 3D seismic data used for both exploration and development of existing fields as well as with a program of integrated characterization field studies.

New areas

We at PEP consider the "new areas" as those regions where no exploration has taken place or where no commercial hydrocarbon production has occurred.

The prospecting effort in the short, medium, and long term will be focused in the new areas located offshore on the shelf and slope of the Gulf of Mexico. Those areas are on trend with existing production sourced from the Late Jurassic and reservoired in Mesozoic and Tertiary carbonates with effective traps and seal.

Gulf coastal plain

The new areas located in the gulf's coastal plain are important because of their proximity to the country's oil producing provinces. Although the coastal plain is Mexico's most explored region, there are still areas where with new concepts, interpretation, and technology, its remaining potential can be appraised. The main areas of interest are Papaloapan, Escarcega, and Cuichapa.

The Papaloapan area is the southeast extension of the Veracruz Province. In that area two exploration wells have had oil and gas shows in Miocene sandstones. Recent seismic has identified structures that detach on the shales of the Lower Tertiary or Upper Cretaceous.

The Escarcega area is in the southwestern part of the Mesozoic-Tertiary carbonate bank of the Yucatan. It is hence a region with low structural relief but with possible stratigraphic and/or structural traps, within its confines. Also the Oxfordian producing trend of Campache Sound could well extend towards that area.

The Cuichapa area is located in the Salinas del Istmo Province, where the Tertiary plays have produced 1.5 billion bbl of oil to date. Two wells were drilled in 1973-78 to investigate subsalt potential. These wells penetrated the salt layer and encountered oil and gas shows in the Lower Miocene section. The subsalt play in the area is being actively evaluated with new seismic.

Continental shelf

The areas located on the continental shelf of the Gulf of Mexico bear a strategic importance because this is where large parts of Tampico-Misantla, Tuxpan, Veracruz, and Salinas del Istmo are located.

The most promising areas on the shelf are: Lamprea, Veracruz, and Coatzacoalcos Marine. The first two will be appraised in the near term, whereas evaluation of most of the Coatzacoalcos area will be done long term.

In the Lamprea area, the extension of the Upper Jurassic Arenque play is being followed north of the Tampico-Misantla offshore area. The traps are subtle features draped over basement horst blocks. The use of recent 3D seismic data is helping to define this play.

The Marine Veracruz area is the offshore continuation of the Veracruz Tertiary Province. Opportunities are being delineated in the Tertiary in this area, and with greater uncertainty in the Mesozoic.

The Coatzacoalcos area is divided in three regions with their own geological characteristics. The southern region is the offshore continuation of the Salinas del Istmo Province with significant numbers of leads identified in the Tertiary. This gives the area a high priority in the overall plan. The western area lacks salt, resulting in few structures and leads. Evaluation here will be short term. The northern area is on the shelf in 200-500 m of water. Its structural complexity, water depth, and the presence of large salt sheets will make evaluation a long-term goal.

Continental slope

So far, PEP has only carried out preliminary work on the continental slope.

This work in conjunction with other scientific studies has identified four areas with a combined area of 190,000 sq km.

These areas, included for the first time in the exploration portfolio, are as follows:

1. Extension of Mesozoic structures and plays in Campeche Sound in more than 200 m of water.
2. Northern part of the Mexican ridges focusing on the Tertiary.
3. Mesozoic features in the Mexican portion of the Perdido fold belt.
4. Tertiary features in the southern part of the Mexican ridges.

Exploring these frontier areas offers both technical and financial challenges. PEP is developing a strategy that will maximize operational efficiency and in the near term allow the development of new reserves that will have a long term effect on Mexico's energy future.

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