Pemex Calls 170-Well Chicontepec Drilling Tender

Chicontepec and Cantarell
(Click to Enlarge)

MEXICO CITY (Dow Jones Newswires), Feb. 24, 2009

Petroleos Mexicanos on Tuesday announced a 170-well tender for the Chicontepec oil region where Mexico plans to be pumping up to 700,000 barrels a day by 2017.

Mexico is aggressively developing Chicontepec, which spans three states in northern Mexico, to help offset declining production at the country's traditional oil fields.

Pemex said it will pick the winning bid on April 7 with work starting in early May and lasting two years. Pemex often runs into bureaucratic delays in assigning large contracts.

Late last year Pemex announced two Chicontepec drilling tenders, each for 500 wells, that have attracted interest from oil-services giants Schlumberger Ltd., Halliburton Co. and Weatherford International Ltd.

Mexico's urgent need to bring new oil fields into production has made the country a bright spot for oil-services firms during a year when most oil companies are cutting their investment budgets due to low oil prices.

Mexican oil production has fallen 9% over the past year to levels not seen since 1995. At this pace the country will run out of surplus oil for exports in around six years, putting the country at risk of a fiscal crisis. Around a third of government revenue comes from oil.

Chicontepec is a main pillar in Pemex's strategy to get oil production back above 3 million barrels a day by 2015. Pemex expects to be producing only 72,000 barrels a day at the basin this year despite two years of aggressive drilling. But by 2015 Pemex says Chicontepec will be producing 511,000 barrels a day, or a sixth of total output.

Observers see Pemex's Chicontepec target as hard to meet. A well at Chicontepec pumps only a few hundred barrels a day, compared with a few thousand barrels at Mexico's prolific oil fields in the Gulf of Mexico.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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