Pemex to Finish 2 Deepwater Wells in Coming Months

MEXICO CITY (Dow Jones Newswires), Jul. 30, 2009

Petroleos Mexicanos will finish two deepwater exploration wells in the next few months as the company pushes farther into the Gulf of Mexico to find oil and natural gas, exploration and production chief Carlos Morales said.

"We expect to have the results of those wells in a couple of months or so," Morales said in a conference call.

Pemex, as Mexico's state oil company is known, has drilled 10 wells in waters deeper than 1,640 feet and discovered significant volumes of crude and natural gas at some of them. Still, the company doesn't expect to see the first deepwater production until 2015.

Pemex also is exploring the shallow waters of the Campeche Sound, where existing infrastructure will allow the company to develop discoveries much faster. Mexican oil production is down by a fifth since peaking in 2004, and it continues to drop.

Of the 10 wells, Morales said four struck natural gas and two struck oil, with the remaining four turning up dry. The most promising is the Tamil well. Pemex has said a cluster of fields near the discovery well could eventually produce up to 250,000 barrels of heavy crude a day.

Mexico has two platforms carrying out exploration drilling in deep areas of the Gulf, and has ordered three more, which will arrive in 2010. The SS Muralla III, which will arrive in late 2010, can drill in up to 10,000 feet of water.

Last year, Congress made it easier for Pemex to afford deepwater development. It increased the cost deductions for deepwater exploration and development to $16.50 a barrel, compared with $6.50 at traditional fields.

Mexico also is drafting business-friendly contracts that can be adjusted to include higher-than-expected costs and the implementation of new technology, as well as bonuses for completing work ahead of schedule. Pemex hopes the contracts will attract large foreign oil companies with deepwater experience to work with Pemex as contractors.  

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

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