Mexico Takes Another Step Toward Tapping Needed Resources

Enrique Peña Nieto, president of Mexico, with Andrew Mackenzie, BHP Billiton CEO, and José Antonio González Anaya, CEO of Pemex, during the contract signing for the Triton field. Source: BHP Billiton.

BHP Billiton’s signing of a contract with Pemex on 3 March marks the beginning of its work on the Triton discovery offshore Mexico and the potential to boost Mexico’s oil production to meet its growing demand. The company bid on the field last December in Mexico’s auction of 10 deepwater blocks in the fourth stage of the Round One bids since the country’s Energy Reform in 2013, which opened its offshore and unconventional fields to international companies. Once the field is fully appraised, BHP Billion expects it to be in the top 10 fields discovered in the Gulf of Mexico in the past decade. Pemex estimated the gross recoverable resource to be 485 million BOE.

The development of the Triton project is estimated to require an investment of USD 11 billion, with production beginning in 6–7 years. More than 100,000 barrels of crude oil equivalent per day are estimated.

Last year’s bid rounds opened the door to the expertise needed for expanded exploration and production in Mexico’s deep water. Although the country has significant hydrocarbon resources, it suffered from the pre-reform model that made Pemex the sole player in oil and gas upstream development, and the government’s spending of hydrocarbon revenue for other priorities, according to the International Energy Agency (IEA).

The main source of Mexico’s future oil production is expected to come from deepwater fields, accounting for almost half of the country’s projected oil output by 2040. However, the combination of falling oil production at mature fields (e.g., the offshore Cantarell field’s output has fallen by more than 80% since 2004 when it produced more than 2 million B/D) and rising demand has set up the country…