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Pemex eyes Tabasco shallow-water, onshore Veracruz for first exploration under Lopez Obrador

Mexico City — Mexico's Amoca Yaxche blocks, in offshore Tabasco state and the Agua Dulce blocks in southern onshore Veracruz state, are at the center of Pemex's first exploration efforts under President Andres Manuel Lopez Obrador.

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Mexico's National Hydrocarbon Commission, or CNH, has approved five exploration wells across both groupls of blocks since the beginning of Lopez Obrador's administration on December 1. These should be completed by the second half of the year, the commission has said.

The upstream regulator approved the Tenantli-1EXP well in the Amoca-Yaxche-06 assignment title within the Cuenca Salina Basin. Tenantli is the third exploration well CNH has approved for Pemex in this title. The regulator recently passed Itta-1EXP in the same block. It also green-lighted Ichilan-1EXP in the adjacent Amoca-Yaxche-04 in January.

Tenantli, Itta and Ichilan have a combined 185 million barrels of prospective light crude resources. Their water depths range from 20-50 meters. Tenantli, which reaches the deepest total depth with 3,400 meters and cost of $35 million, production tests included.

Amoca Yaxche has transportation and production facilities in place, allowing to develop these exploration targets as tiebacks if successful.

In January, CNH disclosed that Pemex has another five targets in Amoca-Yaxche-06 beyond Tenantli and Itta.

PLAYING SAFE

After the successful appraisal of ENI's Amoca and Pan American Energy's Hokchi, Pemex could be reevaluating its understanding of this area, according to Pablo Medina, research vice-president with Houston-based analytical firm Welligence.

"Instead of trying to do a home run, Pemex is looking at connecting some good hits," Medina told S&P Global Platts on Friday. Amoca Yaxche exploration targets could have a low-risk but also an upside potential, he added.

Looking at shallow-water opportunities is safer than getting into deepwater prospects. Although their prospectivity is limited, said Arturo Carranza, an energy analyst with consulting firm Mercury in Mexico City.

"Pemex is betting on shallow water where it is a strong operator with ample experience," Carranza said. This goes in line with Pemex's strategy shift to leave deepwater exploration towards other shallower and less expensive projects, he added.

Amoca-Yaxche-06 and 04 have plenty of midstream capacity in place. Fields in this area include Mulach, Xanab, Puerto Ceiba, Pokche, Yaxche, Xikin, Uchbal, Suuk, Teekit and Hokchi. These have a combined original volume in place of 3.6 billion barrels of oil.

Pemex is developing Xikin, Pokche, Mulach, Suuk, Uchbal, and Teekit with a combined 700 million barrels of oil proved, possible and probable reserves, known as 3P. Also, PanAmerican is developing the Hokchi discovery, which has 178 million barrels of oil in 3P reserves.

DRILLING DEEPER

CNH also approved last week the Yaxjut-1SON onshore high-pressure, high-temperature (HPHT) well. It is in southern Veracruz state in the Chiapas Mountain Range Foldbelt.

Yaxjut-1SON has an expected reservoir pressure and temperature of 8,850 PSI and 290 F. Its total depth will be 6,650 meters, making it the deepest well in the Agua Dulce-06 assignment title.

CNH said this is the first time Pemex will assess the Upper Jurassic and Mid Cretaceous potentials in the area. Its prospective resources are 91 million boe.

The commission alsoapproved Rabasa 1001-EXP in January. This is another complex HPHT exploration target with a depth of 6,700 meters and reservoir pressures and temperatures of 15,000 PSI and 329 F.

Rabasa 1001-EXP will be drilled in the Agua Dulce-01 assignment title on the border of Tabasco and Veracruz states. Its prospective resources are 76 million barrels of light crude with a geological success rate of 17%.

Pemex recently had success with HPHT discoveries with the Ixachi foothill field in 2017. It has a depth of 7,000 meters and a reservoir pressure and temperature of 11,000 PSI and 340 F. Its 3P reserves are estimated at 1.3 billion boe.

Preliminary data shows Ixachi will reach peak production in 2022 of 720 MMcf/d of natural gas and 80,000 b/d of light crude and condensates.

Pemex's HPHT prospects are near existing infrastructure, potentially giving them a low production cost, Medina said. "The biggest concern is their operational challenges as their development is very different from what Pemex is used to do."

-- Daniel Rodriguez, daniel.rodriguez@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com