Mexico Adds 180 Million Barrels to Reserves With New Discovery

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Mexico’s state-owned oil company, Pemex, announced Wednesday that it has discovered seven new reservoirs at two wells in shallow water in the southeast basin of the Gulf of Mexico offshore of Tabasco state. Pemex CEO Carlos Treviño said the company will add 180 million barrels of oil equivalent to its 3P (proved, probable and possible) reserves.

The Manik-101A well was drilled in 90 meters of water to a total depth of 4,765 meters and holds an estimated 80 million barrels of oil and gas 3P reserves. The Mulach-1 well was drilled in 21 meters of water to a depth of 3,976 meters and holds an estimated 100 million barrels of reserves.

Together with previous discoveries in four additional fields, Pemex estimates that the company could add up to 210,000 barrels a day to oil production and up to 350 million cubic feet per day of natural gas output.

Pemex’s oil production peaked at 3.4 million barrels a day in 2004 and has declined ever since. In July of this year, the company produced 1.84 million barrels a day, according to S&P Global Platts. That total represents a decline of 5,400 barrels month over month compared to June and a decline of 145,000 barrels a day since July 2017.

While new discoveries are welcome news for Pemex, the reality could fall short of the projection. Pemex did not indicate how much of the new discoveries were either proved, probable or possible. That’s important because proved reserves are defined as having a reasonable certainty (90%) of being recovered at current economics while probable reserves are defined as more likely than not (50%) of being recovered and possible reserves less likely than probable reserves (10%) of being recovered at current economics. Neither probable nor possible reserves are proved.

All told, the six fields are expected to require $7 billion to $10 billion in investment to recover the resource, according to Reuters. That total includes drilling rigs, pipelines and at least one production platform.