Shell Stakes Claim to Mexican Deep Waters
Shell, already one of the biggest offshore oil and gas developers in US waters of the Gulf of Mexico, made it clear on January 31 it wants to be a big player on the Mexican side as well.
The company, already a major player in the US Perdido and Stones deep offshore projects, which together produce about 150,000 b/d of oil and more than 200mn ft3/day of natural gas, won the bidding, along with partners, for five of nine blocks offered in the highly prospective Mexican Perdido area in Ronda 2.4 bidding conducted by Mexico’s National Hydrocarbon Commission (CNH).
Overall, 29 contractual areas were offered, located in the offshore blocks of Perdido, Cordilleras, Mexicanas and Cuenca Salina, with winning bids from 11 companies from 10 countries. Shell and its partners won nine of the 29 blocks awarded.
Mexican upstream regulator CNH, which has overseen the country’s rights auctions since the monopoly of state-owned Pemex ended in 2013, had reported that there would be 26 bidders participating in the deep offshore round held on January 31, the second round for highly prospective deep offshore assets.
Majors such as BP, Statoil, and Chevron, as well as dozens of mid-size companies, were expected to bid for the blocks being offered. The most sought-after blocks, however, were in Perdido, where Shell and its partners offered generous incentives, including cash payments, to win blocks.
Overall, the nine areas offered in the Perdido belt cover 18,758 km2, with significant light oil and liquids reserves.
Shell and Qatar Petroleum took Blocks 3, 4, 6 and 7, the latter two with cash bids of $10.3mn and $90mn, respectively. Shell and Pemex teamed on Block 2, while Pemex, acting alone, took Block 5. There were no bids for Blocks 1, 8 and 9.
Shell made it clear it wants to be a major player in Perdido, which hugs US waters and could conceivably be developed as an extension of its producing Perdido development. But it didn't ignore other regions as well, later winning four bids for blocks in the Cuenca Salina region with cash bids of $110mn (Block 21), $90.15mn (Block 20), $58.7mn (Block 23) and $43mn (Block 28).
Shell and Qatar Petroleum also bid on, but did not win, less-prized blocks in the Cordilleras, where there is also light oil, gas and liquids potential. Bids were submitted on four of the 10 Cordilleras blocks, with Repsol/PC (Petronas) Carigali/Ophir Mexico winning Block 10 with a cash bid of $30.2mn; PC Carigali/Ophir Mexico/PTTEP Mexico winning Block 12, Repsol/PC Carigali taking Block 14 and Pemex taking Block 18.
Bidding ended with Block 29 in the Cuenca Salina region, with a consortium of Repsol/PC Carigali/Sierra Nevada/PTTEP Mexico beating out a consortium of Italy's Eni and Qatar Petroleum with a bid of $151mn against the Edi/Qatar offer of $86mn. Other Cuenca Salina blocks went to Chevron/Pemex/Inpex (Block 22), Eni/Qatar Petroleum (Block 24) and PC Carigali (Blocks 25 and 26). There were no bids for Block 27.
Speaking with reporters later, CNH head Juan Carlos Zepeda Molina and Dr. Aldo Flores Quiroga, Mexico’s deputy secretary of energy, declared Ronda 2.4 a success, with 19 of the 29 blocks awarded, potentially leading to investments of some $93bn. The round itself attracted total cash commitments of $525mn and commitments to drill 23 wells.
Total production from the awarded blocks, they said, could reach 1.5mn boe/day, while Molina suggested natural gas production from the offshore blocks could reach 4bn ft3/day, nearly equalling Mexico's total current production of 5bn ft3/day.
Shell also announced January 31 one of its largest exploration finds in the US Gulf of the past decade, from the Whale deepwater well: it found more than 1,400 net feet (427 meters) of oil bearing pay. Evaluation is ongoing and appraisal drilling underway to further delineate the discovery and define development options. Whale is operated by Shell with a 60% interest, while Chevron has 40%. The discovery was made in the Alaminos Canyon Block 772, adjacent to the Shell-operated Silvertip field and 10 miles from Shell's Perdido platform. Chevron separately announced a major oil find at its Ballymore well in the US Gulf, 3 miles from its Blind Faith platform, in water depth of 6,536 feet and at total depth of 29,194 feet, encountering more than 670 feet net oil pay; Chevron is operator with 60%, alongside Total 40%.