Pemex slashes forecast for Xanab field: Correction

Corrects two figures for Xanab field production.

Mexico's state-owned Pemex slashed its forecast for crude and natural gas output from the once prolific shallow water Xanab field following inflow of water and overproduction that caused its premature decline.

Pemex expects to recover 59.7mn bl of crude from the field by 2034, down by 75pc from the originally forecast 243bn bl, according to the modified production plan that oil regulator CNH approved today.

The gas production forecast was also cut to 39.3 Bcf from 162 Bcf.

"Historically this was one of the most important fields in Mexico for crude production," CNH commissioner Sergio Pimentel said today. "But Pemex was fined because they inadequately managed the field following the inflow of water."

CNH imposed a Ps24.2mn ($1.3mn) fine on Pemex last May for overproduction in the field, a charge that Pemex contested.

Water began to flood some of the wells in the field in February last year but instead of carrying out further studies to better define the oil-water contact, Pemex continued to extract crude and accelerated an already premature well decline, CNH said today.

"Perhaps a technique will be developed in the future that would allow recovery of the residual hydrocarbons that are currently not accessible because the reservoir was exploited too quickly," commissioner Alma America Porres said.

CNH is required by law to ensure the adequate exploitation of deposits that allow for increased recovery factors and the maximization of the long-term value of the country's hydrocarbons.

Pemex was assigned the 76km² (29 mi²) field following the 2014 energy reform that dismantled the company's monopoly.

Output from the field dropped by 48pc to 75,100 b/d in December from 145,000 b/d in February 2018 when water inflow started.

The 3P reserves in the field dropped by 75pc to 66.3mn bl of oil equivalent last year compared with 2018, according to the latest information from CNH.

Pemex now plans to invest $1bn in drilling three wells — down from the original six — and carrying out 17 minor well repairs over the life of the modified production plan.

Looking ahead, CNH recommended that Pemex carry out further studies and modeling to better understand the depth of the oil-water contact and implement a continual water-monitoring program that would allow the company to take timely action to prevent further water inflow.

Falling production in the Xanab field has had a negative impact on national crude output, which fell to 1.66mn b/d in December 2019, compared with 1.6mn in December 2018. Pemex fell 7pc short of its 1.78mn b/d year-end crude target, mainly because of delays in its 22-field development push that saw only 6,000 b/d of new production added.

By Rebecca Conan