CNOOC to resume deepwater exploration in Mexico after pandemic pause
China National Offshore Oil Corporation will resume its exploration activities in the ultra-deepwater Gulf of Mexico, but striking oil could trigger unitization with the state oil company as the reservoirs identified by the CNOOC extend beyond its block.
CNOOC will resume its exploration activities at one of its two blocks in the Gulf after pausing for a few months due to the coronavirus pandemic.
The exploration plans were approved by Mexico’s National Hydrocarbons Commission on Sept. 22 during a webcast session. The original $339 million plans, which the company could not carry out, were approved in February, and had been scheduled to start in April.
CNOOC will drill the exploration well, Ameyali, in one of the four reservoirs the company has identified inside its 650-square-mile block.
Ameyali is a Wilcox formation, where CNOOC expects to find almost 500 million barrels of oil equivalent of prospective resources. The block is operated under contract CNH-R01-L04-A1.CPP/2016.
Ameyali is located less than five miles away from the US maritime border in the Perdido Fold Belt, an area of high activity both on the US side with wells already producing, as well as on the Mexican side, where international companies have high expectations.
In 2019, Shell announced the Blacktip discovery in the deepwater Gulf of Mexico, less than 100 miles away on the US side.
Blacktip is Shell’s second material discovery in the Perdido area, where Shell’s Great White, Silvertip and Tobago fields are already producing.
Right between the two areas that make up CNOOC’s block, Pemex and Australia’s BHP are jointly developing Trion, a block believed to have reserves near 500 million boe.
If the company finds oil at Ameyali, it would likely have to undergo a unitization with Pemex, the state oil company, as Ameyali extends beyond the limits of CNOOC´s block and into one operated by Pemex, CNH data shows.
Pemex is already undergoing unitization processes at two shallow-water blocks, which has caused concern among market participants as the regulation favors agreement between the parties, but is not clear on how to select an operator if companies fail to agree.
Houston-based Talos Energy and Hokchi Energy, a Mexico-based subsidiary of BP and Argentina’s Grupo Bridas, are both at some stage of the unitization processes as their fields potentially share a reservoir with Pemex.
“In case that the exploration drilling shows data that could infer the existence of a shared reservoir, the company will have to comply with the regulation applicable to unitization,” said Ricardo Basurto, CNH technical advisor, about Ameyali during the Sept. 22 webcast session.