Burning money: Hydrocarbons Commission head knocks gas flaring.
Regulator slams Cantarell flaring
The head of Mexico’s new hydrocarbons agency has shown his organisation has teeth by slamming Pemex’s failure to exploit gas from the giant Cantarell field.
National Hydrocarbons Commission (CNH) boss, Juan Carlos Zepeda, claimed Pemex has been flaring up to 70% of the gas from Cantarell, a field which still accounts for almost a third of Mexico’s crude output.
The CNH was created under Mexico’s recent petroleum law reforms with the remit to present formal opinions on the technical aspects of Pemex’s upstream activities.
Zepeda blamed poor planning for a situation that resulted in massive gas flaring some 10 years after Pemex began injecting nitrogen to revitalise the Cantarell field.
The enhanced recovery project doubled Cantarell output to more than 2 million barrels per day by a mid-decade peak, although output is now at just 750,000 bpd, and declining rapidly.
Despite these huge investments, Pemex has moved slowly in installing nitrogen extraction capacity, and has been forced to flare gas due to the growing presence of that element.
Zepeda said gas output on Cantarell averaged 1.63 billion cubic feet per day, yet 1.14 Bcfd of this was wasted last year.
“This falls short of best international practices,” he commented.
Pemex statistics show that 1.12 million cubic feet per day of gas was still being wasted in the first quarter this year, of which 771 MMcfd was natural gas and 397 MMcfd was nitrogen.
The CNH has the power to impose sanctions if Pemex does not measure up to its recommendations.
Many in the Mexican oil industry view the creation of this agency as a sign that the government is serious about improving Pemex’s operational standards.
"Our gas production was up 14.2% last year, but a significant part of this came with a high concentration of nitrogen. We are putting in the infrastructure to either reinject the gas or extract the nitrogen," Pemex boss Jesus Reyes Heroles told Upstream recently.
The amount of gas that Pemex offers to third party customers in Mexico was down 3% last year, but Reyes Heroles said new discoveries in the southern Veracruz were "highly encouraging".
He said the company's strategic plans for gas would leave a gap for gas imports running at between 5% and 15% of domestic demand.
The Mexican administration of President Felipe Calderon is gradually putting into place the implementing measures that will complete the country’s petroleum law reforms.
Under those reforms, Pemex will also be able to sign performance-based contracts with foreign oil companies and service companies.
The government hopes such contracts will allow Pemex to advance into little-explored deep-water horizons.
A first field development based on subsea completion is promised next year for Lakach, a deep-water gas find.