Mexico Holds First Deepwater Bid Round
Mexico held its first ever tender for deepwater oil and gas exploration acreage on Monday. Licenses were awarded in a competitive bid round for 10 deepwater blocks, four in the Perdido Area and six in the Saline Basin.
The blocks awarded are in water depths ranging from about 900 – 3,200 meters (3,000 – 10,000 feet).
Statoil Wins Untested Blocks
Statoil was awarded blocks 1 and 3 in the Saline Basin. The blocks cover an area of about 5,650 km2 (18,500 square miles) in the largely unexplored deepwater areas of the Saline Basin. Statoil will be the operator of blocks 1 and 3, at 33.4 percent equity, with partners BP and Total participating equally with the remaining equity.
“Mexico’s opening presents the industry with great opportunities, so we are pleased to secure an early position. The award grants Statoil access to significant frontier acreage in an underexplored part of offshore Mexico. The blocks are virtually untested, with considerable subsurface uncertainty, but with play-opening potential,” says Tore Løseth, Statoil’s vice president for exploration in the U.S. and Mexico.
The winning bids for both blocks consisted of an additional royalty of 10 percent (on potential future revenues) and an additional work program equivalent to one biddable well per block. Each block also has a minimum work program as defined by the authorities.
“With the Deepwater tender bringing Mexico’s historic Round 1 to a conclusion, we are starting to see the fruits of Mexico’s comprehensive energy reform. Statoil has a long-term perspective in Mexico, and we look forward to contributing to developing the energy sector by assessing the block(s) awarded,” says Løseth.
Chevron’s International Team
An international consortium operated by Chevron subsidiary, Chevron Energía de Mexico, S de R.L. de C.V., was awarded an exploration contract for Block 3. Other partners in the bidding consortium are Pemex Exploration and Production and Inpex Corporation.
Block 3, which spans approximately 651 square miles (1,687 square kilometers), is located in the Perdido Fold Belt, approximately 45 miles (117 kilometers) offshore Mexico in water depths ranging between 1,640 to 5,575 feet (500 to 1,700 meters). Chevron will be the operator and hold a 33.3334 percent interest in the block while Pemex and Inpex will each hold a 33.3333 percent interest.
BP’s Trion Bid
BHP Billiton submitted the winning bid to acquire a 60 percent participating interest in and operatorship of blocks AE-0092 and AE-0093 containing the Trion discovery. Pemex will retain a 40 percent interest in the blocks. Pemex estimates the gross recoverable resource to be 485 MMboe.
BHP Billiton’s bid for Trion includes an upfront cash payment of $62.4 million and a commitment to a minimum work program (estimated to be up to a maximum of $320 million).
Should BHP Billiton and Pemex agree to progress the project beyond the minimum work program, BHP Billiton would be required to invest a further $570 million in works and a $624 million cash contribution (which comprises the upfront cash payment of $62.4 million already paid and the balance of $561.6 million as a future carry for Pemex). BHP Billiton’s bid also includes a commitment to an additional royalty of four percent.
10 Years On
In a press conference following the bidding, Juan Carlos Zepeda, Mexico's National Hydrocarbon's Commission president, estimated that production will start at Trion by around 2023 and exploration may take another 10 years.
Another three tenders are expected next year.