Pemex lets pipeline contract for KMZ complex in gulf

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 4 -- Mexico’s Petroleos Mexicanos (Pemex) has let a $125 million contract to Global Industries for the installation of a pipeline in the Ku-Maloob-Zaap (KMZ) complex in the Gulf of Mexico.

Global will lay 27 km of 36-in. pipelines in 90 m of water using the Hercules and Titan II vessels in the operation. The pipelines will connect Pemex’s E-KU-A2 and AKAL-C6 platforms.

The project, set to begin in July and end in December, also includes 29 pipeline crossings, risers, and expansion curves.

Pemex said last month that KMZ was beating previous output expectations, producing an average of 848,118 b/d during this year’s first 4 months, a 6% increase compared with the same period of 2009.

“Production at Ku-Maloob-Zaap has registered a rising tendency in recent years, even outperforming original expectations, which has allowed Pemex’s total production to remain stable during the last 6 months,” Pemex said.

The rising output has helped offset the steady decline at Cantarell, with two additional fields added to the KMZ complex—Bacaba and Lum—and nine more wells to follow. “In the current year, two new wells have been drilled out of a total number of 11 that are expected to be drilled,” Pemex said.

Meanwhile, Pemex could boost its oil output to 2.8 million b/d by 2013 from 2.6 million b/d in 2009, according to the company’s exploration and production division.

Mexico’s largest oil project, KMZ field is expected to continue to produce 850,000 b/d over the next 2-3 years, accounting for about one third of Pemex’s of daily output.

Planned investments of $19 billion in KMZ and Chicontepec fields would account for most of the increase in production.

In April, the head of exploration and production at Pemex said the company’s goal is to keep oil production at 2.4-3 million b/d during 2010-24.

Carlos Morales Gil said Pemex still expects to produce an average of at least 2.5 million b/d of oil this year but that output could go as low as 2.4 million b/d.

“That is the floor,” said Morales, who took exception to a report by National Hydrocarbons Commission calling for the Chicontepec project to be redesigned due to the high cost of developing the reserves and disappointing output so far.

“We can't give up. We have to develop the right technology at Chicontepec,” Morales said, explaining that the immediate goal is to find better technologies to increase production.

According to Morales, oil production in the Chicontepec basin exceeded 42,000 b/d at the end of April, up 40% from the 30,000 b/d produced at the end of 2009. Overall, however, Pemex's production fell 2.2% in the first quarter of 2010 from the same period last year to 2.61 million b/d.

However, analysts said containment of the decline at the offshore Cantarell oil fields and increased output from KMZ and other fields has contributed to a slower rate of decline than Pemex has seen in recent years.

Contact Eric Watkins at hippalus@yahoo.com.



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