Mexico plans careful regulation in deep water

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Aug. 6 – Mexico’s formation of deepwater policies in response to the Macondo well blowout, Deepwater Horizon rig explosion, and crude oil spill probably will push drilling of Mexico’s first deepwater well into 2011, said the president of its National Hydrocarbons Commission (CNH).

Juan Carlos Zepeda said CNH is considering whether to require a double-shear ram on blowout preventers, third-party certification of blowout preventers and emergency systems, development of spill-control scenarios, and what he termed “double-key authority action in critical procedures.”

“We cannot rely on one person to make certain critical decisions on well design, cementing, and other procedures,” he said during an Aug. 5 seminar at the Center for Strategic and International Studies.

Oil and gas producers should consider operation and risk techniques from other industries, Zepeda said. “We have to be more specific about how oil companies determine their worst-case scenarios.”

Jeremy M. Martin, director of the energy program at the Institute of the Americas, said Mexico faces substantial obstacles not only in moving its oil and gas activities farther offshore but also in implementing reforms at Petroleos Mexicanos (Pemex) because production continues to drop.

“The maturing and declining fields have come to dominate Pemex’s portfolio,” Martin said. “The decade has not been kind, but the next may be worse. Mexico may cease to be an oil exporting nation by the end of 2020.”

Moving slowly
President Felipe Calderon’s administration discovered change is not easy when it tried to reform the country’s hydrocarbons management in 2008. The administration was able to use the country’s offshore oil potential to press for deeper changes, Martin said.

Legislation aimed to strengthen Pemex, provide more private sector opportunities, and improve oversight and accountability, but its implementation is moving slowly. The development of incentive-based contracts with partners outside Mexico is a suit of legal battles, he said.

“Mexico’s oil future is one giant question mark,” Martin said. “There’s been incremental change and partial implementation of incremental reforms. There also appears to be an internal tug of war within Pemex. The treasure under the sea seems to be farther off than it was 2 years ago.”

One bright spot might be that the gulf spill off Louisiana could give Mexico leverage to get the moratorium on activity in an area of the gulf between the two countries seaward boundary known as the Doughnut Hole extended to 2014 from yearend 2011, Martin said.

US and Mexican government officials have discussed extending the Doughnut Hole moratorium and developing a major treaty covering all boundary resources, said Lourdes Melgar, a visiting scholar at the Woodrow Wilson International Center.

“Mexico has been quiet [about the gulf spill] because it is struggling to resolve its own deepwater dilemma,” she said. “It’s like traveling to Mars: such a big challenge that not everyone can do it. Even a big prestigious company like BP can have a major accident.”

Despite having no deepwater regulations or experience, Pemex invested in ultradeepwater rigs with plans to start drilling in 2,520-2,800 m of water by yearend, Melgar said.

Contact Nick Snow at nicks@pennwell.com



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