Pemex says two US deepwater fields may cause Mexican oil to leak

Oct 26, 2007 02:00 AM

Two deepwater oil fields under development in US Gulf waters may cause Mexican oil to leak into wells on the other side of the maritime border, said the head of Mexican state oil firm Petroleos Mexicanos.
While the US is busy developing deepwater oil reservoirs in up to 10,000 feet of water, Mexico is watching from the bleachers. Pemex, as the state firm is known, currently lacks the technology to drill deeper than 3,000 feet and is constitutionally prohibited from teaming up with outside firms who can.

"In the US, they are exploiting reservoirs that could be border fields," said Pemex Chief Jesus Reyes Heroles, speaking to lawmakers in the Senate. "The latest information we have suggests the possibility that two fields could eventually be confirmed as trans-border fields."
Following the Senate hearing, Carlos Morales Gil, the head of Pemex's exploration and production division, told Dow Jones Newswires the two fields in question are Trident and Hammerhead. Trident is currently being developed by Chevron, which drilled a discovery well at the field in 2001.

A Chevron spokesman said Trident is currently under evaluation.
"We are looking at different development options going forward," said spokesman Mickey Driver.
Chevron, along with partner Royal Dutch Shell, is moving faster with the neighbouring Great White, Tobago and Silver Tip fields, where production will be fed into the Perdido hub. Shell says none of these three fields extend into the Mexican side of the border, even though they are all located within 10 miles of the international boundary.

Shell returned Hammerhead to the US last year. Bois d'Arc Energy put the leading bid for Hammerhead, or block 943 in the Alaminos Canyon, when it was auctioned off again in August.
As oil firms start developing these fields, reservoir pressure on Mexico's undeveloped side could push oil and natural gas across the border into the two companies' wells. Trans-border fields are a problem for oil states around the globe. Oil and natural gas reservoirs overlap maritime borders from Iran to Trinidad, forcing these countries to develop the reserves in tandem with their neighbours to prevent drainage.
"We're setting up teams to deal with this problem," said Reyes Heroles.

There is currently a moratorium on US drilling along part of the US-Mexico border, an area known as the Doughnut Hole, but the Alaminos canyon is to the west of this area. Reyes Heroles suggested a similar agreement to protect Mexican oil at the two fields in question.
Most countries with cross-border reserves set up unitization agreements to set extraction rates in line with the amount of reserves each country holds. Venezuela and Trinidad recently inked such a deal to develop gas fields in the Atlantic.

Source: MarketWatch
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