Mexico’s upstream oil and gas regulator, Comisión Nacional de Hidrocarburos (CNH), has approved the appraisal plan by exploration and production firm Pantera Exploración y Producción to drill two wells in the Burgos Basin south of the Texas border.
One well is the Patriota-106DEL in Tamaulipas state, part of a modification to the evaluation program approved in early March. Investment is expected to hit $6.37 million, with $3.9 million for drilling and $2.47 million to complete the well.
The second approval was for the Teenek-1 well, targeting natural gas. Drilling is to begin in mid-September with costs projected at $4.93 million.
Last month, Mexico’s Jaguar Exploración y Producción CEO Warren Levy said natural gas in the Burgos is a promising investment opportunity in Mexico, even given current demand and regulatory uncertainty. Jaguar has acreage in the basin. Last week, Levy said the new Burgos approvals by CNH “will allow Jaguar to continue moving forward with our exploration and development plans.”
The Burgos is the southern extension of the Western Gulf Basin in Texas, which encompasses the Eagle Ford Shale. “High levels of production” in the Eagle Ford “could indicate similar production levels in the Burgos Basin region,” the U.S. Energy Information Administration said in 2017.
The energy reform of 2013-2014 in Mexico opened the upstream segment, formerly monopolized by national oil company Petróleos Mexicanos (Pemex), to private sector participation. All new upstream rounds have been canceled by the current government, but as a result of the reform, 22 companies including Jaguar are now producing oil and natural gas in Mexico, with another two expected to join the list this year, according to local oil and gas association Amexhi.
CNH Commissioner Sergio Pimentel said during an online event organized by Amexhi that a total of 73 energy companies were operating in Mexico, of which 38 are based in Mexico. As of May, investments of $40.5 billion had been approved for exploration and extraction activities.
Of the 111 contracts awarded in bid rounds during the previous administration, 56 are in the exploratory stage, 31 in the extractive stage, and 24 in the exploration stage at fields where appraisal work has already been undertaken by Pemex.
Private sector operators produced 196.2 MMcf/d of natural gas in 2019, up 35.2% from the 127.1 MMcf/d averaged in 2018. Amexhi expects the figure to increase to 450 MMcf/d by 2024.
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