Mexico racing against time at Cantarell oil field

MEXICO CITY Tue Jun 16, 2009 11:28am EDT

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MEXICO CITY (Reuters) - Mexico's state energy company Pemex is scrambling to extract what oil it can from its key Cantarell deposit as growing water and natural gas levels in the giant field depress yields of crude.

Cantarell produced more than 2 million barrels per day as recently as 2004, but yield has plunged as the aging field enters its natural decline phase, sending Mexican oil production tumbling to its lowest level since the mid-1990s.

The giant offshore Akal field and several nearby deposits that Pemex groups as Cantarell produced only 713,000 bpd in April, below Pemex's forecast of 756,000 bpd for 2009. Yields from the area have fallen at annualized rates of more than 35 percent in recent months.

Pemex engineers said at a conference last week that the oil layer of the Akal field is shrinking by at least 4 meters (13 feet) a month as gas moves downward and water moves upward in the rock formation.

Contraction of the oil layer means many of the traditional vertical wells Pemex has used to drain Cantarell since the late 1970s are getting flooded by gas or water, which forces their closure.

To prolong the field's life, Pemex is drilling horizontal wells costing more than $20 million each. These extend hundreds of meters (feet) along the middle of the shrinking oil layer.

"Planning and execution for these horizontal wells is becoming increasingly important due to the contraction of the oil layer," said Pemex engineer Jose Lopez during a presentation on the new wells at an oil conference last week.

"It is a key risk for the field. Any delays mean we are losing oil."

SECONDARY RECOVERY

The slump at Cantarell has dragged Mexican oil output down to levels unseen since the mid-1990s. Production stood at just 2.617 million bpd in May. Pemex insists production will end the year at 2.7 million bpd, but analysts are skeptical the company can achieve this goal.

Years of underinvestment have left Pemex few options to quickly replace capacity being lost at Cantarell. Pemex officials indicated last week that two major projects are moving more slowly than previously hoped.

Pemex upstream chief Carlos Morales said the Chicontepec project would reach 60,000 bpd by the end of this year, double current production but more than 10,000 bpd below Pemex's previous target.

Engineers working on the Sihil field, a part of the Cantarell complex that currently produces about 35,000 bpd, said output would not reach the peak of 120,000 bpd this year.

Pemex's official forecasts call for output from Cantarell to decline by 16 percent a year. Even so, the field still contains billions of barrels of recoverable oil.

The company is planning an ambitious redevelopment project at Cantarell that will see several satellite fields in the area developed as well as new secondary recovery projects starting in 2013, according to Cantarell manager Miguel Angel Lozada.

Secondary recovery projects could yield an additional 1.39 billion barrels of oil over the next 14 years, Lozada said in a presentation made on Saturday.

Pemex is examining proposals to use surfactants -- chemicals that stabilize mixtures of oil and water -- to squeeze out some of the billions of barrels of crude trapped in the gas and water layers of the Akal field. This should extend that field's life.

Lozada did not provide cost estimates for the program but costs are likely to be substantial. The plan to extract oil from the gas cap alone calls for 20 new high-tech wells to inject surfactants into the gas cap as well as new gas treatment platforms, pipelines and a tanker that will be used as a floating chemical storage facility.

(Reporting by Robert Campbell; Editing by David Gregorio)

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