Wintershall Dea sees a growth market in MexicoJune 15, 2022
Martin Jungbluth, managing director of Wintershall Dea México, talks to The Energy Year about the company’s current producing assets and its plans to develop its exploration fields to raise production in the country. Wintershall Dea México is an independent E&P player that operates the Ogarrio field and has stakes in 10 local offshore blocks.
What unique capabilities has Wintershall Dea México brought to the country?
Wintershall Dea entered Mexico in 2017. Since then, we have managed to develop an attractive and varied portfolio throughout the entire E&P value chain. This includes several exploration blocks in the Gulf of Mexico, where we have already made some important discoveries. Our portfolio also includes one onshore field, Ogarrio.
We have been committed to Mexico since we set foot in the country. From the beginning of the liberalisation of the Mexican energy market, we have been one of the very few international oil companies to have taken over the operatorship of a field in Mexico – in our case, the Ogarrio field.
Our team consists of national and international experts, and we have a good track record of working in and with mature fields in various regions around the world. We leverage our expertise for effective knowledge transfer on local projects. Our internationally acquired capabilities are coupled with the highly skilled workforce available in Mexico. Thanks to these factors, we have been able to improve the operational excellence, performance and production of our projects. This is what makes us unique.
Can you give us an overview of the company’s development of the onshore Ogarrio field?
The Ogarrio field is a 50-50 venture between us and Pemex, and we are the operator. It came about as an opportunity for us after a farm-out by Pemex.
The mature field has a surface area of 156 square kilometres. Ogarrio began production in the 1950s. Since then, more than 500 wells have been drilled. The asset’s production started declining at a certain point, which is a normal occurrence over time. Since we took over the operatorship in 2017, the field’s natural production decline has been overcompensated by a number of workover, perforation and production optimisation activities. At the end of 2021, we registered gross production rates of 9,000 boepd.
We are working to further strengthen the field’s performance by evaluating the application of waterflooding to enhance oil recovery. An ongoing pilot test had good results, and we will further develop this scheme to carry out a major waterflood project in the coming years. We want to increase production, but some data will first require more analysis.
Even though we already have a significant number of wells in the field, we believe the project can be further optimised by using state-of-the-art reservoir models. At present, we have around 60-70 producing wells, with a maximum of 80 producing wells at our peak. Our plan is to drill an onshore well later this year. Our contract extends until 2043, which gives us a very good timespan to develop the field in the most efficient way.
What engagement do you have in Block 7 and in the prolific Zama field?
The Block 7 consortium consists of Talos Energy, Harbour Energy and Wintershall Dea. Pemex has a 50.4% stake in the Zama field, which extends beyond the licensed borders [into Pemex’s adjacent licence area]. In mid-2021, the Mexican government decided that Pemex would be the unit operator for the Zama field. Just recently, in March 2022, SENER published the formal notification of the final unitisation resolution (UR). With a completed UR in place, we are optimistic that the development of the Zama field can now move forward.
Wintershall Dea has a 40% stake in Block 7 and a 19.8% stake in the Zama field. This makes us the second-largest shareholder of the Zama field after Pemex. Our main goal is to develop the project in the fastest and most efficient way possible. The Zama discovery is one of the largest shallow-water discoveries in the world of the last 20 years. The field is estimated to contain 400 million-800 million boe of recoverable gross resources.
Which other Mexican blocks are you currently active in?
Most of our blocks are in their evaluation and interpretation phase. We are the operator of Block 16 and Block 17 in the Tampico-Misantla Basin in the Gulf of Mexico. However, there are no firm commitments for drilling wells in these blocks. We have time to evaluate data and then start our planning procedures.
In 2022, we are planning to drill up to four exploration wells as operator and together with our partners. I can assure you that we are really looking forward to it.
Wintershall Dea is the operator of Block 30 in the Sureste Basin. There are promising prospects in this block, which was the most contested one of Round 3.1. We are ready to drill two wells in Block 30 – called Kan and Ix – in the second half of 2022.
We are also present in Block 5, where our partner Murphy Oil as operator plans to drill the Tulum exploration well in 2022, and in Block 2 with Pemex as operator, where we intend to drill the Amistli exploration well later in 2022.
In addition, we are present in the Salina Basin and hold a 25% share in Block 29. We saw major discoveries there in 2020 with the Polok-1 and Chinwol-1 exploration wells. After Zama, the Polok discovery was one of the most important we have seen in the last few years. In 2021, appraisal wells were successfully drilled in the Polok field. Both the Polok and Chinwol fields are under evaluation to find the best development scenarios.
How significant is Mexico in Wintershall Dea’s global portfolio?
Mexico is a growth market for Wintershall Dea and a key part of our global operations. We are confident that the economy in Mexico will improve and that its government will work to create a more competitive environment. Our Mexican assets are a very good fit for our global portfolio. We have an advantage with shallow-water discoveries, and we believe we are ready to deliver and contribute to increasing Mexico’s production levels.
How much emphasis is being given to reducing emissions in your local operations?
As we all know, the future of energy is decarbonised. Over the more-than-120-year history of our company, we have continuously adapted to ever-changing environments. As the energy transition picks up speed, we are adjusting our strategy to lead this transition. On the global scale and within the next 10 years, Wintershall Dea intends to invest around EUR 400 million in reducing and offsetting greenhouse gas emissions.
Nevertheless, we are convinced that our energy systems will continue to rely on fossil fuels for the foreseeable future. Speaking of Mexico, the country depends by and large on hydrocarbons, with oil presently accounting for almost half of its total energy consumption. This shows that the oil industry is crucial for the country’s economy. Our plan is to produce oil in Mexico for many years to come and to do so in the most efficient and responsible way possible. To do so, we are applying our robust safety and environmental principles. So, we are confident that we are the perfect partner to develop this industry in Mexico.
When it comes to reducing emissions, our goal is clear: We aim to achieve net-zero carbon emissions by 2030 across our entire global upstream operations – both operated and non-operated, which includes Scope 1 and Scope 2 greenhouse gas emissions on an equity share basis.