Vancouver Junior Targets Mexican Gas
Vancouver-based Renaissance Oil, the Canadian junior that became Mexico’s first private sector oil and gas producer in almost 80 years, is now focusing on natural gas production in the blocks where it began oil development two years ago.
Kevin Smith, vice-president of business development at Renaissance, said March 14 the company’s three blocks in the southern Mexican state of Chiapas are largely gas prone.
“About 65% per cent of our production (of 1,650 boe/d) is natural gas,” he said. “We sell it to Pemex and we get some of the best natural gas prices in North America.”
Geography is largely the reason.
“Southern Mexico doesn’t have access to US gas,” he said. “By the time the imported gas from the US reaches Mexico City, the molecules can’t travel any further.”
In January, Chiapas gas fetched about $4.05/’000 ft3.
Gas production from the Chiapas blocks – Mundo Nuevo, Topén and Malva – currently averages about 6mn ft3/day, but Renaissance is about to embark on a work-over program there which could push production to 18mn ft3/day. The program will involve “heavy” work-overs on three existing wells, the drilling of three new Cretaceous wells and coring in other zones of interest.
The work-overs will begin in April, while Renaissance hopes to spud the first of the new wells in early June.
Smith said the company also believes its Amatitlán block, located in central Mexico, has significant gas potential, particularly the unconventional Upper Jurassic zone. Renaissance holds a 25% interest in Amatitlán and is the operator, with Russian partner Lukoil.
“The Upper Jurassic shale is three times thicker than the Eagle Ford, which makes it a world-scale play,” Smith said. “In Texas, the shale plays produce a lot of associated gas and we expect that as well.”
Estimates have put the recoverable shale gas potential of the Tampico-Misantla Basin, where the Amatitlán block is located, at some 23 trillion ft3.