North American shale plays are seemingly pretty wellknown, and other than a major find here or there, they are considered, for the most part, mature basins. This is not the case in other parts of the world, where major discoveries continue to be made. Bahrain, for instance, recently announced its largest oil discovery, estimated at 80 Bbbl, and it’s a shale oil play. The U.K.’s Bowland Basin continues to attract attention as well.
But Mexico might be part of the largest prize. After its oil reforms in 2013, the nation welcomed foreign companies that hoped to apply their shale expertise from North America to other parts of the world. One of these companies was Renaissance Oil Corp. E&P recently visited with Kevin Smith, vice president of business development for Renaissance, about the shale potential of the Amatitlan Block, where the company partnered with Lukoil and Pemex in 2017 to develop the 243-sq-km (94-sq-mile) block.
E&P: What attracted you to the Amatitlan Block initially?
Smith: We believe that the Amatitlan Block holds an immense shale oil resource. Renaissance is focused on unconventional resource development and has been studying and mapping the petroleum systems of Mexico for several years. Mexico has had a tremendously successful history in producing its rich oil resources, including the Golden Lane oil fields, highlighted by Cerro Azul-4, the largest single oil well in the history of global oil development, with production of 260,000 bbl/d, and the Cantarell Field, the world’s largest offshore oil field that reached peak production of 2.1 MMbbl/d. What these Mexican landmark oil fields have in common is that the oil in their reservoirs was primarily sourced from the Upper Jurassic shale deposits below these formations.
Unlike Texas, the Mexican source rock shale formations have not been commercially developed, and the thickest and potentially most prolific resources are in the Tampico-Misantla Basin (TMB). In the heart of the TMB is the Amatitlan Block, which we believe is located in the sweet spot of the Upper Jurassic shales.
E&P: Your website starts out by noting that your company is ‘applying the latest technologies developed in North America.’ Can you go into more detail?
Smith: The core of Renaissance’s technical team is a group of geoscientists and an engineer who worked together at Mitchell Energy with the goal of commercializing the world’s first unconventional play, the Barnett Shale. After that success, these pioneers went on to work on shale resource plays across the U.S. and the world. The team now has reunited to tackle the task of commercializing Mexico’s first shale play. Integral to the team is drilling and completions engineer Nick Steinsberger, who designed and implemented the slickwater frack, solving the Barnett Shale. Steinsberger has gone on to drill and complete more than 1,200 shale wells using a constantly evolving set of new technologies and completion techniques. Along with his former Mitchell Energy colleagues, he is bringing his extensive experience and understanding of unconventional resource development to Mexico, where the shale oil potential is yet untouched.
E&P: The website also noted, ‘Renaissance’s analysis indicates the Upper Jurassic interval is an oil-rich hybrid shale system … and is highly prospective for targeted stacked pay development.’ Can you be more specific about what type of analysis you applied?
Smith: Leading our understanding and mapping of the petroleum systems in Mexico is geochemist Dan Jarvie, who in the early days of the energy reform had unprecedented access for a team member of an international oil company to the extensive core and log libraries in Mexico. Jarvie acquired data from 60 wells drilled across the Tampico-Misantla Basin, including several cores taken from deeper wells drilled at Amatitlan, that penetrated the thick shale formations. He took these samples to modern labs in Houston for geochemical analysis that allowed for a detailed comparison to the rock composition of successful unconventional plays from across the world. Jarvie concluded that the Upper Jurassic shales are very comparable to another marine carbonate formation, the Eagle Ford shales of South Texas, with the predominant difference being that the Upper Jurassic shales are on average more than three times thicker than the Eagle Ford shales. He had the opportunity to closely study the Eagle Ford and many other global shale resources during his previous role as chief geochemist at EOG Resources Inc., his time assisting Mitchell Energy at ‘cracking the code’ of the Barnett Shale and in a remarkable career dedicated to unconventional resource development. Renaissance is quite fortunate to have Jarvie and his vast experience and expertise on the team focused on Mexico.
E&P: The website noted that Renaissance was awarded its top three choices in Mexico’s first oil and gas auction in 80 years. What did you bring to the table?
Smith: The initial properties awarded to us in call 1.3 are in close proximity to each other in the state of Chiapas and came with a steady production base in excess of 1,600 boe/d. We have employed sophisticated reinterpretation of existing 3-D seismic data to identify potentially undrained areas of these formerly prolific reservoirs. Renaissance plans to drill three development wells into the Chiapas blocks in 2018 and work over existing wells with the target of increasing production threefold over the year.
The Chiapas blocks also are of strategic importance as they are situated in the middle of the Sureste Basin surrounded by Pemex producing blocks that have recently come to market for farm-outs. Renaissance has tremendous growth potential in the south of Mexico by organically developing our existing blocks and through acquisition and farm-in of surrounding acreage.
E&P: What can we expect to see next from Renaissance in Mexico?
Smith: Renaissance recently has completed the drilling of 10 wells into the shallower Chicontepec formations at Amatitlan in 2018 and has returned the block back into production. The next big milestone for the company will be to drill a deeper well this summer to test the Upper Jurassic shales. The shale well will be the first unconventional well drilled by an international oil company in Mexico’s history and is an opportunity to unlock tremendous value in the block by initiating a new worldclass shale play in Mexico.