An independent evaluation of the Zama discovery made offshore Mexico by the Talos Energy-led consortium shows the best estimate of contingent resources are near the high end of previous guidance, mostly in the block operated by the Houston-based company.
Talos Energy said Jan. 7 Netherland, Sewell & Associates Inc. put the best estimate of 2C gross recoverable reserves at about 670 million barrels of oil equivalent (MMboe) and the high estimate of 3C gross recoverable reserves at about. 1,010 MMboe. The latter is above the consortium’s previous guidance range.
Nearly 95% of the oil is believed to be high quality with API gravities averaging about 28 degrees.
“We are happy to see that the results of their evaluation exceed our previously guided resource range,” Talos Energy CEO Tim Duncan said in a news release.
The evaluation also showed that 60% of the resources in the reservoir, which extends into an adjacent block owned by Pemex to the east, is located in the consortium’s Block 7.
Results of the evaluation were delivered as the consortium moves toward a 2020 target to make a final investment decision on Zama if it succeeds in wrapping up unitization talks with Mexico’s Pemex. Talos said the consortium provided technical evidence to Mexico’s energy ministry in December of the shared reservoir.
Netherland, Sewell & Associates’ evaluation was based on data that included information from four reservoir penetrations, more than 1,400 ft of whole core samples, an extended flow test, 185 pressure samples, 60 physical oil samples and 28 well logs.
“With this step completed, we will continue to advance the project engineering and design work while also finalizing unitization procedures,” Duncan said.
Talos said preliminary FEED work is complete. Development plans include two fixed production facilities. First oil could be reached in 2023 if unitization discussions conclude soon, Talos said.
“The Zama project alone could generate approximately $28 billion of fiscal revenue to Mexico’s government—in addition to Pemex’s share of Zama—and will drive a significant amount of local job creation and positive social impact across the supply chain of this project,” Duncan added. “We believe it is in everyone’s best interests to maintain the urgency in bringing this project forward, and ensuring it is done so in an efficient way that draws from international best practices is critical to achieve these objectives.”
Crude oil inventories also hit another record high on the U.S. Gulf Coast, where the bulk of the nation's refining capacity is located.
For the week ahead we expect moderate gains to continue. Brent will likely average close to $67/bbl.
During the week ahead, Stratas Advisors expect Brent to continue falling as demand fears grow, likely averaging $60/bbl.