The unprecedented energy reforms taking place in Mexico - which are allowing foreign investors into the country for the first time in 77 years - have been the talk of the petroleum geology community.
AAPG Honorary member Alfredo E. Guzmán, this year's recipient of the Michel T. Halbouty Outstanding Leadership Award, had a small hand in the changes many are calling "Mexico's Moment."
A former executive of Petróleos Mexicanos (Pemex) who also served on the country's National Hydrocarbon Commission, Guzmán's honors are two-fold: Not only is he receiving AAPG's second highest award, he is experiencing a rush of pride watching his country transform on a host of levels.
"I would like to think that I had some influence on the changes that Mexico is undergoing, as I always felt and expressed that the country needed more enterprises looking for oil and gas resources rather that just one company - no matter how good and efficient it could be," said Guzmán, who has been an active member of the AAPG for 46 years and a notable leader in Mexico.
Pushing PEMEX to Its Max
Although Pemex sometimes has been criticized by outsiders for inefficiency and corruption, Guzmán said the company has performed exceptionally well given its relatively small workforce that has been tasked with exploring and producing some of the world's largest oil fields.
Throughout his career at Pemex, holding multiple executive titles, Guzmán led Mexico to some of its most historical achievements including:
♦ Increasing gas production in the Burgos Basin from 183 million cubic feet per day to 1.65 billion cubic feet through the discovery of more than 90 new fields - boosting the basin's estimated ultimate recovery from 10 to 26.5 trillion cubic feet.
♦ Implementing the rejuvenation of the Veracruz Basin from 150 million cubic feet per day to 1 billion cubic feet after the discovery of nine new fields, leaving an additional 250 million cubic feet per day at the wellhead in 2007 waiting for facilities to come on line.
♦ Leading the discovery of the Lankahuasa Field, which contains almost 500 billion cubic feet of 3P reserves that came on-stream at 100 million cubic feet per day. It is the first offshore gas province in Mexico, located off central Veracruz State.
♦ Leading the discovery of six new offshore pools in the Tampico and Poza Rica shelf areas, with 300 million barrels of new light oil reserves, turning around a 50-year decline in the output of oil in the region.
♦ Implementing a new process for the evaluation of the exploration function at Pemex and the development of an exploration portfolio with more than 2,500 opportunities - up from a previous count of 40.
♦ Initiating a development project for the Chicontepec Paleochannel, a resource play located in northern Veracruz that has more than 100 billion barrels of original oil-in-place and 50 trillion cubic feet of original gas-in-place.
While at Pemex, Guzmán expressed the need for Mexico to open its doors to third-party investors when the country began to experience a decline in production of its largest oil field, the offshore Cantarell, in 2004. The idea was highly controversial at the time, but it was the only obvious path to enabling the world's 10th largest producer to reach its full potential.
"He guided Pemex into offshore areas of exploration and pressed for innovation at a time when such was not popular," said Scott Tinker, a past AAPG president and the director of the Bureau of Economic Geology, State Geologist of Texas. "Alfredo's vision is now being borne out by the actions of the Mexican government."
A New Mexico
As a result of Mexico's energy reforms, which were signed into law in December 2013, operators north of the border and beyond are jumping at opportunities to explore and exploit the country's hydrocarbon-rich fields.
Mexico has discovered in its subsurface 263 billion barrels of oil and 279 trillion cubic feet of gas, Guzmán said - and those numbers do not include the "yet-to-be-found" conventional and unconventional resources.
If Pemex's estimate of 435 billion barrels of oil equivalent for the country's total endowment is correct, there are at least 159 billion barrels of oil equivalent to be produced, Guzmán explained.
To date, just six of its 12 basins with petroleum systems are currently producing.
Guzmán grew up in a county that relied on its national oil company to provide 30 to 40 percent of its income in revenues. Although his father was a petroleum geologist at Pemex and former vice president of the AAPG, Guzmán initially felt a different pull in college.
"Actually l liked chemistry, but during my first semester at Texas Tech University I had to take a course in an additional science, and a professor I had, Vestal L. Yeats, showed me how fulfilling and rewarding geology could be," Guzmán said. "Once I chose my career, my father was highly influential in my choosing petroleum geology and in exposing me to the AAPG."
Guzmán entered the field of petroleum geology in 1970 as a field assistant for the Minerals Exploration Company, a subsidiary of Unocal, in northwestern Mexico. He joined Pemex four years later as a field geologist and went on to become:
♦ Burgos Basin Integral Project team leader.
♦ Exploration manager of the North Region Strategic Business Unit in northern Mexico.
♦ Planning manager of the North Region Strategic Business Unit.
♦ Vice president of exploration for all of Mexico.
♦ Vice president of the North Region.
Mexico's Moment
A career at Pemex spanning 33 years paired with a year as a commissioner for the National Hydrocarbons Commission in 2009-10, Guzmán - if anyone - knew what Mexico needed to up its game for its citizens and in the international playing field. Currently, people in Mexico pay six times more for electricity than those in the United States, Guzmán explained.
"It was impossible for just one company to explore the whole country and produce all that was needed, especially after Cantarell started declining," he said, explaining that Cantarell and just a handful of Mexico's 600 oil fields were producing more than 90 percent of the country's total.
As a commissioner for the National Hydrocarbons Commission, Guzmán lobbied for the creation of a "development area" to connect exploration and production at Pemex, as many of the fields Pemex discovered could not be produced because of a lack of people with subsurface skills.
"It is expected that third party participation will increase the investment in the oil and gas sector from approximately $23 billion a year to more than three times that amount," Guzmán said.
"Oil production, which has been declining since 2004, will increase to an estimated 3.5 to four million barrels of oil per day by 2018," he continued. "Gas output should increase from its current six billion cubic feet per day to more than eight billion cubic feet."
Working Together
To help push Mexico forward, Guzmán recognized the need for interdisciplinary teams early on and created them within Pemex.
"It is important for geoscientists to interact on multidisciplinary fronts," he said, "in order to promote their ideas and concepts."
On a macrocosmic level, Guzmán has done the same in his involvement with AAPG - working to connect countries and cultures to enhance working relationships and, ultimately, productivity.
A member since 1969, Guzmán has participated in or served as the following:
♦ International Distinguished Lecture Committee in 1991, 1997 and 1999.
♦ Visiting Geologist Committee since 1999.
♦ Annual convention session chair.
♦ General chair for the 2004 AAPG International Conference and Exhibition in Cancun, Mexico.
♦ President of the Latin America Region in 2003-04.
♦ Vice president-Regions 2010-11.
"When I think of Alfredo, I always recall him talking to me once, giving credit to the AAPG for the short courses he took and lectures at conventions he attended that inspired him to go back to his drawing board in Mexico and apply what he learned to finding more oil and gas," said Robbie Gries, president of Priority Oil and Gas and an AAPG past president, Honorary member and previous winner of the Halbouty Leadership Award.
"He credits the AAPG for the valued enhancement of his own professional life."
Guzmán was recognized by AAPG in 2002 at the luncheon of the Heritage of the Petroleum Geologist, given by the Division of Professional Affairs/Society of Independent Professional Earth Scientists. That recognition was followed by his receiving the AAPG Distinguished Service Award in 2007 and the Statesmanship Award from the Gulf Coast Association of Geological Societies in Corpus Christi, Texas in 2007.
He has published more than 100 papers and made more than 200 presentations for AAPG and its affiliates throughout his career.
"We have to continue the globalization process of the AAPG if we are going to go into our second 100 years as a truly international organization," Guzmán said. "We have to work hard to increase our membership, to include more young professionals and to be a more diverse group. We have to have more women entering our profession as well as in our organization."
A Change of Direction
After retiring from Pemex in 2007, Guzmán worked as a consultant for several oil and gas companies before joining Casa Exploration as its director of exploration and new ventures in 2014.
Initially focused on South America, the company quickly changed directions when Mexico announced its plans to reform its energy sector.
With the backing of savvy and professional investors, Casa Exploration expects to have a significant short-term impact on Mexico's efforts to increase its production and reserves, Guzmán said.
"The possibility for private third parties to invest in the exploration, development and production of Mexico's oil and gas resources will have only positive results," he said.
"It means more income for the government," he added, "more energy for the people at lower costs, jobs and an increased GDP for the country."