Mexico's Sureste Basin

An archetype of a 'super basin'

The resurgence of the Permian Basin in the United States led directly to the concept of the “super basin”: a mature basin that can be rejuvenated to produce as much or more oil and gas than it has so far.

Another archetype for super basins lies 1,000 miles southeast of the Permian, in the onshore/offshore Sureste Basin of Mexico.

This is the home of the supergiant Cantarell oil field, discovered in 1976, which hit peak production of 2.1 million barrels a day in 2003. Since then, Cantarell’s output has steadily declined.

It’s also the basin where operator Talos Energy recently reported a major crude oil discovery.

In July, the company said its Zama-1 well found an accumulation of up to 2 billion barrels of oil after drilling to about 11,100 feet offshore in 546 feet of water, marking what it called “the first offshore exploration well drilled by the private sector in Mexico’s history.”

Talos Energy holds a 35-percent interest in the well, Sierra Oil and Gas 40 percent and Premier Oil 25 percent.

At this point, super basin-status for Sureste looks like a legitimate call, said Mark Shann, subsurface director for Sierra Oil and Gas in Mexico City.

Prospectivity of the Sureste

Using numbers for exploration success and total production, a future outlook for the Sureste can be estimated, he said.

“We can use the creaming curves, or the discovery curves, from the U.S. Gulf of Mexico to make a prediction,” Shann said.

“In less than 200 meters of water there have been 230 discoveries finding 40 billion barrels of oil equivalent, and 800 exploration wells. That excludes Cantarell. If you add Cantarell, the number goes up to 55 billion boe,” he noted.

Image Caption

Talos drilled Zama-1 with the Ensco 8503 rig. Photo courtesy of Ensco

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The resurgence of the Permian Basin in the United States led directly to the concept of the “super basin”: a mature basin that can be rejuvenated to produce as much or more oil and gas than it has so far.

Another archetype for super basins lies 1,000 miles southeast of the Permian, in the onshore/offshore Sureste Basin of Mexico.

This is the home of the supergiant Cantarell oil field, discovered in 1976, which hit peak production of 2.1 million barrels a day in 2003. Since then, Cantarell’s output has steadily declined.

It’s also the basin where operator Talos Energy recently reported a major crude oil discovery.

In July, the company said its Zama-1 well found an accumulation of up to 2 billion barrels of oil after drilling to about 11,100 feet offshore in 546 feet of water, marking what it called “the first offshore exploration well drilled by the private sector in Mexico’s history.”

Talos Energy holds a 35-percent interest in the well, Sierra Oil and Gas 40 percent and Premier Oil 25 percent.

At this point, super basin-status for Sureste looks like a legitimate call, said Mark Shann, subsurface director for Sierra Oil and Gas in Mexico City.

Prospectivity of the Sureste

Using numbers for exploration success and total production, a future outlook for the Sureste can be estimated, he said.

“We can use the creaming curves, or the discovery curves, from the U.S. Gulf of Mexico to make a prediction,” Shann said.

“In less than 200 meters of water there have been 230 discoveries finding 40 billion barrels of oil equivalent, and 800 exploration wells. That excludes Cantarell. If you add Cantarell, the number goes up to 55 billion boe,” he noted.

Success rates and discovered-reserve numbers for the deepwater have been reasonably proportional to the shallow-water drilling, so it’s fair to think the Surestre could put up a future oil production total comparable to past production, he said.

“All you need to do is find another couple of things and you’re right back there,” Shann said. “We have identified a structure that is at least as big as Cantarell.”

A key concept is that Sureste’s prolific onshore and shallow-water formations are also present in deepwater plays.

“It’s the same petroleum system. We know from petroleum seeps and our own mapping that the same formations extend into the deepwater,” Shann said.

Because today’s oil industry has much-improved seismic imaging capability plus a wealth of information and experience to draw upon, Shann thinks the Mexican side of the Gulf of Mexico will develop more rapidly than did the U.S. side.

Sierra Oil and Gas has already accumulated a significant amount of data to assess prospects, he said.

“We’ve got a dataset where we can look under the salt canopy. It is changing our view of the (basin’s) prospectivity,” he explained.

The company’s data resources include 2,000 wells with logs, 800 wells with core data, 60 wells with source rock information and 500 wells with pressure-volume-temperature information, plus extensive 3-D seismic, Shann said.

“Once you get your hands on that data, you can use it to drive your exploration campaign. As a company dedicated just to exploring Mexico, we have the luxury of only doing Mexico so we have the time and the focus to do the work,” he noted.

Anatomy of a Super Basin

Established producing formations and known source rocks give super basins much of their allure.

“You don’t have to go after virgin source rock. There is plenty of low-hanging fruit in the super basins,” said Pete Stark, executive director of upstream research for IHS Markit and co-author of the super basin concept.

Also, new technologies – especially horizontal drilling – can open up previously non-producing or low-producing formations in hydrocarbon-rich super basins. Opportunities vary with geology, and while super basins are similar, no two super basins are exactly alike.

“The Permian Basin is a magical place,” noted AAPG President Charles Sternbach. “A lot of the innovation from the Permian is, if you drill a dozen wells, why not drill hundreds of wells? For me, what’s really exciting is the upscalability,” he said.

Sternbach contrasted that basin with the North Sea, where infrastructure additions and improved imaging will make a difference, and with the very mature Appalachian Basin, where new approaches including unconventional development are required.

“The Gulf of Mexico is also a super basin province. It has multiple source rocks. It has billions-plus barrels produced and billions-plus left. Major infrastructure, multiple plays, multiple pays,” he said.

Sierra Oil and Gas maps “everything from basement to seabed” to assess prospects in the Sureste, Shann said. With seeping oil on the water’s surface and prolific source rocks buried below, success depends on the presence of both traps and significant hydrocarbon accumulations.

“The structures we see are very high structures, kilometers high. The question of how much you’ve retained is going to be the issue,” he said.

If the Zama discovery well is an indicator of Sureste’s deepwater future, the industry could have multiple attractive structures to try.

Regulatory Factors

“The question then is, ‘How fast can you drill these things?’” Shann said.

How fast wells can be and will be drilled is a question in all super basins. Economics and price are significant factors, and so are regulation and geopolitics.

“There are critical qualitative and risk aspects in play for various super basins. Price is going to be a big issue. Policies that are in place or will be put in place also will affect the future of super basins,” Stark said.

Development in already-producing onshore super basins needs a different regulatory approach from the frontier exploration process of finding a large structure, drilling a successful test and then drilling a confirmation well, according to Stark.

“The regulatory environment for traditional conventional exploration doesn’t work well when you need to drill a large number of wells in a timely manner,” he said.

Stark thinks macro-economics could, and should, affect policies and ease regulations for super basin development.

Economic Impact

He said the impact of horizontal technologies – primarily in North American super basins – has reduced global oil and gas prices and is now saving energy consumers worldwide about $7 billion a day.

Shann said he worked at BP for 30 years before joining the small group of professionals that founded Sierra Oil and Gas in 2014. He lived in 13 countries for more than two years each in his BP career, including Mexico and countries in Latin America.

He considers the company’s current area of focus to be a world-class region for oil and gas prospecting.

“I’ve always wanted to come back. I have been amazed at the quality of the source rock,” Shann said. “It stands out to me, globally, as one of the key places on the planet to explore.”

Many people in the industry thought the offshore Sureste Basin “would not be as prolific as the U.S. Gulf of Mexico, and that has not been the case,” Shann observed. It’s turning out to be a highly favorable province – for companies willing to do the spadework.

“There are no shortcuts in Mexico. You absolutely have to be a data hound to be successful,” Shann said, adding, “I don’t think Mexico has any shortage of information – its oil exploration history dates back to 1869.”