After an 80 year period the country of Mexico has allowed a private company to drill an offshore oil well in the territorial waters of Mexico. This signifies the allowing of competitors from foreign nations into the energy market in and around Mexico. The oil market has been monopolized by the state-run Petroleos Mexicanos since 1938 when Mexico nationalized the oil industry there.
This new project is a joint-venture between Premier Oil, PLC of London, Sierra Oil and Gas of Mexico, and Talos Energy of Houston, Texas. The drilling was launched in May of 2017 in the Sureste Basin right off of the coast of Tabasco. The area is said to hold approximately 100 to 500 million barrels of crude oil. The expected cost of the project comes in at around $16 million.
According to Tim Duncan who is CEO of closely held Talos Energy, Inc., Mexico has been very interested in recent years in the opening up of the Mexican waters to major investors and offshore drilling is a special emphasis on the Mexican government.
Talos has been involved in several earlier mergers and acquisitions as they recently took over Energy Resource Technology which was a subsidiary of Helix Energy Solutions. The operating territory of Talos is mostly in the Gulf of Mexico region of the American Coast.
The new drilling project has been named Zama-1 and is located in 546 feet of water, with the well reaching an initial vertical depth of around 11,000 feet. It is possible that this field contains from 1.4 billion to around 2 billion barrels of oil. Most experts in the industry count this discovery a very significant finding.
Since 2014 when the deregulation of the oil and gas market in Mexico occurred, many foreign companies have been bidding on blocks in the Gulf and the Zama-1 project is the very first well discovered and finalized in nearly 80 years. Duncan has stated that the objective is to continue drilling the well to 14,000 feet in order to maximize its output.
Duncan went on to say that this discovery has done just what the reforms of the Mexican oil situation was intended. It will deliver new capital, new participants all around and a new feeling of ingenuity that will help the economy of Mexico a great deal.