The Valaris 8503 rig was used for Zama appraisal. Source: Talos Energy

Stamp of approval for huge oil field development plan lays the foundation for $4.5 billion investment

Mexico’s hydrocarbon regulator, the Comisión Nacional de Hidrocarburos (CNH), has greenlighted a unit development plan (UDP), which Pemex submitted on behalf of its partners – Wintershall Dea, Talos Energy, and Harbour Energy – for a giant oil field located in the Sureste Basin offshore Mexico.

The Valaris 8503 rig was used for Zama appraisal. Source: Talos Energy

The Zama unit development plan (UDP) was submitted in March 2023 to Mexico’s CNH for formal approval. This development plan includes two offshore platforms (Zama-A and Zama-B), the drilling, and completion of 46 wells, as well as the transportation of oil and gas produced to the new onshore facilities of the unit at the Dos Bocas Maritime Terminal. 

As the CNH has now given the go-ahead for the UDP, this enables Pemex and its partners to sanction the Zama project off the coast of Tabasco state and inject $4.5 billion of capital into its development. The production from this field is expected in December 2025, reaching a peak production rate of 180,000 barrels per day of oil and 70.35 million ft3 per day of gas in 2029.

According to the Mexican regulator, the approved Zama development plan entails plans to recover a volume of 625.68 million barrels of oil and 243.29 billion ft3 of gas by the end of September 2045, with an estimated recovery factor of 37.8 per cent for both oil and gas. The operator’s investment programme foresees total costs of $9 billion from 2023 to 2045, of which $4.5 billion will be allocated to investments, and $4.5 billion for operating expenses and abandonment costs.

Furthermore, the CNH points out that activities will focus on the development – geophysics and facilities construction – and production with a budget of $45.5 million from July to December 2023. In addition, a budget of $1.2 billion has been allocated for the period from January to December 2024. Following the approval, Talos Energy disclosed that the final investment decision (FID) for Zama is expected after the completion and final review of engineering design (FEED), project financing and final approvals.

Zama development concept; Source: Talos Energy

Discovered in 2017 by Talos, the Zama field was fully evaluated in 2019 by the Block 7 consortium, made up of Talos, Wintershall Dea and Harbour. Zama is a shared reservoir that extends from the Talos-operated Block 7 to neighbouring Pemex AE-0152-Uchukil Asignación in the Cuencas del Sureste, in the Bay of Campeche in Mexico.

Moreover, a unitisation of the Zama field was required after a determination that the field is located within both the Talos-operated block and the adjacent Pemex-operated block and provides for joint development of the entire reservoir instead of each party developing its own block.

Considering that Pemex and Talos did not see eye to eye when it comes to the unitisation, Mexico’s Ministry of Energy (SENER) in July 2021 designated Pemex as the operator of the Zama unit, much to the disappointment of Talos. The company then decided to explore all legal and strategic options to resolve the situation. In September 2021, Talos filed notices of dispute to the government of Mexico over decisions taken by SENER.

Following SENER’s final unitisation resolution (UR) from last year regarding the development of the Zama shallow water field, Talos maintains a 17.35 per cent participating interest in the field. Zama’s 30-year production sharing contract (PSC) is slated to expire in 2049.

An independent third-party reserves auditor estimated the discovered recoverable resource volumes to be between approximately 735 – 950 million barrels of oil equivalent.

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