Mexico seeks bids for 500 Chicontepec oil wells

MEXICO CITY Tue Dec 16, 2008 5:12pm GMT

MEXICO CITY Dec 16 (Reuters) - Mexico's state oil company Pemex said on Tuesday it will seek bids from drilling contractors for 500 new development wells in the Chicontepec area, which Pemex is banking on to replacing dwindling output from other fields.

The vast Chicontepec area in eastern Mexico is thought to contain billions of barrels of oil but recovering crude from the area is difficult due to challenging geology.

Wells drilled in Chicontepec produce little oil as the rocks of the basin do not easily allow oil to flow through them and the oil reservoirs are at a low pressure.

Mexico produces approximately 35,000 bpd at Chicontepec. Pemex, seeking to boost output from the area to 550,000 bpd or more by 2021 plans to drill 15,000 wells over the next 15 years in Chicontepec.

Analysts have questioned the viability of those plans, noting the fields were discovered decades ago but never placed into production due to the technical challenges.

Pemex expects to award the drilling contract in March 2009. (Reporting by Robert Campbell; Editing by David Gregorio)