Mexico's Pemex pushes ahead with Chicontepec field

MEXICO CITY Mon Jan 5, 2009 8:21pm GMT

MEXICO CITY Jan 5 (Reuters) - Mexico's state oil company Pemex has awarded over 2 billion pesos ($148 million) in construction contracts at its Chicontepec project aimed at boosting crude output, the firm said on Monday.

The contracts call for the construction of access roads and site preparation work at 344 well pads, where Pemex plans to drill thousands of horizontal oil wells to tap the difficult-to-produce oil of Chicontepec.

Analysts have questioned Pemex's plans to pour up to $30 billion into developing the 29 oil fields of the Chicontepec area over the next 15 years as many believe oil cannot be profitably produced in significant amounts there using current technology.

As recently as 2002, Pemex forecast Chicontepec would produce 1 million bpd by 2010. But, despite drilling nearly 650 wells in the area since then, results have been disappointing.

However, years of underexploration by Pemex has left it with few options other than Chicontepec as it scrambles to replace the rapidly declining output of the offshore Cantarell oil field, Mexico's main producer.

Pemex's current business plan calls for output from Chicontepec to rise to at least 550,000 bpd by 2021. The area currently produces less than 40,000 bpd. ($1 = 13.495 pesos) (Reporting by Robert Campbell; editing by Jim Marshall)

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