CALGARY, ALBERTA--(Marketwire - Sept. 25, 2012) - The corporation is pleased to announce that its 100% wholly owned Mexican subsidiary Cdn Oilfield Technologies & Solutions (TSX VENTURE:OTS) S. de R.L de C.V. ("COTS") has been presented with a unique opportunity to facilitate an exclusively awarded contract as a result of first round integrated service contracts awarded by Pemex under the "New Reform" to a private company to develop an oilfield in Mexico. Pemex has been under steady pressure to open its operations to outside firms, either through contractors or near-concessions known as "multiple services contracts," because government investment money has become scarcer and demand is growing for duties that can be performed better or cheaper by non-Pemex workers. The contract was awarded based on two factors, the lowest bid and the fee-per-barrel remuneration aspect of the contract and the percentage increase over the minimum investment requirements. As a result, Dowell Schlumberger has been awarded the Carrizo field by Pemex to enhance existing production and develop new infrastructure and production wells to increase production.
COTS Mexican joint venture partner has been awarded an exclusive maintenance contract issued by Schlumberger estimated at US$8 to US$10 million per year, granted on a year to year basis for a term estimated up to 25 years depending on results in the Carrizo field. In addition to the maintenance contract, COTS will play a key role integrating new technologies and services focused on increasing production in the Carrizo field. COTS will provide advance funding and project management services under a new contract that will have a minimum revenue structure. The agreement is being finalized between the parties under a new joint venture arrangement that will define process and guarantees governing all aspects of the project.
Whilst Schlumberger has not been particularly vocal about their development plans, other awards have been granted by Pemex in the Magallanes and Santuario fields to Petrofac with announcements to invest a minimum of US$200 million up to US$500 million prior to 2014 with an option to invest more depending on results. COTS in conjunction with its Mexican partner will participate in a study and make recommendations to Schlumberger to enhance production in the Carrizo field. There is over 150km of failed steel pipelines that require rehabilitation not to mention new drilling programs under review to further develop the field which will require construction infrastructure. Also being considered is preventative maintenance programs utilizing advanced filtration technologies that will prevent breakdowns and improve performance and efficiencies.
The Carrizo field is 13.01 km2 and is comprising of only one field. The areas belong to the basin of Comalcalco, which is composed of seven sand deposits with an approximate depth that ranges from 500m to 2,000m, is located 8 km west of the city of Villahermosa. The producing deposits were discovered in 1962, drilled to a depth of 1,780m. The well was completed in the range 1,464m to 1,477m, and obtained initial production of 213 bbl/day of 27 API. Another 43 wells were drilled between 1965 and 1977 to reach the deepest deposits that were over 1,000m in depth. Of these 43 wells, none are currently producing: 30 were closed and 13 plugged off. Over the last 11 years of its producing life the field has an average of 13 active wells producing an average of 1,200 bbl/day before water entry initiated steep decline. Having reached cumulative production of 14.86 MMbbl of oil and 9.60 Bcf of gas, Carrizo was abandoned in December 1999.
During 2000 and 2001 technological tests were performed in 8 wells in order to reactivate the field, but these wells were subsequently closed due to lack of funds for development. Since 2000, installed systems and equipment have been out of operation without receiving maintenance. The remaining 3P reserves, certified on January 1, 2010, amount to be 49.80 MMbbl of oil and 5.80 Bcf of gas.
Phil D'Angelo states, "This award marks the first of its kind. Under the Mexican constitution, never has a private company been allowed to develop an oilfield in the past. Not only does the project have an annual revenue base maintenance contract up to an estimated 25 years, we will be allowed to introduce new products and services that can be sold to Schlumberger to expedite normal Pemex processes which are time consuming and costly. COTS will focus on integrating its product lines to enhance production and improve efficiencies (the primary objective of the award). Imagine 150 km of steel pipe that no longer produces due to blockage and paraffins. Rehabilitating existing corroded steel pipelines utilizing new flexible pipe technologies can be producing quickly again without having to obtain new environmental studies and permits. A pipeline that would normally take up to a year to obtain approvals and several additional months of installation can be completed in less than a week. Integrating new filtration technologies can be applied to failing valves, hydraulic systems and reduce maintenance costs, not to mention the countless other technology improvements that can be integrated in the field".
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