Making EOR attractive

About 80 % of Mexico’s oil production comes from mature fields or in their last
development stage. With very low recovery factors, the trend that production follows is
not encouraging, so, due to the current need to increase Mexico’s hydrocarbon
production the government and petroleum companies are starting to look for new areas
and opportunities, but new fields such as those in deep water and shale oil are difficult
and expensive to develop (Rangel E., 2015). One of the biggest but also undeveloped
areas of opportunity is the implementation of Enhance Oil Recovery (EOR) methods but
the economic and financial challenges are the main obstacle for this strategy.

In most of cases, the fiscal regime systems for the production of hydrocarbons limit to
oil companies when looking for the best exploitation scenario in a long term. The fiscal
regime between the Host Government and the companies must be designed in a way to
motivate investments focusing on the ultimate recovery of the field instead of the short
term profits, so this way, EOR projects would become attractive.

Worldwide, other countries, such as Canada, USA, Vietnam, among others, have
adopted new fiscal regimes (IHS, 2010), allowing to unlock the remaining reserves in
the sub surface, with greater profits for both sides, in a win-win deal. With the correct
strategy, the potential that EOR offers for Mexico’s oil industry is quite important and is
possible to believe that the production tendency can be switched back to important
levels, positioning Mexico as an attractive sector for foreign investments.

Rangel, E. 2015. IOR-EOR: Una Oportunidad Histórica para Mexico.

Ngoc P., Kieu P., Ngoc L. 2015. Motivating Enhanced Oil Recovery (EOR)
Projects in Vietnam- A Regulatory Approach. Petrovietnam-Journal Volume 6.
Mian M.2010. Designing Efficient Fiscal Systems. Presented at the SPE
Hydrocarbon Economics and Evaluation Symposium, Dallas, Texas. SPE-
130127

IHS CERA. 2010. A Comparison of Fiscal Regimes.