I am so grateful to be preparing this edition from a friend’s house, as ours is still without power and internet more than 24 hours after Hurricane Beryl hit Houston on Monday. More than two million homes lost power, and the city is recovering. But with people helping each other, we shall overcome!
Let’s get to the news of the week.
Shangyou Nie
Editor, Well Read
ENI Makes Key Discovery in Mexico
Ricochet64/Shutterstock.com
On Monday, ENI announced it had made a new discovery: the Yopaat-1 well in Block 9, located in mid-deepwater in the Sureste Basin, offshore Mexico.
The Italian major estimated roughly 300–400 million boe of oil and associated gas from in-place resources. ENI has found more than 1 billion boe in Mexico overall.
Discovery details:
According to ENI, the Yopaat-1 well is drilled 525 m underwater and reached a total depth of 2,931 m.
The company has encountered 200 m net pay of hydrocarbon-bearing sands in the Miocene and Pliocene sequences.
ENI is the operator and owns 50 percent of the participating interest. Spanish partner Repsol holds the other 50 percent.
Previous ENI discoveries in Mexico:
ENI estimated its discoveries across Mexico contain more than 1.3 billion boe of in-place oil and gas total, including the latest discovery.
ENI prides itself on its “dual exploration model,” in which it holds high equity during the exploration phase, and then dilutes some interest after discovery to share risk and rewards with new partners.
Block 10, with a 65 percent stake. Its partners are Lukoil, which holds a 20 percent stake, and Cairn, which holds a 15 percent stake.
These exploration blocks were awarded in 2017 in Mexico’s Round 2.1.
What to watch:
With the latest discovery, ENI will be able to accelerate development of its offshore discoveries in Mexico. ENI is well known for a “fast-track developments” approach, emphasizing parallel development programs. It has used this approach in Egypt and Ivory Coast.
ENI and its partners are evaluating a potential development hub in Mexico, using infrastructure sharing to lower the development cost.
Will Repsol stay in Mexico, or will it cash out? Repsol is planning to list its upstream arm in the USA by “concentrating the portfolio.”
A message from AAPG Academy & Well Read
Join AAPG Well Read editor, Shangyou Nie, and Energy Intelligence's Monica Enfield as they discuss the year's top upstream mergers and acquisitions, plus give their predictions on what lies ahead in the deal environment for the remainder of 2024 and into 2025.
Federal Judge James Cain from Louisiana ruled in favor of the plaintiffs in a lawsuit brought by 16 Republican-led states against the Biden Administration. The ruling blocks the Department of Energy’s pause to approve applications for LNG export projects to non-FTA countries.
About the pause:
On 26 January, the Biden Administration announced a temporary pause on pending approvals of LNG exports to non-FTA countries.
DOE Secretary Jennifer Granholm said during CERAWEEK that the reason for the pause is to update a review evaluating the economic and social impact of increased LNG exports.
In April, Brad Crabtree, the DOE’s assistant secretary for the Office of Fossil Energy and Carbon Management, told lawmakers that the DOE had plans to complete the review before March 2025.
Members of Congress have been pressing the DOE to end its LNG permit pause, alleging it to be a political move driven by extreme environmental groups aiming to stop LNG projects.
About the lawsuit:
In March, 16 Republican-led states filed a lawsuit challenging the ban, claiming it would harm the U.S. economy. The lawsuit was filed in federal court in Lake Charles, Louisiana.
The lawsuit stated that the pause oversteps the DOE’s authority under the Natural Gas Act, which requires the DOE to affirmatively demonstrate that projects are inconsistent with public interest before denying applications.
On 1 July, Trump appointee Judge Cain of the Western District of Louisiana granted a request for a stay in the suit.
Judge Cain sided with the 16 states, ruling that the pause for LNG export approval was “completely without reason or logic” and that the DOE’s actions were “above and beyond its scope of authority.”
Ruling response:
A DOE spokesperson said that it disagrees with the ruling and is evaluating next steps.
Sierra Club, an environmental advocacy group, issued a statement after the latest ruling that “expanded LNG exports are not in the public interest and the pending applications should be denied.”
What to watch:
Will the DOE appeal?
When will the DOE finish and publish its review?
How will potential LNG buyers and investors interpret this ruling?
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