*

New E&P head says advancing with 'reactivation of closed

wells'

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Some 4,800 wells could be reopened for production, data

shows

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Programs to extract more barrels are expensive and

difficult

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Pemex lacks funds for these strategic projects

(Adds details on different plans to boost production)

By Stefanie Eschenbacher, Adriana Barrera and Ana Isabel

Martinez

MEXICO CITY, May 8 (Reuters) - Mexican state energy

company Pemex plans to reopen old wells in a bid to squeeze more

barrels out of them to boost declining oil production, according

to two documents and four sources, as it struggles to reach an

ambitious government target.

Pemex said in a filing to the United States Securities and

Exchange Commission published this week that it expects

production to fall to 1.58 million barrels per day (bpd) this

year rather than the 1.8 million bpd officials have consistently

touted.

It currently produces some 1.6 million bpd. Production

for the heavily-indebted company has been declining for years as

its older fields in the Gulf of Mexico, including many former

star producers, are being depleted and newer fields have failed

to compensate for it.

Angel Cid Munguia, the new head of the company's exploration

and production arm, wrote in an internal document, dated May 6,

that it was advancing with the "reactivation of closed wells"

though did not elaborate on the number.

The specifics would depend on both the risk profiles of the

thousands of wells across the country both onshore and offshore,

and which ones could ramp up production fastest, four sources

familiar with the plans told Reuters.

Pemex did not immediately respond to a request for comment.

Mexico has more than 31,000 wells both onshore and offshore,

and about a third of them are closed, data shared with Reuters

showed. More than 4,800 wells are considered to be "operational"

for hydrocarbon production.

The reactivation depends on geological information, funding,

well mechanics, and the recovery factor of each well, said one

of the sources, who has studied closed wells in detail.

The documents lacked detail on what exact technology would

be used to reactivate old wells but companies operating in other

mature fields around the globe have used specialized expensive

equipment to keep bringing hydrocarbon products to the surface

even as production slows.

The wells being considered for this strategy are for crude

oil, natural gas and condensate, said another one of the

sources, who works at Pemex, adding plans had advanced slowly

because of tight budgets at the highly indebted company.

Some of these wells had been closed because they filled with

water or had presented too low pressure, which made production

challenging because more specialized equipment was needed, the

source added.

Pemex had for the past months also been working on plans for

extensive secondary recovery methods for wells in the Gulf of

Mexico, including Ku, Maloob, Zaap, Akal and Ayastil, two other

Pemex sources who worked on a separate plan with the same aim of

boosting declining production.

While these wells do not have to be reopened, using new

production methods, they could potentially produce much more,

the two sources said, adding that in part the projects have not

moved forward because of a lack of funds.

In a separate document dated the same day, Cid Munguia wrote

that two people had already been designated for the supervision,

design and engineering of strategic exploration projects.

Cid Munguia returned to his post last week after the

surprise departure of Nestor Martinez, a former senior official

at the hydrocarbon regulator who had been appointed by President

Claudia Sheinbaum in October.

Last year, Pemex sought to defer up to 26.8 billion pesos

(then worth $1.35 billion) of spending in an attempt to

"optimize resources" in its exploration and production arm.

Pemex then argued it would prioritize investments in

higher-producing wells and defer some administrative and

production work, including covering wells and acquiring seismic

equipment needed for exploration.

In the past, there have been concerns over the management of

closed and abandoned wells. It is a legal requirement in Mexico

to safely shut wells that are no longer producing and ensure

they do not pose a risk to air, land and water.

Even so, petroleum engineers and reservoir geologists have

repeatedly told Reuters that some closed wells are having a

detrimental impact on the environment.

Reuters in 2022 reported on how some of these wells were

impacting populations in the poor southern state of Chiapas.