Mexico Oil Watchdog Sounds Alarm

Regulator Highlights Disaster Risk in State-Owned Pemex’s Plans to Drill Ultra-Deep-Water Wells

Mexico’s oil regulator is sounding an alarm over plans by the country’s state oil monopoly to drill two ultra-deep-water wells near U.S. waters this year, saying neither the company nor his commission is prepared to handle a serious accident or oil spill there.

The regulator’s chief, Juan Carlos Zepeda, said Petróleos Mexicanos has relatively little experience with deep-water drilling, much less with the ultra-deep wells—those at depths exceeding 6,000 feet—that it could tackle as soon as next month. Pemex plans to drill as many as six deep-water wells this year, including the two ultra-deep wells, more than at any time in its history.

Mr. Zepeda said his fledgling National Hydrocarbons Commission also is out of its depth, with a staff of just 60 and a budget of $7.3 million, about 2% of what its Washington counterpart spent last year.

While U.S. offshore inspectors zip to faraway drilling platforms on helicopters, Mr. Zepeda said in an interview, “all I have is a borrowed car,” an old Nissan Sentra belonging to Mexico’s Energy Ministry, which has the ultimate say about where the oil company can drill.

Pemex, as the oil company is known, says it seeks to abide by the commission’s rules, and is confident it can tackle the ultra deep-water challenge.

Experts say that Mr. Zepeda is speaking out publicly in an effort to overcome resistance to oversight among top officials at Pemex and in the Energy Ministry, which hope off-shore discoveries will revive Mexico’s declining oil industry. Mr. Zepeda’s agency was formed in 2009 to allow more technical and independent oversight of the industry.

Mr. Zepeda’s warnings follow the Deepwater Horizon blowout, which killed 11 workers in April 2010 and unleashed the worst offshore oil spill in U.S. history. That, in turn, has led to increased U.S. concern about offshore drilling outside American waters. Last month, U.S. Interior Department officials inspected a drilling rig scheduled to operate in Cuban waters to assuage concerns by Florida residents.

The U.S. Coast Guard declined to comment specifically on Mexico’s deep-water plans, but said that its officials and those from Interior hold regular discussions with Mexico on environmental cooperation, and the countries have a long-standing relationship on oil-spill response.

WSJ