Mexico's Pemex Increased Gas Flaring at Top Field, Despite Pledge to Stop

(Reuters) — State oil company Pemex promised late last year that it would stop burning natural gas from a major field in southeast Mexico by mid-January, amid mounting pressure to improve its poor environmental record.

But satellite data analyzed by scientists exclusively for Reuters — as well as a visit by reporters to the site — show gas flaring from the vast Ixachi field in Veracruz state not only continued, it increased.

In January, an estimated 1.3 billion cubic feet of gas were burned from four flares at the Papan and Perdiz plants meant to process gas from Ixachi, the satellite data shows, up from 1 billion cubic feet in November when the promise was made.

Satellite images showed the largest increase in flaring was at the Papan plant.

"We have a spike in flaring in January for two of the largest flares," Mikhail Zhizhin, a researcher from the Earth Observation Group at the Payne Institute for Public Policy, Colorado School of Mines, told Reuters.

Zhizhin said an initial assessment of the latest satellite images shows the flares were still active last week.

Pemex, the energy ministry and the president's office did not respond to requests for comment. The hydrocarbon regulator declined to comment.

Reuters reported last year that Pemex, the world's most indebted oil producer, had increased environmentally harmful flaring as it sought to reach President Andres Manuel Lopez Obrador’s ambitious production goal of 2 million barrels per day – a 12% increase from current levels.

The pledge to stop burning gas at the Ixachi field came after months of pressure over flaring from the hydrocarbon regulator, environmentalists and Mexico’s most important trade partner, the United States.

Pemex has promised several times to bring down flaring rates and eventually meet limits set by the regulator, saying that its environmental record was also putting at risk access to financing.

However, two sources at Pemex and the energy ministry said no significant steps had been taken to halt the flaring at Ixachi since last year's pledge. The two sources and three others at Mexico’s energy regulator said the Nov. 18 promise to process the gas instead of flaring it was unrealistic because the infrastructure at the Papan and Perdiz plants was incomplete, and they lacked sufficient capacity to handle the vast quantity of gas.

Infrastructure investments such as those needed to process gas into a form fit for distribution take a long time. The process involves building units to remove contaminants and break the gas down into different components, as well as storage and transport infrastructure.

When Reuters visited the sites of the plants outside the town of Tierra Blanca in mid-February, a month after the deadline set by Pemex, four giant flares were burning. One of the flares at Papan — a yellow flame atop a slim, tall tower — was visible from about 10 kilometers (6 miles) away.

Two more sources at the Papan plant — which is connected to Perdiz — said both installations are operating well below planned capacity, flaring most of the gas rather than processing it. The sources spoke on condition of anonymity since they are not authorized to speak to the media.

Five locals living and working nearby said the flares were almost constantly lit.

Flaring not only emits harmful greenhouse gases that contribute to climate change, it wastes a valuable resource that could help reduce costly imports from the United States.

Still Flaring

Pemex CEO Octavio Romero shared a video message on Nov. 18 promising the company would start processing 300 million cubic feet of gas per day from Ixachi, rather than flaring it.

The video shared on Twitter showed Romero and other executives from Pemex and contractor Nuvoil, which is developing the Papan plant, standing in hard hats at the facility and explaining how they would stop the flaring by Jan. 15.

Nuvoil did not respond to a request for comment.

Lopez Obrador has staked a large part of his legacy on reviving Pemex, once a powerful symbol of energy self-sufficiency.

Although Pemex’s production is around half its level of 20 years ago, it remains by far the largest contributor to state coffers in a country where millions live in poverty.

In 2018, Lopez Obrador celebrated Ixachi as the biggest energy find in decades. But Pemex has repeatedly missed gas production targets, blaming it on missing infrastructure.

Two senior company sources told Reuters last November Pemex would rather pay fines than deal with gas flaring problems.

The three sources at the regulator, all familiar with classified development plans for Ixachi, said that infrastructure to capture, process and transport or store the gas should have been in place before 2020 under the plans.

But the company instead prioritized the production of condensate — similar to a very light crude oil, buried in the seams of rocks along with the gas. Pemex counts the condensate towards its 2 million bpd production target, unlike gas.

That resulted in excessive flaring of gas - which comes to the surface at the same time as the condensate - because the adjacent plants lack the necessary infrastructure, and there is no possibility to store the gas in its raw form.

Completing the infrastructure would have meant halting condensate production temporarily and that would have taken Pemex even further from the president's production target, according to the sources at Pemex, the energy ministry and the regulator.

Pemex's updated business plan for 2023 to 2027, released in December, reiterated promises to reduce emissions but focused more on oil and gas production as well as refining.

In August 2022, the regulator documented wrongdoing at the Ixachi field following at least two fines for mismanagement and found Pemex in breach of its own development commitments.

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