Resource World Magazine

o c t o b e r / n o v e m b e r 2 0 1 6 www.resourceworld.com 59 International Frontier off to Mexico by Bruce Lantz International Frontier Resources Corp. [IFR-TSXV] has shifted focus south of the border – the Mexican border, that is. The company has projects in the Northwest Territories, Alberta, northwest Montana, and now Mexico. The August 26 announcement that Tonalli Energia, the company IFR formed with Mexico's Grupo Idesa, had been granted a licence to develop and produce petrochemicals. "It's an important milestone," IFR President Steve Hanson said. "We spent two years investigating opportunities in Mexico and now we can be an operator – one of the first foreign upstream com- panies operating in Mexico. We're highly focused on Mexico now. It's our number- one priority." While Mexico hasn't received much industry attention, that changed when the country denationalized the oil and natural gas resource sector in 2014, prom- ising industry reform, transparency and the utilization of best practices from around the world. A total of 914 oil and gas blocks have been opened in the first of four rounds of bidding from 2015-19. The Tecolutla Block was awarded to Tonalli in the first round of bidding in almost 80 years on Mexico's oil and natural gas 'mature fields'. Hanson said the government's move, designed to rejuvenate declining pro- duction and develop new fields, ensures significant foreign and even local invest- ment lured by what should be lower operating costs. "Time will tell, but in this current global environment, lower costs are attractive." Tecolutla is a 7.2 km 2 block in the Tampico-Misantla Basin in Veracruz State. The producing carbonate oil reservoir in the Tecolutla Block is the El Abra forma- tion at a depth of 2,340 metres. 3D seismic has been acquired over the entire block and seven wells have been drilled into the producing reservoir in previous years. Peak production of more than 900 barrels a day occurred in 1972 from three wells, with one producing well remaining as of December 2014. Tonalli's operating team will deploy advanced carbonate drilling, completion and recompletion techniques, in the ini- tial 1-2-year assessment period spending just under US $6 million to meet licence requirements, and using labour mix of US, Canadian and Mexican workers. In the future, they plan to pursue other onshore blocks, Hanson said. "We believe we have the right team and we aim to be a leader in the Mexican oil and gas busi- ness." Hanson said this could be "one of the greatest energy opportunities globally" and indicated he expects "hundreds" of fields to eventually be available. "The first mover advantage is key," he said, explaining it gives his company a solid foothold in the Mexican indus- try, the ninth largest in the world. "It allows us to establish a solid foothold and develop a relationship with the Mexican government." Tonalli is in a 90-day transition period with Pemex to assume full operatorship of the 100%-held Tecolutla block. Field development planning has begun, includ- ing additional geological and geophysical evaluation, social and environmental base- line studies, well workover programming, horizontal well planning, production facil- ity design, and permitting. These efforts will lead to existing well workovers expected to start, subject to government approval, in late 2016 to bring production back on stream, with the first horizontal well to be drilled in H1 2017. n Oil & g a s

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