Mexico oil platform fire kills five, threatens production

HOUSTON (ICIS)–A fire at an offshore oil platform in Mexico killed five workers, state energy producer Pemex said on Monday.

The fire raises questions about whether the accident will interrupt production.

Reuters reported that the accident caused Pemex to cut crude production by 440,000 bbl/day, because the company lacked natural gas to re-inject into its oil fields. Reuters cited a company document.

Bloomberg also reported that oil production fell by more than 400,000 bbl/day as a result of the accident.

Pemex did not immediately respond to a request for comment about the reports.

In a statement, the company said the fire took place at the E-Ku-A2 platform in the Ku-Maloob-Zaap field in the Bay of Campeche. The accident killed a Pemex employee and four workers from Cotemar, a contractor.

Cotemar confirmed the accident in a statement.

Pemex said the fire started on Sunday and it has brought the blaze under control.

The accident took place during scheduled maintenance, Pemex said. The company is investigating the cause of the fire, but stressed that it was not caused by a lack of investing in maintenance.

If Pemex reduces oil production, then that could limit supplies of ethane for its ethylene plants. All of Mexico’s crackers rely on ethane as a feedstock and Mexico gets most of its domestic ethane from the associated gas produced from its oil wells.

Over the years, Mexico’s oil production has fallen, causing domestic ethane supplies to drop as well.

The country now has an ethane shortage and relies on imports from the US to make up a portion of the deficit.

Mexico lacks the capacity to import more ethane from the US, so additional shipments cannot offset the loss of any production caused by the fire.

It is the second fire to hit Pemex during the past two months.

In July, a pipeline that fed into the Ku-C platform wells in the Ku-Maloob-Zaap field had ruptured on 2 July. The company estimates that the accident affected oil production by 5m bbl/day.

The two accidents raise questions about whether Pemex can reverse the declines in the country’s oil production and increase domestic ethane supplies to its petrochemical industry.

Mexico’s current administration has paused the energy reforms that would have allowed other companies to develop its fields. For now, Pemex will be responsible for new oil and gas development.

Additional reporting by Alex Snodgrass