Mexico Pilot Project to Classify Oil and Gas Projects Using United Nations Framework Classification UNFC

Abstract

A Pilot project was initiated to classify Oil and Gas projects in 19 Blocks in Mexico using the United Nations Framework Classification (UNFC) which has a unique 3-dimensional evaluation structure with three axes: Economics, Environment and Social viability (E axis), Project Feasibility (F axis) and Geological Knowledge (G axis). The main focus was to capture the environmental and social impact on project classification and resources categorization. The Pilot project was coordinated by the National Hydrocarbons Commission (CNH) with integrated collaboration from the Energy Ministry (SENER), the Agency for Safety, Energy and Environment (ASEA), and the Petroleum Work Group of UNECE. SPE classification system (i.e. PRMS) has been mapped to UNFC. While PRMS covers oil and gas projects only, UNFC covers all resources e.g. oil and gas, minerals, renewables, nuclear, etc. The E axis uniquely differentiates UNFC from PRMS by its granular capture of social and environmental issues. A systematic approach was adopted with focus on E and F axes for which a matrix and a decision tree (‘flow chart’) were created for an efficient classification of the hydrocarbon volumes. For the G axis, the volume ranges provided by the project operators were considered to be valid. In the selected 19 blocks, there were 75 projects identified. These were located offshore, onshore and included conventional and unconventional projects with varying degrees of environmental and social issues. This is the first known exercise using UNFC for integrating social and environmental issues into oil and gas projects for hydrocarbon volumes classification and categorization anywhere globally. The outcome shows the differences between the PRMS and UNFC due to social and environmental conditions. Using UNFC for classification and categorization of all energy sources of a country, a potential tool can be created for making energy policy decisions. This may also assist in meeting Sustainable Development Goals- 2030 adopted by most countries including the UN and The World Bank. Classification using UNFC assists in identifying the key social and environmental drivers which may be impediments to moving the oil and gas volumes categorizations higher up the value chain. Added granularity in the classifications incorporating environmental and social considerations will assist project financial investment decision making through comparative assessment of objectives and priorities of national, regional and local stakeholders. To the authors’ knowledge, this is a unique Pilot project with significant value-add outcomes which can be replicated in other countries.