PEMEX - Cantarell Output Down 34% YOY In May - Biggest Drop Since 1994 Hurricane Shutdown - BBerg

[hatrack]

July 7 (Bloomberg) -- Crude output from Mexico's Cantarell, the world's third-largest oil field, is falling at the fastest pace in 12 years as investment limits keep state-owned Petroleos Mexicanos from fully exploiting deposits and finding new ones.

Production at the Gulf of Mexico development dropped 34 percent in May from a year earlier, the biggest decline since October 1995, according to data compiled by the government and Bloomberg. That was when Hurricane Roxanne's 131 miles-per-hour (114-knot) winds shut down offshore wells for a week.

Seven decades after Mexico banned foreign oil investment, President Felipe Calderon is pressing lawmakers to allow Pemex, as the state energy company is known, to hire outside producers to help find and pump petroleum. Cantarell's decline is costing Pemex $20 billion a year in sales at a time when oil prices have never been higher, and the company lacks the funding to find enough new deposits to keep reserves from dwindling.

``We are at the worst time right now of the decline,'' David Shields, an energy analyst and publisher of Mexican oil magazine Energia, said in a July 1 interview. ``They should have been developing the fields to be sustainable.'' Falling production is curbing exports to the U.S., which buys about 80 percent of the oil Mexico sells abroad. Sales to the U.S. declined to 1.07 million barrels a day in May, the lowest since November 1995.

EDIT

http://www.bloomberg.com/apps/news?pid=20601087&sid=aQF381AACFAI&refer=home

On edit: tweaked headline.

[tama]

1. Hilarious!

"They should have been developing the fields to be sustainable."

Yup, the miraculous technofix of White Man Oil Company will allways find a way to make a peaked oil-field in decline produce more and more into eternity, ie. "sustainably"... (sigh)

[pscot]

2. I've seen this assertion a number of times, now

i.e., that the decline from Pemex is due to poor planning, inefficient exploitation of known reserves and inadequate exploration of areas known to hold oil. Is any of this true? Or are the Mexicans just in denial?

[phantom power]

3. I think of it as a half-truth.

I think Cantarell caught them with their pants down. There is new oil they could have, in theory, been going after, that would have helped temporarily. So in that sense it was poor planning.

In the bigger picture, there are no more fields the size of Cantarell. The remaining oil comes in smaller fields, that are more expensive to extract. Assuming that anybody could have predicted when Cantarell was going to collapse, better planning could have delayed what's happening now, but not forever.

[bhikkhu]

4. In case anyone doesn't know how important Cantarell is:

The government of Mexico derives 70% of its revenue from Cantarell.

The US imports 15% of the oil it consumes from Mexico, largely from Cantarell. The current decline projections make Mexico a net importer of oil around 2013-2015.

Thats not a long time, and regardless of what oil prices are if we lose 15% of our supply it will not be an easy thing. Couple this with our neighbor de-funding the bulk of its government and things get pretty hard to predict; anything resembling "status quo" seems highly unlikely.