As Cantarell collapses, Pemex tries to regroup

[pscot]

http://www.bloomberg.com/apps/news?pid=20601086&sid=aeYpvgsAXJQI

Sept. 4 (Bloomberg) -- Mexico is “evaluating” its $11.1 billion onshore Chicontepec oil project after production failed to meet targets, Energy Minister Georgina Kessel said.

“Chicontepec has not been generating the production we expected and we have to evaluate with Petroleos Mexicanos how the field is working, and our strategy moving forward,” Kessel, who is also the chairwoman of state-owned Pemex, said yesterday in a telephone interview from Monterrey, Mexico.

Chicontepec, which stretches across Mexico’s Puebla and Veracruz states, will produce 60,000 barrels a day by the end of the year, down from a previous forecast of 72,000, according to Pemex. The company is being “too optimistic” about the field, board member Fluvio Ruiz said in a May interview.

Pemex Chief Executive Officer Jesus Reyes Heroles has said the company needs to drill 1,500 wells a year at the field to meet its production goals. Mexico is counting on Chicontepec to help offset output declines at fields such as Cantarell......Cantarell peaked in December 2003 at 2.2 million barrels a day, about a third of all the crude Pemex pumped that month. Last month, Cantarell produced 588,210 barrels a day, or 23 percent of total output. That’s the lowest amount since 1990 when Pemex began publishing monthly production data

[Buzz Clik]

1. 1500 wells per year. Doesn't sound particularly sustainable.

[bemildred]

2. Do I read correctly that Pemex production has declined from 6.6 MBpd to ~2.5 MBpd?

Since 2003? That's a lot of decline.

[pscot]

3. That is a stunner

Especially when you consider that most of that oil was sold to us. The new offshore find that Pemex has been crowing about is optimisticly expected to yield about 600,000 bbl/d by 2020. It just drives home the point that we are not finding near enough new oil to offset declining production in existing fields.

[enid602]

4. Mexico

Unfortunately, Mexican law required that exploration/drilling be carried out by companies that are majority Mexican-owned. The Mexican Government has softened that legislation, but future oil finds will take years and years to produce.

[Nihil]

5. Well fancy that ...

> Unfortunately, Mexican law required that exploration/drilling be carried
> out by companies that are majority Mexican-owned.

... a country with natural resources that *doesn't* want to get
ripped off by exploiting multinationals ... how ungrateful!
Have they no shame?

[enid602]

6. exploited

Was the United States 'exploited' when BP announced a 4 billion bbl find 200 miles SW of Houston last week? Looks like a good deal for all involved.

[Nihil]

7. The way that BP (or anyone) behaves when working off the USA ...

... and the way that Exxon (or anyone) behaves when working off
any "minor country" are worlds apart ...

[enid602]

8. Mexico

Well, I gues Mexico´s skepticism has paid off; they´re looking at becoming an oil importing nation in just a few years.

[GliderGuider]

9. Do you think that allowing foreign drilling would prevent that ultimate fate?

[enid602]

10. Mexico

Depends on whether or not Mexico has any fields to be discovered. Most people think they do. Remember, the BP/Texas find was just a few hundred miles from Mexican waters. The real tragedy is that even if Mexico were to change its laws, it tends to take 10 or 15 years to find and develop these fields.

[Finishline42]

11. Double edged sword

Premex was not investing in new technology for finding and developing current or new fields. Most of the income from selling oil was being used to support the gov't - something like 40% of revenue comes from oil (which is a real danger to the future stability of Mexico). They probably over pumped to max current income which would decrease the overall life the field.

Foreign companies would have been more efficient but there would have been less control.

[IrateCitizen]

15. Apples and oranges, my friend. Apples and oranges.

Mexico (along with the rest of Latin America) has a long history of being exploited by outside powers for their commodities, dating back to the initial Spanish conquest of the Aztec and Inca. That is why, beginning after the dictatorship of Porforio Diaz and culminating with the Cardenas Presidency in the 1930s, Mexico nationalized their oil industry. Mexico, along with the rest of Latin America, decided that their mineral and oil wealth was going to be developed for the betterment of their country, not for the enrichment of outside interests.

Here in the United States, there is NO such history of exploitation by outside powers -- unless you consider the exploitation and conquest of Native Americans by those of European descent.

In other words, historically and culturally speaking, there is no valid comparison between the two.

[phantom power]

12. Dietrich? Crowe? Sound off! Wierzbowski?

[NickB79]

13. Game over, man. Game over!

[bhikkhu]

14. Maybe they're lucky

It looks like, whether they want to or not, they will be one of the first countries leading the world into a post-oil age. Perhaps the government will just decline unpredictably as revenues decline, or perhaps they will by necessity develop alternatives and make changes that will allow a good sustainable standard of living and population...