[John_A]

$this->bbcode_second_pass_quote('ROCKMAN', '
')And let's not forget that although Mexico's oil production is in decline they still produce about 3.5% (10th largest) of the oil on the planet. Which is about 1/3 as much as the US produces. Not huge but not insignificant either.

[westexas]

Re: pstarr

Note that you are plotting gross exports. Net exports, taking into account product imports into Mexico, were only 0.72 mbpd in 2012, per EIA data. And as noted above, I estimate that their post-2004 CNE (Cumulative Net Exports) are about 75% depleted, as of the end of 2012.

[ROCKMAN]

Dude – Sorry. Easy mistake after hearing the conservative BS all these years about the damn envirowackos holding us back by not letting us build new refineries. In reality while we haven’t built many new ones in the last 40 years we continually upgraded the existing ones to deliver the refining capacity we needed.

Pstarr – IMHO our “China Syndrome” (Chai-T) is one of the greatest energy stories not being told. So much emphasis on how much oil the US is producing, how much additional oil there may to develop around the globe, the possibility of “US energy independence”, etc. so no one is paying attention to how the control of future oil is changing significantly. And then add westexas’ ELM to Chai-T and it’s easy to see the storm just over the horizon IMHO. Remember our complacency/panic duality. PO isn't an important factor to an economy that has access to the oil it requires. That bear race syndrome again, ya know. LOL

Actually I may have a tendency to focus on access issues more than others even in the oil patch. My second job was working for the exploration arm of a NG pipeline company. They made the bulk of their revenue by transporting, for a fee, NG belonging to others. IOW they didn’t buy or sell NG. They formed the exploration company to get the call on the NG. The “call” is the option to transport all the NG a well produced including the percentage the company didn’t own. Eventually this company went under and was merged with another p/l company because they didn’t have access to enough NG to transport. I'm currently in an exploration JV with an aluminum plant that has the call on all of our production. Having call is different than right of first refusal but a similar dynamic.

Even more odd is how the rest of the world seems to be ignoring these dynamics. I suspect the US won’t be affected as badly as many of the other developed economies. In particular the EU and England seem most vulnerable. For instance the EU doesn’t have nearly as much energy waste to cut as the US. And England appears trapped (at least for the moment) by its anti-coal treaties with the EU. And neither have the political/economic clout of the US.

John – I think a few folks took the sudden decline of Cantarell Field as a “Bridge too Far”. A nasty hit to Mexican production but not the end of life as they know it. I think the bigger blind spot is that while Mexico is a major oil exporter to the US they were not nearly as vital as a net energy exporter to us given how much refined products we shipped back to them. They receive about half the value of the energy they ship to us back in the form of those products. And at the same time are increasing their import of US NG.

[John_A]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('John_A', '')$this->bbcode_second_pass_quote('ROCKMAN', '
')And let's not forget that although Mexico's oil production is in decline they still produce about 3.5% (10th largest) of the oil on the planet. Which is about 1/3 as much as the US produces. Not huge but not insignificant either.

[TheDude]

Matt said that in 2008 Mexico would cease exports at the end of 2009. Why, I couldn't tell you. Nobody reasonable would make such a prognostication, but there you go. Some wondered during the Deepwater Horizon incident if he weren't losing his grip a bit. Or he was succumbing to being a full on alarmist. Who knows.

He said that on the Financial Sense Newshour, hardly "telling it to the world." JD handily provided a link to the interview, as well as letting us know how bored he is with peak oil. To quote the Church Lady: Isn't That Special?

SATAN!

[ROCKMAN]

Dude - I knew Matt but not very well. Towards the end folks that did know him well were becoming concerned about his state of mind based on a variety of his statements that were never made public.

OTOH, so what? A guy makes a prediction and it turns out to be wrong. Despite what the church may claim even the Pope screws up now and then. LOL. We've all seen this BS before: one person ends of making a mistake about one aspect of PO and the entire issue must be wrong. I find it's best to just ignore folks who follow that line of "logic".

[John_A]

$this->bbcode_second_pass_quote('TheDude', 'M')att said that in 2008 Mexico would cease exports at the end of 2009. Why, I couldn't tell you.

[agramante]

Dude- (by the way, I love that handle, in part because it forces Rock and westexas address you as "Dude"--two guys who I doubt had ever called anyone "dude" in their lives before now. Duuuuuuude.) And Rock too, since you knew Simmons and referenced his state of mind.

A family member who knew Simmons at least reasonably well said he was quite a drinker. (That's not a surprising trait in an imaginative, highly intelligent entrepreneur.) There might well have been some drama in his life or inside his head (or both) during the time he was making all of those strange pronouncements. I do recall one interview he gave about the Horizon where he repeated, perhaps a dozen times, that the rig had only 700 gallons of fuel aboard, which meant that it was well oil which was burning. He was right about the burning well oil, of course, but he was a little off about the fuel on board the rig. I can't imagine a DP-dependent rig would allow its fuel level to go as low as 700 gallons. The Deepwater Horizon had the capacity for 700,000 gallons of fuel.

Was he deliberately misinforming the interviewer? Was he just stone drunk? It was hard to tell since I hadn't heard him speak often, but he did seem to be talking in circles. And that interview was unfortunately par for the course for him about then.

[westexas]

However, the key point of course is that our global supply of net oil exports is the sum of net exports from oil exporting countries that will generally, based on recent case histories, sooner or later demonstrate the kind of net export declines that we have seen in Mexico, where an eight year 24% decline in production corresponded to a 59% decline in net oil exports. And as noted above, a direct implication of "Net Export Math," is that Mexico's estimated post-2004 CNE (Cumulative Net Exports) depletion rate is about 18%/year.

Here is a link to my post up the thread that shows remaining estimated post-Index Year CNE for various regions:

an-update-on-mexico-s-net-oil-exports-t68490.html#p1154771

As noted in this post, by definition we are depleting the remaining post-2005 supply of Global and Available CNE. The key question is the rate of depletion, but my premise is that we are only maintaining something resembling "Business As Usual," because of huge, and almost totally overlooked, rates of depletion in post-2005 Global and Available CNE.

[TheDude]

From Aug 10th: Mexico’s oil industry: Unfixable Pemex | The Economist

$this->bbcode_second_pass_quote('', 'M')exico’s government says it will shortly unveil big energy reforms. These may include changing the constitution to relax Pemex’s monopoly on oil production. As an indication of how politically sensitive this will be, the presidency let speculation grow that the reform would be announced on August 7th, only to admit the day before that it was not ready. Not only is it unclear how far the reforms will go, such is the state of Pemex that some doubt it is reformable at all. Bernardo Minkow, a former consultant at McKinsey, says it is so complex and poorly governed that it is “very hard if not impossible to fix”.

Its first problem is structural: it has never been treated as a profit-making company. Astonishingly for a monopoly that drills every barrel of oil in Mexico at an average cost of less than $7, and sells it for around $100, it lost an accumulated 360 billion pesos, or $29 billion, in the five years to 2012 (despite a small profit last year). This is partly because although its oil-and-gas-production side makes a fat profit, its refining business loses a fortune, and its petrochemicals division is also loss-making. Worse, the government sucks out cash to compensate for the lack of tax revenues it collects in the rest of the economy. Last year 55% of Pemex’s revenues went in royalties and taxes. This perpetual drain on its cashflow means its debt has soared to $60 billion. The hole in its pension reserve is a whopping $100 billion.

[ROCKMAN]

Dude - “This is partly because although its oil-and-gas-production side makes a fat profit, its refining business loses a fortune, and its petrochemicals division is also loss-making." And as a result of their refining biz running so badly last time I saw the numbers Mexico was spending 1/3 of the revenue it was getting from oil sales to buy and import refined products...mostly from the US. Add that sucking sound to the monies the govt pulls out of PEMEX it's a wonder they aren't deeper in debt. But part of the reason for the debt not being bigger is PEMEX being way behind on big capex projects like DW GOM development.

And again it's the refining angle that I think the Chinese could play so well with the Mexicans. Pay Mexico what it gets from US refiners but crack the oil in Mexico and give them their share at cost. That alone could save them $billions per year. And the latest chatter: if the Chinese build any new Mexican refineries to the right specs Mexico/China might start importing Eagle Ford Shale oil. Not that crazy an idea when you consider at least 50,000 bbls of EFS oil per day are being tankered to east coast Canadian refineries today because they can make much better spreads than Gulf Coast refineries. The Mexico/China link may also explain China's proposal to spend $1 billion restarting a shutdown refinery on the Caribbean coast of Coast Rica. Limon is not very far from Mexico’s big offshore field. Also not very far from Corpus Christi from where that EFS oil is being shipped all the way to eastern Canada.

[TheDude]

Pemex is setting up a subsidary co to work on shale in the US, too, picking up some experience in the process, with any luck. Props to Lozoya for trying something, anything. I've read here and there that their own onshore hasn't been explored adequately though, no surprise in a company with so many shortcomings. Wonder which avenue would be best to go down first. Shale or 3D prospecting seem like better prospects to me than attempting to go into the DW GOM.

[ROCKMAN]

Dude - Difficult to say...I don't know enough Mexican petroleum geology to appreciate the onshore potential. But the DW GOM may be huge. And oddly DW production takes a lot less infrastructure to develop the same amount of reserves onshore. And lack of ability by Pemex won't hold them back: all it takes is a far checkbook. China could be a big help. There are enough hired guns and equipment available for them to move fast into DW. I don't know if they've been delivered yet but México had three new drillships on order.

But that would requires Pemex to give up a lot of day to day control. Even with all the "we're going to change the playing field" chatter I suspect getting Pemex to go along might require a lot more than talk.

[ROCKMAN]

Mexico's Pemex to Pay Income Tax on Exploration, Drilling

From http://www.rigzone.com/news/oil_gas/a/1 ... n_Drilling

"State oil monopoly Pemex would pay income tax on exploration and extraction of oil and gas under new fiscal rules in the government's proposed energy sector overhaul. The proposal unveiled by President Enrique Pena Nieto on Monday calls for the government to open the oil sector to allow private companies to share profits, but not have a stake in crude as many companies had hoped. The reform would ease the financial burden on Pemex, lessening the amount used to prop up the government and using the leftover money to reinvest in the company or to be paid out as a dividend for the government to invest in public spending. …the changes would bring Pemex into line with rules that govern other state-run oil companies like those in Brazil and Colombia, which have both successfully changed their lumbering oil monopolies."

The aspect of companies sharing profits but not getting direct ownership of the crude may have significant implications when it comes to US public companies not being able to compete effectively against China.

[dolanbaker]

$this->bbcode_second_pass_quote('', '
')http://www.bbc.co.uk/news/business-25341887
Mexico's Senate has approved a measure to open the state-run oil fields to foreign investment for the first time in 75 years.

The measure would let private firms explore and extract oil and gas with state-run firm Pemex, and take a share of the profits.

It now moves to the lower house to be voted on, where it is expected to pass.

President Enrique Pena Nieto wrote on Twitter that it was "a significant decision for Mexico".

[Subjectivist]

$this->bbcode_second_pass_quote('dolanbaker', '')$this->bbcode_second_pass_quote('', '
')http://www.bbc.co.uk/news/business-25341887
Mexico's Senate has approved a measure to open the state-run oil fields to foreign investment for the first time in 75 years.

The measure would let private firms explore and extract oil and gas with state-run firm Pemex, and take a share of the profits.

It now moves to the lower house to be voted on, where it is expected to pass.

President Enrique Pena Nieto wrote on Twitter that it was "a significant decision for Mexico".

[Synapsid]

For all:

Bloomberg: Mexico's Senate has passed the reform measure that will allow foreign firms into production of oil and gas, along with other measures. It now goes to the lower house where it's expected to pass.

The bill lays out changes to Mexico's constitution that, among other things, will allow foreign companies to book reserves instead of just being paid money. Increasing reserves is what Wall Street goes by in directing investors, according to a well-known oil-industry plant on this site (he knows who he is) so a change of this sort is expected to lead to a great increase in foreign interest in Mexico's petroleum potential.

Pemex, the NOC, has seen a 25% decline in production over the last eight years, and foreign investment and expertise are greatly needed to get el Oilpatch back on the rails.

[Synapsid]

The lower house in Mexico's government has now passed the bill to allow foreign companies into the oil industry, according to BBC.