[Daniel_Plainview]

$this->bbcode_second_pass_quote('BrazilianPO', 'P')EMEX has just released new numbers for September 2008.

September report

Total production down to 3,080 mbod from 3,532 a year ago: 12.8% reduction year-on-year.

Production offshore (think Cantarel) is down to 2,169 mbod from 2,613: 17% reduction year-on-year.

[newman1979]

Tuesday, 21 October, 2008, 23:20 GMT | $this->bbcode_second_pass_quote('', '
')
Online-editor
Anthea Pitt

Sales & Marketing
sales@upstream Pemex output takes a slide
News wires

Mexican state-run producer Pemex has seen its monthly crude output fall to its lowest level since November 1995 on decreased demand from US refiners and declining output from the Cantarell field.


Production fell to 2.722 million barrels per day in September, a decline of 14% year-on-year, Pemex said. The company pumped 2.5 million bpd in November 1995.

Pemex shut in wells that produced about 250,000 bpd on 23 September after US refiners struggled to restart because of Hurricane Ike. The company resumed full output on 9 October.

Output at Cantarell fell 36% to 940,020 bpd, the third consecutive month below 1 million barrels.

Declining output is costing more than 275 billion pesos ($21.2 billion) in sales this year and threatening Mexico's budget, as 40% of the government's revenue comes from Pemex royalties, a Bloomberg report said.

Exports fell 37% to 1.06 million bpd. Pemex closed its export terminals for a prolonged period in September because of storms, damage to ship channels and repairs.

Natural gas output in September reached 7.02 billion cubic feet per day, a gain of 15% from a year ago, matching a record attained in June.

Pemex produced 65% of its oil from Cantarell in March 2005, its peak. Cantarell now accounts for 35% of Pemex's total output

[ROCKMAN]

I only have unverified reports from expats who have worked in Cantarell but the rapid decline fits those stories. Most know PEMEX has been pumping nitrogen into the field for years to maintain the reservoir pressure and effectively push the oil towards the producing wells. But as this nitrogen gas cap gets close to a producing well much of the production stream includes increasing amounts of the nitrogen. This "gas coning" is made worse by producing at excessive rates, which has been reported to be happening for years. Thus operators end up in the proverbial spot between a rock and a hard place: decrease rate and increases ultimate recovery. But with so much of the economy dependent on that cash flow there would be great pressure to increase production rates even though that shortens field life and ultimate recovery.

[RSFB]

What is Mexico planning to do when they run out of oil money?

[ROCKMAN]

The current Mex gov't has been trying to modify their constitution which effective kills the opportunities for outside capital to invest in oil development but has had little success to date. PEMEX has been begging, with little success, for decades for a bigger share of their revenue stream so they could develop a bigger reserve base. Even if by some miracle there were a huge capital infusion into PEMEX and there were opportunities out there, the time lag would still be too great to prevent significant social upheaval IMO. The leftists, which narrowly lost the last election, are dead set against outside operators drilling in Mex. This will work greatly to their advantage. As the current administration fails to maintain the social safety net the left can blame them and probably take control in the next election cycle. How they then handle the problem is anyone's guess. Overall, life in Mex for Jose Six-pack isn't that good today. Add the drop in income earned by Mex workers in the US to a cut back in social support from the Mex gov't life in Mex could turn into one of those worse case scenarios discussed here. It may be truly heart breaking to watch from this side of the Rio Bravo.

[galacticsurfer]

I've been asking myself the same question.

Since Mexico had a revolution in 1910-21, while the USA was essentially at peace and in prosperity(barring WWI short term involvement) and USA had few latin American immigrants or trade then no large complications arose.

Nowadays however USA and Mexico are both hitting their stride for crises at the same time. If we buy the idea of John Xanakis (Generational Dynamics) and Strauss and Howe (Fourth Turning) then every 80-100 years a country hits a major crisis which ends in war. If USA and Mexico hit these crises simultaneously and as it appears that due to massive economic and population overlap that what happens in the one country effects the other directly (Maquiladoras factories, immigration as work and repatriation of funds, NAFTA trade, drug dealing).

So we can see USA/Mexico/Canada as a single crisis area with a feedback loop happening pulling each area down the worse the other area is effected. Mexican oil is needed in USA nad USA gasoline in Mexico. USA cheap labour is needed in USA and repatriations in Mexico. The Gulf of Mexico is really one body of water and the whole southwest region is one economic region. The drug trade has huge effects on both sides of the border.

Presuming a global financial crisis and PO crisis over the next 5-10 years similar to Great Depression and WWII then the USA must act with full spectrum dominace to prevent foreign incursions from Russia/China, etc. over Arctic or Atlantic areas so Canadian/Mexican indpendence are not realistic. Of course if they cooperate voluntarily ok and I think they will. The current credit crisis has shown everyone pulling together. Perhaps there will be no enemy this time and no war but it seems hard to believe that nobody in a PO/Credit Crisis Great Depression will lose their nerves and get angry over Taiwan or Kashmir or Crimean ports, Georgia etc. and start the ball rolling (like WWI with the prince being shot in Sarajevo).

[Maddog78]

Pemex thinks they can halt the slide in production?


$this->bbcode_second_pass_quote('', 'P')emex can 'triple' drilling program says official

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Nov. 5 -- Petroleos Mexicanos could triple the amount of its exploratory drilling to an average of 1,800 wells/year from the current 600 as the result of new contracting arrangements approved under reform legislation, according to a senior company official.

Pemex Exploration & Production (PEP) director Carlos Morales Gil told Mexico's El Financero newspaper that the new contracts provided for in the Pemex law—Regulating Article 27 of the Constitution—and to its amendments "are going to allow us to quicken the pace and build a stronger Pemex."

In this regard, Morales told the paper that, with the substantial improvement in Pemex's ability to execute projects on land and offshore, the state-owned firm will be able to replenish 100% of its reserves by 2012 and begin developing deepwater deposits in 2014-15.

The boost in exploration capacity will increase output in the medium term, so that it is back to more than 3 million b/d, the level of Pemex production until 2007.

"We're going to be able to generate more value and more oil revenue," Gil said, explaining that the new legislation will enable Pemex to offer incentives that will improve services from contractors.

In particular, Morales said the new contracting arrangements would provide an additional incentive for companies to work hard, improve, and be more efficient, creating more value for the Mexican people.

Morales said the new legislation empowers PEP to award contracts directly under certain conditions, as when safety and protection of the environment are involved or in the case of risk or emergency.

All other contracts will be awarded under the traditional arrangement of competitive bidding, he said.

Greater flexibility
Morales emphasized that Pemex will be able to reach its targets of higher production and reserves because it also will have greater flexibility and capacity to manage its budget more independently.

He added, however, that greater accountability and transparency would also be required of it.

He said the country would likely not have to import crude oil to meet its needs.

"We don't see the possibility of Mexico becoming an importer. Pemex is producing 2.8 million b/d, which is far more than we consume—1.3 million b/d on average."

Morales' views largely echoed those of Energy Secretary Georgina Kessel Martinez, who told delegates at a conference: "As a result of the reform that has been approved, the country would reverse the decline in crude oil production that we have seen in recent years."

Kessel said that, due to the new legislation, Pemex "will be able to develop highly complex deposits, such as Chicontepec and the deep waters in the Gulf of Mexico, in an effort to boost output, the rate of reserve replenishment, and the rate of recovery at our deposits."

[Tyler_JC]

That 2.8 million barrels a day in production wasn't supposed to happen until 2022.

That graph was a prediction 2004/2005.

Look where we are now.

Be afraid, be very afraid.

[vtsnowedin]

How do you replenish a reserve? You can develop a field to bring a new portion of your reserves on line to replace fields that have been pumped dry. But that does not Replenish anything. Or you could redrill and repressurized an old field to recovere oil missed with older technology but that doesn't create any new reserves just improves the spread between total and recoverable.
Not my field but I think he misspoke.
At any rate it looks like they are going to do their best to run out of oil at the same time as the rest of the world. The cliff gets steeper.

[Daniel_Plainview]

Perhaps the North Sea should also halt its slide in production.

[TheDude]

Note the spike in drilling in the US in the late 70s, yet no big onshore fields have been found, and shallow offshore has largely been covered as well. But I've heard that much of Mexico hasn't been adequately wildcatted, there could be a big field waiting out there; also looking at data from Schlumberger, the rig count has been gaining steadily through the last decade, so they may have a surprise in store.

Morales betting the bank on demand begats supply is him putting on the economist's hat though. He left out the fact that Mexico already imports much finished product as well.

[Plantagenet]

In July 2008, daily production rate at Cantarell fell sharply by 36 percent to 973,668 barrel from 1.526mpbd.[5] This rapid decline since the peak in 2004 is postulated to be a result of production enhancement techniques causing faster oil extraction at the expense of field longevity.

------------

Nitrogen injection was used to enhance production at Cantarell, leading to very rapid declines after the peak in 2004. If Canarell production continues to collapse, Mexico will lose the vast majority of the oil production from Cantarell in 5-10 years.

[SteinarN]

New monthly report for october is released.

The total october production is 3.12 mmbpd, down from 3.366 mmbpd in october last year.

Edit:
Updated faulty link.

[ROCKMAN]

S,

Maybe it's just me but I get a message that your link address is incorrect.

[SteinarN]

You are absolutely right, ROC.

Corected faulty link.

[eastbay]

2.757 mb/d of crude oil production for October, 2008.

Wow. Last October it was 2.99 mb/d.

Their days are numbered.

That's Change You Can Believe In!

[skeptik]

$this->bbcode_second_pass_quote('RSFB', 'W')hat is Mexico planning to do when they run out of oil money?

[bratticus]

$this->bbcode_second_pass_quote('skeptik', '')$this->bbcode_second_pass_quote('RSFB', 'W')hat is Mexico planning to do when they run out of oil money?

[Revi]

Pobre Mexico, tan lejos de dios, y tan cerca a los estados unidos.

They have a saying in Mexico that when the US catches cold, Mexico gets pneumonia.

I think it will end up being really bad in Mexico. Fortunately there are places that live the same as they have for the past 2000 years, and they can survive an economic downturn.

Mexico City is another story.

[MrBean]

$this->bbcode_second_pass_quote('skeptik', '')$this->bbcode_second_pass_quote('RSFB', 'W')hat is Mexico planning to do when they run out of oil money?