[TheDude]

Yeah right. That's less than Cantarell declined Jan-Mar. Oh, you Pemex yucksters!

Speaking of which here's an anecdote posted at TOD on June 3:

$this->bbcode_second_pass_quote('', 'P')emex
Some years ago I worked for about a year as a subcontractor for Pemex, so I think I have pertinent experience for commenting on Are monopolies holding Mexico back?.

I found working in a Pemex office a rather surreal experience. There are a lot of smart, competent people there. But there are also a lot of people who are totally incompetent, like the draftsman who happily admitted he knew nothing at all about drafting: he got his job simply because a relative was a union official.

Even the competent people tended to be very unproductive. Some of them were unproductive because they knew they had a secure job (because of their political or family connections) but most of them because to show initiative was to risk failure, and to risk failure was to risk losing your job. And if you are a Mexican professional in a petroleum discipline (such as petroleum engineering or the geosciences) the only potential employer is Pemex. Lose your job there, and you will have to change careers or emigrate.

Pemex is also chronically short of money, which means all kinds of shortcuts are taken, sometimes leading to accidents, but usually leading to waste of what money they do have: well bores lost due to poor quality casing or shortcuts in the mud program, dry holes due to inadequate seismic data, and projects cancelled before completion because there is no money.

In general, the overall atmosphere gives the impression that who you know is far more important than what you know. This is not necessarily part of being a monopoly, but the lack of competition certainly makes it easier for such an atmosphere to flourish.

I figured someone would laugh at that.

But there's far more than just Chicontepec going on here. A flurry of Pemex news out the past few days.

>>> Reuters <<<
$this->bbcode_second_pass_quote('', '[')b]Pemex says output from Ixtal oil field to rise
Fri Jun 12, 2009 4:36am

VERACRUZ, Mexico, June 11 (Reuters) - Mexico's Pemex said on Thursday output from the Ixtal oil field off the shore of the Yucatan Peninsula is set to rise approximately 60,000 bpd to peak at 180,000 bpd in 2010.

The field currently produces 110,000 bpd, said Pemex engineer Juan Carlos Rangel in a presentation at an oil industry conference.

[TheDude]

Robin Mills says that Cantarell's decline could be greatly reduced or even reversed if they installed simple water injection. Think about that for a minute. Might be costly but it's a technology that's almost a century old, and could do wonders for this cash cow that fills up most of the barn - yet they don't bother.

Mills is about as cornucopian as they come, too, and has been in the industry for decades.

[copious.abundance]

Here is a reprint on rigzone of the entire last WSJ article I posted.

>>> Cantarell and Water <<<

[TheDude]

That's separation, not injection; we'll see how much it helps things. Curious that they went with the N2 EOR instead of water injectors, but cost suggests itself immediately - installing a series of water injector wells around the periphery of the field would be more expensive than inject N2 straight in through existing producers and let it associate. Perhaps you have some Pemex docs that cover this.

Of course building the biggest N2 production plant on the planet couldn't have been cheap, either.

[DantesPeak]

N2 appears to have caused some other problems:



Burning money: Hydrocarbons Commission head knocks gas flaring.

$this->bbcode_second_pass_quote('', 'R')egulator slams Cantarell flaring

By Gareth Chetwynd
Monday, 15 June, 2009, 16:41 GMT

The head of Mexico’s new hydrocarbons agency has shown his organisation has teeth by slamming Pemex’s failure to exploit gas from the giant Cantarell field.


National Hydrocarbons Commission (CNH) boss, Juan Carlos Zepeda, claimed Pemex has been flaring up to 70% of the gas from Cantarell, a field which still accounts for almost a third of Mexico’s crude output.

Zepeda blamed poor planning for a situation that resulted in massive gas flaring some ten years after Pemex began injecting nitrogen to revitilise the Cantarell field.

The enhanced recovery project doubled Cantarell output to more than 2 million barrels per day by a mid-decade peak, although output is now at just 750,000 bpd, and declining rapidly.

Despite these huge investments, Pemex has moved slowly in installing nitrogen extraction capacity, and has been forced to flare gas due to the growing presence of that element.

[bratticus]

$this->bbcode_second_pass_quote('', '[')b]Mexico racing against time at Cantarell oil field

By Robert Campbell
Reuters
June 16, 2009

... skip ...

Pemex engineers said at a conference last week that the oil layer of the Akal field is shrinking by at least 4 meters (13 feet) a month as gas moves downward and water moves upward in the rock formation.

Contraction of the oil layer means many of the traditional vertical wells Pemex has used to drain Cantarell since the late 1970s are getting flooded by gas or water, which forces their closure.

To prolong the field's life, Pemex is drilling horizontal wells costing more than $20 million each. These extend hundreds of meters (feet) along the middle of the shrinking oil layer.

"Planning and execution for these horizontal wells is becoming increasingly important due to the contraction of the oil layer," said Pemex engineer Jose Lopez during a presentation on the new wells at an oil conference last week.

... skip ...

Pemex's official forecasts call for output from Cantarell to decline by 16 percent a year. Even so, the field still contains billions of barrels of recoverable oil.

... snip ...

[newman1979]

A key element in the Cantarell field is the depth of the oil column that is now contracting more than 13 feet a month or more than 156 feet a year according to the article above. As I recall, someone estimated that the field was around 800 feet three years ago. Does anyone have any new information on the present depth of the oil column?

[TheDude]

$this->bbcode_second_pass_quote('newman1979', 'A') key element in the Cantarell field is the depth of the oil column that is now contracting more than 13 feet a month or more than 156 feet a year according to the article above. As I recall, someone estimated that the field was around 800 feet three years ago. Does anyone have any new information on the present depth of the oil column?

[DantesPeak]

$this->bbcode_second_pass_quote('newman1979', 'A') key element in the Cantarell field is the depth of the oil column that is now contracting more than 13 feet a month or more than 156 feet a year according to the article above. As I recall, someone estimated that the field was around 800 feet three years ago. Does anyone have any new information on the present depth of the oil column?

[newman1979]

Secretaría de EnergíaPetróleos Mexicanos

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Pemex released its May data today. Crude oil production was down 184,000 b/d from May 08 to 2,609 m/b/d.. Exports of crude oil were down 203,000 b/d to 1,173 m/bd. Exports of crude oil to the USA were down 120,000 b/d from May 08 to1,087 m/b/d.

[newman1979]

maltose on June 19, 2009 - 4:29pm
$this->bbcode_second_pass_quote('', '<')/div>PEMEX has released Cantarell's output for May 2009. I have compiled the last 17 months. Decline,decline,decline...
http://online.wsj.com/article/BT-CO-200 ... 12840.html

1243000 1.2008
1192000 2.2008
1110000 3.2008
1074000 4.2008
1038000 5.2008
1017000 6.2008
1010000 7.2008
988100 8.2008
940020 9.2008
901796 10.2008
862060 11.2008
811000 12.2008
772000 1.2009
744778 2.2009
754063 3.2009
713036 4.2009
692925 5.2009$this->bbcode_second_pass_quote('', '<')/div> on TOD
Cantarell has fallen from 1038 m/b/d in May 08 to 692,925 b/d in May 09. 345,000 b/d less on a yoy basis or 32.5% less output in a year. Pemex must know exactly how much of the oil column is left. Certainly as the wells are plugged, Pemex knows at what level the oil is at the top and the bottom of the column. Transparency is lacking in Pemex's disclosures. It is vital that the government disclose to the public of both the US and Mexico the facts that can be readily determined and understood by the public of how long oil can reasonably be expected to be extracted from Cantarell given the decline of more than 156 feet a year in the oil column.

[DantesPeak]

Mexico will require imports for 50% of its oil products by 2010:

$this->bbcode_second_pass_quote('', 'E')IU ViewsWire
Economist Intelligence Unit
June 18, 2009

Mexico industry: Energy woes mount


Following a four-year downward trend, Mexican crude oil output fell by 8% year on year in the first quarter of 2009. At current rates of extraction, proven reserves will last only nine years. The debt-laden state oil company, Petróleos Mexicanos (Pemex), lacks the funds and technological expertise to undertake necessary explo-ration and development to replace reserves without the collaboration of external operators and investors. Yet exploitation of Mexico's natural resources remains a historically sensitive and politically charged issue; since the nationalisation of the oil industry in 1938, Mexicans have fervently guarded against attempts to open up the sector.

The case for far-reaching energy reforms has increased in recent years, not least because of the country's persistent dependence on fiscal revenue from Pemex. Since the 1979 discovery of the Cantarell mega oil field, Pemex has served as the main source of funds to finance public spending, providing between 30% and 40% of total fiscal revenue. The drain on Pemex has limited both upstream and downstream invest-ment. Despite ranking as the world's seventh-largest oil producer, Mexico imports around 40% of its petrol because of insufficient refinery capacity. Although plans announced in early 2009 to construct a new refinery in Tula (Hidalgo state) should assuage the shortfall in the medium term, Pemex estimates that imports might in-crease to 50% of total petrol consumption in 2010.

Similarly, while a decade ago the country held among the highest proven oil re-serves, a lack of investment has hampered development of proven oil fields and pre-vented exploration of new sources believed to lie principally in the Gulf of Mex-ico. Rather than replacing reserves with new discoveries, Pemex has focused on op-timising extraction from Cantarell, with low costs and minimal risk. The result has been a sustained fall in overall output.

[BrazilianPO]

Last numbers for PEMEX not looking good. All liquids production has fallen below 3Mbpd for the first time (2,991), and crude oil is going down really fast as well.

Link: http://www.ri.pemex.com/files/dcpe/petro/eprohidro_ing.pdf

Exports are also going down, as expected: 1,173mbpd.

Link: http://www.ri.pemex.com/files/dcpe/petro/evolexporta_ing.pdf

It is quite steep decline, really.

[eastbay]

http://in.reuters.com/article/oilRpt/id ... 24?sp=true


A further drop of 400,000 bbls/d and Mexico enters import land. It should occur some time next year. That means no more net oil revenue.

That, in turn, means no more functioning Mexican government. And that means chaos. I mean real chaos.

[Cloud9]

I think legalizing drugs in the U.S. would help stabilize Mexico.

[Roy]

$this->bbcode_second_pass_quote('', 'I') think legalizing drugs in the U.S. would help stabilize Mexico.

[vision-master]

Coming Into Los Angeles

[newman1979]

With the June numbers, we have 18 months of Cantarell production. June production was 658,700 b/d. Cantarell is falling around 35% yoy, and over the last 18 months, around 30,000 b/d a month. At this rate, Mexico will be a net importer of oil products within one year on a value basis. The US will lose what was its number two supplier 4 years ago and become a net exporter to Mexico even though the US imports almost 2/3 of its oil. Pemex projections do not inspire any confidence and based on their own production records, raises many eyebrows.