Reasons Mexico’s Oil Production Has Stagnated

Mexico´s crude production peaked at 3.455 Mbopd in 2004 and has already declined to 2.568 Mbopd, (Feb 28, 2013). I believe it will not be possible to return to former production levels, nor even to the present official forecast of 3 million barrels per day, because of the following reasons:

The giant and supergiant oil reservoirs, like Cantarell, discovered more than 30 years ago,were produced
irrationally at accelerated rates and are now in an advanced stage of decline or are practically exhausted.

Other major oil fields, like Ku-Maloob-Zaap, are expected to start declining in the next few years.

The oil fields that will be discovered in the future will be smaller,more difficult and costly to produce.

To date the potential production of shale oil is not known with any certainty. Rigorous evaluation with sound
scientific, technical and economic basis will be needed before starting such development and production.

The rate of increased production from new oil discoveries will be slower than the rate of decline of existing mature
oil fields because of delays and inefficiencies in development.

Because of these considerations, I believe that neither opening up exploration and production of mature fields to private investment nor applying new technologies to development of unconventional resources (shale oil and tight oil sands) will be able to add significantly to oil production.All that can be hoped for is that the decline will abate and production will remain well above domestic refining capacity of about 1.5million barrels per day in order to avoid having to import feedstock.

Increasing investments in the belief that they will lead to increased overall production is a grave strategic error. It will continue to cause enormous value destruction for PEMEX and Mexico.

Comments and discussion of further details are welcome by contacting raulgonzalez.aspomexico@gmail.com

Raúl González García, Professional Geological Engineer
Director of Mexpetrol Argentina, 1996-1997
Sub Director of Exploration, PEMEX, 1991-1995

ASPO-USA