Mexico oil, gas continue long decline

[mooncliff]

In spite of what PEMEX said over and over in the past, doesn't look like Drill Baby Drill is going to work...

http://www.reuters.com/article/2011/...26802620110222

[GRG55]

Re: Mexico oil, gas continue long decline

In spite of what PEMEX said over and over in the past, doesn't look like Drill Baby Drill is going to work...

http://www.reuters.com/article/2011/...26802620110222

If Pemex can't drill at these prices they won't ever be able to drill.
LOL. Who cuddaknowd...

http://www.itulip.com/forums/showthr...ht=Chicontepec

Pemex to Miss 2008 Oil Target, Mexico's Kessel Says

By Thomas Black and Andres R. Martinez
May 28 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, will miss its annual production target of 3.1 million barrels a day as output falls faster than expected at its largest oil field, said Mexican Energy Minister Georgina Kessel...

...The company is trying to boost output at other fields to make up for plunging results at Cantarell, the largest offshore oil field in the world. Production at Cantarell fell 33 percent to 1.07 million barrels in April from 1.59 million barrels a year ago...
http://www.bloomberg.com/apps/news?p...d=ao7To3pIP2qk

And right on cue, as we have come to expect whenever these sorts of bad news announcements are necessary, they are immediately followed by "good news" announcements (a behaviour, just to be clear, that is by no means unique to Mexico):

Pemex Discovers Crude Oil in Deep-Water Well Tamil

By Thomas Black and Andres R. Martinez
May 29 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, discovered oil in a deep-water well that is the lightest crude found to date in Gulf of Mexico waters more than 500 meters (1,650 feet) deep.

The project, dubbed Tamil, is the seventh exploratory well Pemex has drilled in deep water. It produced crude with a grade of 18 on the American Petroleum Institute's scale for measuring the viscosity of oil, Guillermo Perez Cruz, director of Pemex's deep-water unit, told reporters today.

The grade is heavier than the company's Maya crude and lighter than extremely heavy oil Pemex discovered at is first deep-water well, Nab, which had crude as thick as grade 8 on the petroleum institute's scale, Perez Cruz said. Lighter crude is easier and less costly to refine into gasoline and other fuels. Further testing in coming weeks should reveal the pressure and amount of potential oil from the well, Perez Cruz said...

...Pemex is counting on producing 500,000 barrels of oil per day from deep-water fields by 2021 to help make up for the decline at Cantarell, the world's largest offshore oil field.

Of the seven wells it has drilled in deep water since 2004, most have either contained natural gas or have been dry. The company plans to drill at least 19 wells in waters deeper than 800 meters during the next four years to seek new fields to slow a four-year decline in output...
http://www.bloomberg.com/apps/news?p...d=aCz08vCVUiC4

And...

Pemex to Add Reserves From Drilling at Chicontepec

By Thomas Black and Andres R. Martinez
May 30 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, may add between 200,000 and 300,000 barrels of proved oil reserves for each well drilled at its onshore Chicontepec field, helping stem declining crude stocks.

Pemex plans to drill 500 wells this year at Chicontepec, which would allow the company to add as much as 150 million barrels to proved reserves, said Vinicio Suro, managing director of planning and evaluation at Pemex's exploration and production unit, during a conference in Monterrey.

``There's going to be a small jump,'' Suro said of incorporating reserves at Chicontepec. ``It's going be little by little. There's not going to be a change overnight.'' ...

...Mexico's reserves have declined almost every year for more than two decades because Pemex has pumped more oil than it has discovered since production began in 1979 at Cantarell, the world's largest offshore oil field...

...Next year, Pemex plans to drill as many as 1,000 wells at Chicontepec, which requires sophisticated horizontal drilling techniques because it consists of the small pockets of oil and is located in densely populated rural areas...
http://www.bloomberg.com/apps/news?p...d=azhYrsC2YVkk

Perfect example of "Peak Cheap Oil". While the easy, cheap, good stuff depletes it's replaced with heavier crude, or much more expensive to develop lower grade reservoirs.

Example of the former, Tamil is reported as 18 API crude. Anything less than 20 API is considered heavy & anything less than 10 API is considered bitumen by the Society of Petroleum Engineers. The US DoE EIA considers anything less than 25.7 API as heavy (Mexico's Maya grade is about 22 API).

Example of the latter, Chicontepec is a huge onshore oil field (covers more than 1200 sq miles) with potentially 70 billion barrels of light oil (about 31 API) in place. The catch is the reservoir is tight (extremely low permeability) and in a populated area. Groppe Long (Henry Groppe's Houston based firm) estimates it may take as many as 16,000 wells to recover something like 11 billion of those barrels from Chicontepec.

Yes Virginia, there is a Santa Claus. But he can't bring us what we really wish for now...

[mooncliff]

Re: Mexico oil, gas continue long decline

Any guess as to when they will become a net energy importer and essentially cease to earn foreign exchange income? I have no idea, but Pemex has been saying there is no problem, there is no problem, for the last 10 years as the output just crashed... and then it was don't worry we have new fields coming on... and those are producing like 10th what they should be. They may have new projects planned, but if recent performance is any indication, they will take a long time to come on line and may be just pretending so the banks don't pull their credit lines. Spectacularly consistent behavior.

Which makes me wonder about Saudi Arabia.