By 2016 Mexican oil production could drop 44% (thus virtually eliminating exports) or stay about the same by (reducing exports by the amount of internal growth in Mexican oil use) depending on the amount of capital invested.  Deepwater production will be insignificant until 2014 at the earliest.

Here is the news report from Energy Current:

12/20/2007 2:00:55 PM GMT

MEXICO:  BNamericas reports that Mexico’s state oil company Pemex could begin deepwater oil production by 2014 in a best-case scenario, the energy ministry (Sener) said in its 2007-16 oil forecast.  Sener classifies deepwater as greater than 1,640 feet (500 m).  Deepwater production could begin in 2014 with an average output of 19,000 b/d and increase to 174,000 b/d by 2016, according to the forecast.

WORST-CASE SCENARIO

In the ministry’s worst-case scenario, deepwater production will not take place in the 2007-16 period due to greater emphasis on production at current onshore fields.  A worst-case scenario would entail oil investment averaging US$9.22 billion in the period and an average production level of 2.68 million b/d.  Of the total, US$8.21 billion would go on production projects, and 61 percent of that on the Chicontepec, Ku-Maloob-Zaap (KMZ), Cantarell, Burgos and Crudo Ligero Marino Basins.

Another US$737.63 million annually would go to exploration including the Crudo Ligero Marino, Sardina and Reforma projects starting in 2013.  Over the period, 33 percent of exploration would be onshore and 67 percent in shallow water.  The worst-case scenario would entail US$276.61 million a year in future development, starting in 2010 with Burgos and by 2015 at the Reforma, Crudo Ligero Marino, Sardina and Macuspana projects.  Over the period, 71 percent of new development projects would be onshore and 29 percent in shallow water.

The number of wells drilled in the period would be 11,124, of which 73 percent would relate to Chicontepec and financed public works contracts.  Only 13 percent of the total wells drilled would be exploratory.  Production wells drilled would drop from their 2006 level of 531 to 58 in 2016.

With increased drilling, Chicontepec production would increase 32 percent annually, or a total 360,000 b/d more by 2016 compared to 2006, partially offsetting the expected 14.1 percent annual decline at Cantarell.  The fall at Cantarell and KMZ over the period would cause heavy crude output to fall 44.8 percent by 2016 compared to 2006 levels.  Likewise, light and extra-light crude output would drop 12.5 percent and 6.1 percent, respectively.  Production by 2016 would be 2.14 million b/d as a result of the output decline in the northeast marine basin, among others.

BEST-CASE SCENARIO

By contrast, Sener’s best-case scenario would mean maintaining average crude output above 3.26 million b/d over the period with annual investment of some US$13.83 billion.  As in the worst-case scenario, the bulk of resources would go toward production of current fields.  Chicontepec, KMZ, Cantarell, Burgos and Crudo Ligero Marino would account for 60 percent of production investment.  Output investment would be 55 percent onshore, 38 percent for shallow water and the remainder for support and maintenance.  However, in the best-case scenario, exploration and future development would receive significantly more resources.

The US$2.58 billion for exploration of new fields would go on the Crudo Ligero Marino, Campeche Oriente and deepwater Golfo de Mexico B and Golfo de Mexico Sur projects as of 2010.  Some 75 percent of the annual exploration budget would go on marine areas.  Future development projects would receive an annual US$2.86 billion.  This would be directed 43 percent to the latter two deepwater projects starting in 2012, 32 percent toward shallow water projects, such as Crudo Ligero Marino and Coatzacoalco, starting in 2009, and 25 percent to land projects, including Reforma Terciario, Simojovel and Cuichapa.

The best-case scenario would entail drilling 12,597 wells in the period due primarily to the development of Chicontepec.  The annual number of wells drilled would reach a maximum for the period of 1,736 in 2011.

Production in the northeast marine basin, which accounted for 69 percent of output in 2006, would decline by an annual seven to eight percent and account for only 31 percent of national production by 2016.  This would largely cause the expected drop in heavy crude to reach 1.46 million b/d by 2016, 35 percent lower than its 2006 level.

The northern region, which currently contributes only three percent of national output, would comprise 27 percent of production by 2016 due to Chicontepec development.  The southern and southwest regions would increase output 53 percent and 37 percent, respectively, by 2016.  Due to development of Chicontepec, Crudo Ligero Marino, Cuichapa, Reforma and Campeche Poniente projects, light and extra-light crude levels would increase seven percent and six percent annually, respectively.  Light and extra-light crude production levels combined would grow to 1.97 million b/d in 2016 from 1.01 million b/d in 2006.

Tags: energy investments

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