A report in The Financial Times today casts doubt on the ability of Mexico to develop new oil supplies to offset the declining Cantarell field that is scheduled to result in substantially lower Mexican oil production starting in 2010.  The left wing opposition party brought Congress to a standstill by physically occupying the building and not allowing business to proceed while there was consideration of a modest proposal by the Calderon government to provide incentives for foreign companies to help find and develop Mexican oil.  “Denise Dresser, a political …

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The New York Time published a comprehensive discussion of the political morass that is stopping Pemex from modernizing and exploiting new oil deposits.  It features the resurgence of Mexico City Mayer Lopez Obrador, who is using Pemex as a rallying cry for his left wing followers.  He maintains the government - particularly the PRI - has been intentionally starving Pemex for years in order to make the situation sufficiently desperate that Pemex will have to be sold off.  Only a campasino could buy such baloney, but, hey, that’s his constituency. …

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The sad case of Mexican oil declining into the sunset while billions of barrels lie in the Gulf unexploited is discussed in the following excellent piece of journalism from Bloomberg.   The short story is that PEMEX revenues first go to political and union corruption at virtually all levels.  Some goes to fund 40% of the Federal budget.  What is left, after paying costs, can be spent on capital improvements and exploring for new oil.  That amount is getting small all the time while politicians, who get the first dibs on PEMEX …

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The latest ministerial report says Mexico could lose 800,000 of the 1.67 m barrels per day of oil it exports by 2012.  Since Mexican oil use is growing by 4.5% per year, new domestic demand could grow by 430,000 bpd through 2012.  This combination of supply fall and internal demand growth could therefore eliminate almost 74% of Mexico’s ability to export oil in five years. 

Such a development would pressure U.S. oil supplies as well as the finances of the Mexican government, possibly putting Mexico’s political stability into question.  The Mexican …

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As anyone who follows the oil market knows, production of oil in Mexico, the 3rd largest supplier of oil to the U.S., is falling.  Production from their largest field, Cantarell, is declining at about 16% a year, and growth from two smaller fields, which is currently limiting the slide in total production, is scheduled to peak in 2010.  Without substantial new production from fields not yet developed, Mexico could stop exporting oil at all within five years.  The development of new fields depends on vast new investments being made, …

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The history of Mexican oil productions features some unique themes.  They include a hysterical antipathy toward any form of equity by any foreign entity and a bloated, inefficient state-controlled management effort.  Another theme, which now shows signs of being repeated is the over-production of a field to meet short term production goals.  Such a practice ultimately results in very rapid decline rates for the field in question. That is what happened to the giant Cantarell field that was expanded rapidly using nitrogen injections.  It is now in a …

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As reported more fully here, Mexico’s largest oil field, Cantarell, continued its 16% per year decline in January, 2008, producing 1.243 mb/d, down from 1.26 mb/d in December, 2007.

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A consequence of NAFTA, whether unintended or not, seems to be the take-over of the Mexican used car market by old U.S. clunkers.  The trend is likely to lower Mexican fuel economy substantially and to mute the impact of higher efficiency cars being bought in the U.S.  That happens because the old, less fuel efficient cars that the new ones replace do not die; they are used in Mexico (and various other South and Central American countries).

Here is the full story from the L.A. Times:
In Mexico, old U.S. cars find …

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Mexico’s Cantarell field is slated for continued declines in the 14% per year area, but for the next two years, total Mexican production will decline by a lesser amount as the new  Ku-Maloob-Zaap (KMZ) fields add to production.  However, after 2010, both of these enormous fields are expected to be declining simultaneously, according to the report below.  The report does not comment on Mexico’s net exports, which will be declining even faster than production because of the rapid growth of domestic Mexican …

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The following article published 2/1/08 quotes the respected analyst of Mexican oil activities, George Baker.   It suggests that Mexico’s oil exports are likely to decline going forward, a continuation of the current trend.   By Payne, Stephen Peak oil production occurred in Mexico in 2004-that is, under the limitations of current regulations-says George Baker, publisher of Mexico Energy Intelligence in Houston. Mexico’s most important field, Cantarell, is in serious decline, and the recently announced KMZ and Chicontepec prospects are "suspect" as well, he says. A Pemex business-as-usual …

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Matt Simmons has published a fascinating overview of past and likely future global oil production.  He argues that the “petro-optimists” lack evidence for maintaining that “high” oil prices are an aberration.   He firmly believes oil prices are too low.

While he rues the poor and sometimes inconsistent nature of the available oil production statistics, Simmons finds that they nonetheless suggest that production of conventional crude oil peaked in May, 2005.  To satisfy the continuing growth in demand the world has relied upon demand destruction through higher prices, the addition of significant …

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By Andres R. Martinez Jan. 21 (Bloomberg) — Petroleos Mexicanos, the state- owned oil monopoly that accounts for 40 percent of the government’s budget, said daily crude oil production fell 5.3 percent in 2007 and fell short of the company’s goal. Output fell to an average 3.08 million barrels a day because of storms and a decline at the company’s biggest field, Mexico City-based Pemex said today in an e-mailed statement. Hurricane Dean in August and high winds in October shut down production in the Gulf of …

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  Although Cantarell oil production is scheduled to fall in 2008 at the same 16% rate of 2007, PEMEX is planning to keep total production at the same level by means of developing new production elsewhere.  Here is the full article.

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Mexico Says No to Private Energy Mexico, Dec 21 (Prensa Latina) The Mexican Union of Electricians (SME) demanded that President Felipe Calderon’s Government lay off a privatizing project of energy or they will bring the nation to a halt. ó If we do not receive a viable response to the demand, the sectors opposed to privatization of petroleum and electricity will get together and protest campaigns and maybe go on strike, ó warned SME In declarations …

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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 …

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