Friday, August 3, 2007

PEMEX Reports Oil Depletion in 7 Years

Recently PEMEX, Mexico's largest integrated oil producer informed the United States that, "Supplies of its economically exploitable resource are running out." The company estimated proven reserves near 9 billion barrels in December of 2005. With current production near 1.3 billion, and demand stable; simple division extrapolates 7 years as the target depletion date.

PEMEX has long suffered from the stagnation of decreasing exploration investments as the company has been an exhausted cash cow of the Mexican government. According to the article, experts from the PFC Energy Advisory company in Washington estimated that in the event of heavy investment, new fields could take nearly 8 years for full maturation. Even with this optimistic view, "Mexico may have to import oil to satisfy its internal market." Jesus Reyes, director of PEMEX attributed the current state of affairs to declining capacity in Cantarell, Mexico's largest oil field.

Given that Cantarell is one of the world largest oil fields, with its discovery in 1976, exploitation in 1981 and peaking in 2004, this development could mark a startling corollary when compared to other elephant fields, notably the Ghawar field in Saudi Arabia.

For the energy intensive United States, this marks a chief concern as Mexico is our third largest importer at an estimated 1,469,000 barrels of crude daily. If and when Mexico does become a net importer of crude, the United States would require this differential to be recouped either internally or through the aid of existing importers. The question is where will this excess capacity come from?


KNX said...

Very good question to pose. In addition th those concerns a few more come to mind. With the loss of former President Fox who was more of ally to the U.S than the current president. Calderon is an ally of Hugo Chavez who despises Our Government raising the stakes even higher. Hence our strong alliance with The Saudis. The Fossil Fuels of the Gulf are day to day year to year and as a country so dependent on oil especially foreign oil we must always have a back up plan. As time progesses and tensions with Latin America increase it will be very interesting to see which direction we go in. Do we create an uproar with the activists and drill the environmental spectacle of Alaska? Seek alternative forms of energy at a more agressive level? Ban the use of SUV's by the average citizen? Or at least only allow the use of those gas guzzlers for strictly functional purpose, e.g distribution. All options need to be brought to the table.

CNL said...

Undoubtedly this will require a combined effort of all the above. While I believe that AK will be drilled farther, I do realize that oil is a finite resource and as the abundance subsides additional alternative supply's will have to be exploited.