[Texgreen] FW: [HoustonPeakOil] Pemex predicts production drop

[Alfred Molison]

>From: westexas@aol.com
>To: houstonpeakoil@lists.riseup.net
>Subject: [HoustonPeakOil] Pemex predicts production drop
>Date: Sun, 21 Jan 2007 20:04:10 -0500
>
>Re: Pemex predicts production drop
>
>David Shields is predicting that the Pemex decline will be much worse than 
>what Pemex is admitting to. (Shields is predicting an 800,000 bpd drop from 
>2007 to 2008). Mexico may cease to be a net oil exporter as soon as 2010. 
>Tthe UK went from exporting one mbpd in 1999 to being a net importer in 
>2005.
>
>BTW, Mexico, like the North Sea in 1999, and just like the US Lower 48 in 
>1970, just crossed the 50% depletion mark on our mathematical models. The 
>world is also now past the 50% mark, and according to the EIA, the most 
>recent world crude oil production number was about 1% below the 2005 peak.
>
>What is fascinating is all of the similarities between Pemex & Cantarell 
>and Saudi Aramco & Ghawar. In both cases: Large carbonate fields--which 
>account, or accounted for more than half of their production--where the 
>remaining oil is between rapidly thinning oil columns between rising water 
>legs and expanding gas caps.
>
>Other than their production rate, the key difference between Pemex and 
>Aramco is that Pemex has grudgingly admitted to the Cantarell decline. Note 
>the references to Pemex cutting deliveries to refineries. Saudi Aramco is 
>also unilaterally cutting deliveries to Asian refiners (below what the 
>refiners wanted to buy).
>
>We have heard rumors of 50% plus water cuts at Ghawar and Richard Heinberg 
>reported, from an industry source, that Ghawar is crashing. Published 
>reports put Saudi production in 2/07 at 8.5 mbpd, down 1.1 mbpd from their 
>2005 peak.
>
>
>
>http://www.eluniversal.com.mx/miami/23061.html
>Pemex predicts production drop
>El Universal
>Viernes 19 de enero de 2007
>
>The progressive decline in Mexico´s capacity to produce oil is rapidly 
>becoming more worrisome than the slump in global crude prices.
>
>According to estimates by the state oil company, Pemex, petroleum exports 
>will decline dramatically during the Calderón administration.
>
>Pemex is anticipating a 13 percent drop in its crude exports over the next 
>six years as Mexico´s proven reserves continue shrinking.
>
>Analysts contacted by EL UNIVERSAL agree that Pemex´s inability to 
>increase production is due to waning reserves - particularly the Cantarell 
>field in Campeche Bay which is the source of roughly 60 percent of the 
>nation´s proven reserves - and incapacity to access potential deep-water 
>wells.
>
>The first symptoms of a genuine oil crisis are becoming more and more 
>evident.
>
>Documents acquired by EL UNIVERSAL indicate Pemex will be forced to cut 
>back on exports to the United States. The reduction could reach 150,000 
>barrels per day in the next four years. In the final two years of the 
>Calderón administration, the reduction could reach 500,000 barrels per 
>day.
>
>Currently, around 1.5 million barrels of oil go to the United States daily.
>
>The potential for long-term damage lies in the fact that such a reduction 
>could allow other suppliers - among them, Brazil, Venezuela and Canada - to 
>permanently steal some of Mexico´s market share.
>
>Furthermore, Pemex has already canceled shipments of crude to the Deer Park 
>(Texas) refinery it owns along with Shell for the next 12 months. That 
>means prices of imported gasoline and diesel may rise.
>
>According to Raúl Muñoz Leos, a former Pemex director, the primary 
>problem lies in the rapid decline of Cantarell reserves and the failure to 
>develop other fields.
>
>Muñoz said production levels rose steadily from 2002 to 2004, encouraging 
>company directors to predict a continuation of this trend.
>
>"We established a production goal of 4 million barrels a day by 2006, but 
>by mid-2005 production levels began to decline," he said.
>
>Although Pemex´s exploration budget was boosted to US$4 billion last year, 
>the investment has yet to bear fruit.
>
>"Since this sizeable investment has brought little in return, it might be 
>time for us to learn from the experience of other international producers 
>and redouble our exploration efforts," he said. "It is impossible to ignore 
>the fact that our reserves are rapidly shrinking."
>
>The latest official projection shows Pemex will be able to produce only 3.3 
>million barrels per day over the next 10 years.
>
>George Baker, an oil industry consultant, told EL UNIVERSAL the situation 
>is further complicated by the fact that the price for Mexico´s basket of 
>crude - which is heavy and therefore less attractive - is so low.
>
>"It is very dangerous to lose market share," Baker said. "Especially if 
>your share is taken by someone who can supply lighter crude."
>
>PMI Comercio Internacional, Pemex´s export management company, has already 
>begun to notify some clients in the United States that it will have to 
>cancel some contracts because production levels are declining.
>
>Rosendo Zambrano, the director of PMI, explained that the contracts 
>affected at present are short-term, renewable contracts that will be 
>sacrificed due to the 150,000 barrel-a-day cutback planned for 2007-2010.
>
>However, Pemex is also notifying clients with long-term contracts that 
>production levels may force adjustments in contracts beginning in 2010.
>
>"We are facing a very complicated situation that could result in the loss 
>of more and more clients," said a Pemex official who asked to remain 
>anonymous.
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