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Page added on September 26, 2013

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Mexico needs technology to boost oil output


Insufficient investment in technology is the main reason for Mexico’s declining oil production, an executive of its state oil company said in Houston Tuesday.

Mexico’s national oil company, Petróleos Mexicanos, or Pemex, relies on the federal government for its annual budget, limiting the company’s ability to invest in technology for new exploration, said José Antonio Escalera, deputy director of exploration for Pemex.

He spoke with FuelFix  after delivering a luncheon keynote address at the Society of Exploration Geophysicists International Exposition and 83rd Annual Meeting.

“Mexico has a huge potential,” Escalera said. “We need technology, we need the development of personnel skills — and budget. If Pemex gets the budget to access the technology and skilled people, the future is very good.”

Escalera is one of many speakers sharing their geophysical and business expertise at the annual geophysicists’ gathering, which runs through Friday at the George Brown Convention Center. Organizers expect more than 10,000 scientists, seismic computer programmers, data experts and others to visit its many exhibition booths and technical discussions.

Pemex is the focus of a politically charged proposed change in Mexico’s constitution that would expand international participation in the profits and risks of the state-owned monopoly.

Advocates of the proposals introduced by Mexican president Enrique Peña Nieto say that Pemex needs investment and expertise from international companies to boost oil production.

Opponents fear foreign incursion into the resource that has been a source of pride and money since a previous Mexican president nationalized the oil industry decades ago.

Escalera said that some of the plays in the southern Gulf of Mexico with the most potential are also the most complex, and that they differ from formations in U.S. Gulf waters.

Pemex’ advantage is its experience in this geology, Escalera said, but it needs better access to the latest seismic and processing technology.

Since 2004, Mexico’s overall crude output has dropped 23 percent, and production in its once-muscular Cantarell field in the Bay of Campeche has fallen 75 percent, to less than 500,000 barrels a day.


15 Comments on "Mexico needs technology to boost oil output"

  1. bobinget on Thu, 26th Sep 2013 4:39 pm 

    There is nothing wrong with PEMEX’ intellectual capacity. In fact PEMEX sends specialists all around South America advising on exploration and drilling.
    These people are highly experienced, quite knowledgable experts. Whats’ missing is funding.
    Mexican politicians have been robbing Pemex for six decades.

    The ONLY reason to permit foreign companies is
    exploration funding that can’t be extracted by government for other proposes.

  2. action on Thu, 26th Sep 2013 6:27 pm 

    Our technology, who make earth heaven, hallowed by thy name; thy kingdom come; thy will be done on earth does thou maketh heaven. Give us today our daily bread; and forgive us our lack of funding as we forgive those who lack funds for us; and lead us not into recession, but deliver us from oil depletion. Amen.

  3. GregT on Thu, 26th Sep 2013 8:28 pm 

    Very good action 🙂

  4. BillT on Fri, 27th Sep 2013 1:48 am 

    Mexico is part of the North American Union and will soon have funding from the printing presses of Bennie ‘the shark’ Bernanke. It will be in Ameros though. Or maybe the whole game will end before the final consolidation of the NAU happens. We shall see.

  5. bobinget on Fri, 27th Sep 2013 2:20 am 

    BillT, If the Mexican GOVERNMENT were able to
    borrow from IMF or WB, Pemex would never see a penny.

    I repeat, it’s not expertise PEMEX seeks, it’s Billions for E&P. The ONLY outfits in this world with ‘too much hard currency’ are multi national oil companies.
    Mexico’s government expects XOM to pony up all the cash needed to drill these three and four mile deep
    offshore wells.

    Oh btw, here’s a piece PO news overlooked elsewhere.

    KHARTOUM, Sudan — This time, it was not the organizing by activists on Facebook and Twitter that made people take to the streets in such numbers. They did not need it. The anger was already widespread enough.

    “The people want to bring down the regime!” and “No, no, to high prices!” young protesters shouted this week as they marched in Omdurman, Khartoum’s twin city across the Nile.

    Deadly protests have rocked several Sudanese cities since Sunday, when the government lifted subsidies on gasoline, nearly doubling the price in an increase that is bound to create a domino effect on other goods.

    “The economic situation is just painful,” said one protester, Moyasser, 25, who did not want his full name used out of fear of government reprisals.

    The demonstrations broke out across greater Khartoum, with some leading to the destruction of public property like buses and gas stations. One witness saw at least six burned cars on Africa Road in Khartoum; another saw protesters throw rocks at cars and block a road with burning tires and bricks.

    The government has responded forcefully. A statement by the authorities promised to act “with an iron fist” to “destructive actions.” Sudan’s police forces said 29 people, including members of the police, had died in the violence, blaming “trained elements” and “rioters.”

    But activists say that at least 100 are believed to have been killed, mostly by the government, with hospitals flooded. Security and police forces have used live ammunition as well as tear gas and batons to break up the protests.

    “I know two who were killed,” Moyasser said. “One was shot, and the other beaten to death.”

    As the protests escalated, Internet services were shut down on Wednesday and early Thursday. The authorities said that rioters had attacked and destroyed equipment belonging to a local online provider, but activists say it was a deliberate act by the government to create a blackout on events in Sudan.

    The lifting of gasoline subsidies was the latest step in the difficult economic adjustments Sudan has experienced since South Sudan became independent two years ago, taking with it nearly 75 percent of the oil revenue the two countries once shared. Inflation has reached nearly 40 percent, and the value of the Sudanese pound has spiraled downward.

    “The removal of subsidies must be accompanied with widening the social safety net,” said Abla el-Mahdi, an economist. “But the government has failed to compensate the poor through direct transfers and increasing the minimum wage.”

    Despite promises for assistance to the poor and an increase in the minimum wage, “there is little confidence in the government,” she added.

    The Sudanese government, however, said it would continue with its economic overhaul policies.

    “A government that backs down from taking the right decision for the benefit of society is not a government worthy of the trust and support of the people,” Vice President Ali Osman Taha told a group of graduates on Wednesday.

    Sudan’s political opposition has been quick to criticize the government.

    “We are against the increase in fuel prices,” said Kamal Omer of the Popular Congress Party. “This shows the failure of the ruling party.”

    Thirty-five activists belonging to various political parties have been arrested since the beginning of the protests, Mr. Omer said. He said the current wave of protests represented “a revolution of the hungry.”

    “This is the straw that broke the camel’s back,” Mr. Omer added.

    Amjad Farid, 29, an activist with the Coalition of Sudanese Revolutionary Youth, warned that the protests would continue.

    “After what happened, we cannot back down,” he said. “The blood of Sudanese is not cheap.”

    Attempts by Sudanese dissidents in 2011 and last year to organize and set off an Arab Spring-like revolution in Sudan failed. But popular uprisings in 1964 and 1985 succeeded in bringing down military governments.

    Abdel-Latif el-Bouni, a columnist, was cautious to not describe the current events as a revolution.

    “This was all expected, but thus far, it’s been a reaction,” he said. “Anger is not enough for change.”

    But, he added, “if geared into political momentum, it has the potential to become a revolution.”

    Five days of protests have taken an economic toll on the city of Omdurman as well. In the usually crowded Al Shuhada Square, an intersection for buses, shops were closed or only partly open.

    Salih Ibrahim, 47, a conductor, said that while 250 drivers of minivans used for public transportation usually showed up for work, “only 30 showed up.”

    Many of the drivers, Mr. Ibrahim said, feared that protesters would attack their vans. Others simply could not find gasoline, as a number of gas stations in Omdurman had been burned down.

    “The guys who came bought gasoline from the black market, not for 21 pounds, but 30 pounds,” Mr. Ibrahim said. “So they’re charging passengers up to three pounds,” or about 68 cents, double the normal price.

    “I have no choice; I need to get home,” said Abdel-Munim Ismail, 37, who got on a van.

    Some grocery store owners also felt the brunt of higher gasoline prices and their expected trickle-down effect.

    “The price of transporting goods to my store went from 20 pounds to 40 pounds,” or about $9.11, said Abdel-Aziz Ahmad, 40.

    “The prices of flour, cooking oil, tomato sauce and onions are starting to go up,” Mr. Ahmad said. “I know people who don’t buy from me anymore.”

  6. GregT on Fri, 27th Sep 2013 3:46 am 


    “I repeat, it’s not expertise PEMEX seeks, it’s Billions for E&P.”

    So right, and the billions that they seek, are not for the good of the Mexican people, or any people, for that matter.

    The rich get richer, and the poor eventually kill each other over the scraps.

    What is occurring throughout much of the world already, is a harbinger of things to come.

    History has shown us, that when civilizations deplete key resources, the results have been civil unrest, chaos, societal breakdown, and war.

    Why would we expect things to be any different today?

  7. MrEnergyCzar on Fri, 27th Sep 2013 3:59 am 

    They look like they are the next declining North Sea….


  8. Luke on Fri, 27th Sep 2013 7:43 am 

    The Gulf might contain “much” oil under the floor. But it will be “expensive” oil. It will not save us from the coming decline of the world production rate. Stepping over this cliff is plunging us in the Recession of all recessions. And mankind will learn like a small kid when it is too late.

  9. rollin on Fri, 27th Sep 2013 12:33 pm 

    Collapse appears to be inhomogeneous in time, place and quality. Some are coming up against it hard with little recourse, others like Mexico are slower. The inevitability is certain. Desperation will be expensive and short-lived. Better to realize the future and take steps to ease the inevitable decline and shocks.

    Watch what the people in hard hit areas do, not the protests or government attacks but how people handle everyday tasks like getting food, water and money. Many may migrate or attempt to migrate.

  10. GregT on Fri, 27th Sep 2013 2:15 pm 

    “Many may migrate or attempt to migrate.”

    Eventually, there will be nowhere left to migrate to.

  11. bobinget on Fri, 27th Sep 2013 2:19 pm 

    GOM like the North Sea peaked some time ago,
    as you know. This doesn’t mean hydrocarbon seeking technology peaked, quite the reverse.

    Of course, eventually we run up against inevitability.
    Judging by the newest discoveries in BOTH bodies we are not there yet.

    As for Mexico, because of uncontrolled population growth and poor planning every government learned quickly to depend on oil exports as easy money.

    You bring up the North Sea in contrast, Norway did the opposite of Mexico realizing oil and gas finite they invested oil profits to the point Norway is holding one of the largest ‘rainy day’ funds of foreign currency reserves in the world.

    The UK OTOH used the cheap oil to continue a life style of Jaguars and duded up Land Rovers instead of
    the next electric London delivery van.

  12. shortonoil on Fri, 27th Sep 2013 3:09 pm 

    Mayan heavy (API 21 deg) produces 28% residuals that must undergo vacuum distillation to be serviceable. This makes refining it very expensive. As the cost to produce conventional crude continues to increase, and the price of its finished products follows suite, demand for petroleum products will fall. It will be the non-conventional oils that will be priced out of the market first, as they are more expensive to produce. Anyone planning on investing in heavy oil had better plan on getting their money back within a decade.

  13. BillT on Fri, 27th Sep 2013 3:21 pm 

    “…Norway is holding one of the largest ‘rainy day’ funds of foreign currency reserves in the world…”

    Really? $57 billion is not much. That is about 3 weeks of Bernanke’s printing of US dollars. I hope they are not the worthless pieces of paper from the US. ^_^

  14. Stilgar on Fri, 27th Sep 2013 3:23 pm 

    Off topic sort of, but as a post oil drummer this website is great, but what made TOD such a great site was Drumbeat. They would list numerous articles about oil then the postings and replies would come fast and hard. This site is great for peak oil type articles and comments, but it’s in slow-mo regarding replies because posters are spread amongst many different headlines.

    Any chance for a Drumbeat type experience here? Not that I’m complaining, just miss the sense of community Drumbeat delivered.

  15. rockman on Sat, 28th Sep 2013 3:26 pm 

    Actually the Norwegian energy trust fund is $790 billion. Of that a smaller amount is held in foreign currency.

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