Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on September 29, 2018

Bookmark and Share

Mexico must double oil exploration spending to halt output fall

Geology

Mexico will need to double to about $4 billion its annual oil exploration investment to reverse a 14-year decline in output, a move that will require more funding by Pemex and private producers, a top official with the state-run firm said Friday.

The Pemex logo is pictured during the 80th anniversary of the expropriation of Mexico’s oil industry at the headquarters of state-owned oil giant in Mexico City, Mexico March 16, 2018. REUTERS/Edgard Garrido

The nation’s oil industry needs Petroleos Mexicanos to invest more than $2.5 billion per year and another $1 billion to $1.5 billion from private companies to fully replace its reserves, Jose Antonio Escalera, the firm’s chief of exploration, said at an energy conference in Acapulco.

Pemex this year expects to invest about $1.65 billion, roughly the same as 2017. Reserves fell 7 percent this year, to 8.48 billion barrels of oil equivalent, and have slid more than 40 percent over the past decade, according to government data.

Escalera made the comments as the administration of President-elect Andres Manuel Lopez Obrador is still formulating its plan for Pemex and has given mixed signals over the future of the landmark energy reform.

Lopez Obrador, who will take office in December, has said he aims to boost Mexico’s oil production by a third to 2.5 million barrels per day (bpd,) from 1.82 million bpd in August. He also wants to increase domestic refining to end imports of foreign fuel.

However, he has been a critic of the nation’s opening of its oil industry to outside firms and has called for a review of the more than 100 exploration and production contracts awarded to oil companies, and a suspension of future auctions, casting doubts on what direction the energy reform will take in coming years.

“The reason why Mexico has seen an output decline since 2004 is not because of lack of potential, it is because it stopped exploring,” Juan Carlos Zepeda, chief of Mexico’s energy regulator National Hydrocarbons Commission (CNH), said at the energy conference.

Pemex said it will not meet its annual output target in 2018, and is likely to see a further slide in 2019.

LONG RANGE INVESTMENT

Pemex is making progress: It drilled 24 exploratory wells in 2017 and 35 are planned for 2018. But stemming the oil output decline will require the country to replace its reserves faster, Pemex and experts interviewed at the conference said.

The country will need $20 billion in exploration investment in the long term to confirm its estimated reserves and increase oil and gas output, according to Pemex’s calculations, a difficult task as prospective oil and gas resources to be confirmed are mostly in deep waters and onshore shale formations that require higher investment and technical knowledge.

As a sign of how it has fallen behind in replacing those reserves, Mexico has drilled 58 exploration wells on its side of the deep water Gulf of Mexico, compared with more than 1,100 on the U.S. side.

“What we need is more activity, even more exploration,” said Monica Boe, Mexico country manager of Norwegian oil major Equinor. She said auction terms could be changed to encourage more exploration activity.

Reuters



22 Comments on "Mexico must double oil exploration spending to halt output fall"

  1. Tom Ballentine on Sat, 29th Sep 2018 9:33 pm 

    Is it likely that Pemex did not choose the most promising targets for their 58 exploratory wells?

    Over what time period were the 1,100 exploratory wells drilled in the U.S. Gulf? How many were dry or not worth producing? And for those that did find producible oil, what was the average reserves found per well drilled? How many were drilled in deep water where the potential finds are high and how many were drilled in old fields?

    A little more detail in our quote might reveal a greater truth.

  2. The last drop on Sat, 29th Sep 2018 9:58 pm 

    Should be no problem at all…turn over ownership of Pemex to Wall Street and have the Fed finance the capx with worthless IOUs that will never be repaid.
    Brilliant….until it can’t

  3. dave thompson on Sat, 29th Sep 2018 11:12 pm 

    Pretty sure all the oil worth finding has been found.

  4. boney joe on Sat, 29th Sep 2018 11:49 pm 

    ~~Trump’s $12 billion Taxpayer Funded Farm Bailout~~

    Naturally, Dear Leader Dump thought he could buy the votes of American farmers in November with a $12 billion taxpayer funded bailout. This is how a hustler and a grifter thinks.

    This smacks loud and clear as selective socialism, yet nary a peep from the resident Republicans/right-wingers.

    What the hell, Trump has already exceeded $1 TRILLION in annual budget deficits in contrast to the Obama administration’s $587 billion deficit in the last year of his administration. For years we were told how fiscally conservative are the Republicons. Just more Republicon lies and hypocrisy. Nothing new.

    “Midwest farmers in the United States are not happy with Donald Trump’s trade wars, and they’re even less happy with the bailout that he gave them recently. Farmers are now saying that these bailouts have not provided enough relief to save them economically, and they don’t know how they can continue with their farming lifestyle under the President’s policies.”

  5. Outcast_Searcher on Sun, 30th Sep 2018 1:46 am 

    Way to stay on topic Joe. Take your meds.

  6. Davy on Sun, 30th Sep 2018 2:53 am 

    “Naturally, Dear Leader Dump thought he could buy the votes of American farmers in November with a $12 billion taxpayer funded bailout. This is how a hustler and a grifter thinks.”
    The income from the tariffs will likely more than cover this bill.

    “This smacks loud and clear as selective socialism, yet nary a peep from the resident Republicans/right-wingers.”
    The socialist movement is from the extremist left. Are you now attacking your far left friends?

    “What the hell, Trump has already exceeded $1 TRILLION in annual budget deficits in contrast to the Obama administration’s $587 billion deficit in the last year of his administration.”
    Got a reference extremist?

    “Midwest farmers in the United States are not happy with Donald Trump’s trade wars, and they’re even less happy with the bailout that he gave them recently. Farmers are now saying that these bailouts have not provided enough relief to save them economically, and they don’t know how they can continue with their farming lifestyle under the President’s policies.”
    Got a link for that reference my boney intellectually sloppy joe.

  7. boney joe on Sun, 30th Sep 2018 5:22 am 

    Like this link makes any difference to you Neutral-Balanced DavyTurd:

    https://www.youtube.com/watch?v=w4Ssxvc8PAE&lc=z22cj5kj3kmehveqn04t1aokgajtebndqix4wc1byrwbrk0h00410.1538272668040721

    “The income from the tariffs will likely more than cover this bill.”

    Got evidence to support your claim DavyTurd or is this your opinion, which counts for zero.

  8. boney joe on Sun, 30th Sep 2018 5:30 am 

    Poor outcast, upset with the truth.

    Mercy me! So this is the first time someone posted a topic not directly related? Please, save your fake outrage for someone who cares. What a bozo.

    By the way, where’s your on topic comment? Ooops, the hypocrisy wheel is spinning in your direction.

  9. twocats on Sun, 30th Sep 2018 8:37 am 

    test post – can I post anymore? oh, well, I guess there’s worse thing in the world.

  10. twocats on Sun, 30th Sep 2018 8:42 am 

    ok peakoil HATES the post i’m going to put below this, but Tom – I’m assuming your comment has mainly rhetorical, but these questions can and have been answered.

    I had a great summary of the article but again peak oil hates me this morning (10 minutes of life gone forever! and for what?!)

    anyway – US GOM production – plateau since 2000

    discoveries – plummeting since 1998.

    drilling activity – not seeing 1,100 exploratory wells so not sure where reuters is getting the number, but that is possible. either way – doesn’t matter – haven’t led to new discoveries.

  11. twocats on Sun, 30th Sep 2018 8:42 am 

    OHHH!!!! I figured it out. You cannot link anything to peak oil barrel. Interesting. Turf war?

  12. twocats on Sun, 30th Sep 2018 8:44 am 

    so yes – POB has a monthly post from a George Kaplan who is knowledgeable about the US Gulf of Mexico. very technical but still has good info.

  13. Duncan Idaho on Sun, 30th Sep 2018 9:22 am 

    George Kaplan is well informed, and politically astute.

  14. pat on Sun, 30th Sep 2018 5:52 pm 

    “Pretty sure all the oil worth finding has been found” what left is highly expensive, costly, hard to get, low eroei, dying giant oil fields. the worlds oil depletion is at pace not seen in history, the giant oil fields are hardly able to maintain their flow using modern technology while the reserves get depleted. oil rationing…prepare.

  15. I AM THE MOB on Sun, 30th Sep 2018 6:19 pm 

    Photo of Emmanuel Macron during his visit to Saint Martin (French overseas territory)

    https://i.redd.it/k9nywkc91fp11.jpg

  16. I AM THE MOB on Sun, 30th Sep 2018 6:22 pm 

    Pat

    Yup, and the sheep may go insane when they find out the worlds running out of oil..This is a going to be the biggest catastrophe in the history of mankind..Nothing will ever come close..

    Anarchy will soon reign the earth..prepare

  17. I AM THE MOB on Sun, 30th Sep 2018 6:41 pm 

    Parents are going to have to eat their babies..

    It won’t be pretty..

  18. I AM THE MOB on Sun, 30th Sep 2018 6:44 pm 

    “I live in St. Charles, Missouri, right in the heart of Dumbf—istan.”

    https://www.cnbc.com/2016/12/16/apparently-i-live-in-dumbfkistan-commentary.html?__source=Facebook

  19. I AM THE MOB on Sun, 30th Sep 2018 6:48 pm 

    Pat

    The easy oil is gone

    Oil discoveries peaked in the 1960’s.

    Every year since 1984 oil consumption has exceeded oil discovery.

    In 2017 oil discoveries were about 7 billion barrels; consumption was about 35 billion barrels

    Of the world’s 20 largest oil fields, 18 were discovered 1917-1968; 2 in the 1970’s; 0 since.

    https://imgur.com/a/6dEDt

    https://www.chron.com/business/energy/article/Oil-discoveries-in-2017-hit-all-time-low-12447212.php

  20. Cloggie on Sun, 30th Sep 2018 11:13 pm 

    The easy oil is gone
    Oil discoveries peaked in the 1960’s.

    Wrong. That may have applied to conventional oil but there is a new kid on the block:

    https://deepresource.wordpress.com/2018/08/19/the-sudden-death-of-peak-oil-4-5-trillion-barrels-of-oil-left/

    They have a planet to frack.

    Peal oil a la Heinberg and ASPO2000 has been called off.

    Nevertheless, I still advocate that millimob’s parents eat him, for spreading fake news.

  21. Darrell Cloud on Mon, 1st Oct 2018 7:17 am 

    The IEA is not a credible source. “The IEA is clearly either too politically constrained or ideologically biased to provide an objective assessment of the renewable energy sector – even if the failure to do so gets more and more embarrassing for the agency.”

    https://unearthed.greenpeace.org/2017/11/14/all-is-lost-renewable-energy-growth-will-hit-a-brick-wall-no-not-really-its-just-the-iea/

  22. rockman on Mon, 1st Oct 2018 4:04 pm 

    So spend a lot more exploration capex and reserves will increase proportionally. I’ve seen that business plan put into effect by numerous US petroleum companies over the last 40 years. And the vast majority failed. The first was in 1979 with my pubco employer just 4 years after I began my career. Hyped up the surge in oil prices. Short story: spent $500 million and found $60 million in reserves. Got to see the nightmare from the inside. The president was a former university economics professor with no petroleum background but well connected to the family of the controlling stock owner. Inexperience management and staff. Including the Rockman holding his position normally held by a geologist with 4X the experience I had. But wasn’t going to turn down the big $ they offered me.

    So first faulty assumption: company would be staffed by competent personnel. Second faulty assumption: the type of prospects targeted existed in large numbers. Business plans typical called for projects with huge reserves. Some did exist…but not as many that actually existed. The Rockman recognized this early on and focused on the numerous small plays. As mentioned before hit 23 out of 25 wildcats for a very small pubco in the mid 80’s when many companies were failing. But were very small discoveries: usually one well fields.

    Mexico may have a better than average chance since much of it (especially offshore) has been unexplored. And that due to the Pemex monopoly. But it still has to overcome the competency hurdle: wrong people in the wrong jobs at the wrong time. IMHO a problem Venezuela faced despite Chinese capex infusion.

    Time will tell.

    Cloggie – BTW no such thing as “easy oil” has ever existed. Just ask any of the folks that have ever actually been tasked with the job. Actually discovery rate for conventional oil reservoirs have never been higher then today. The problem is that they are relatively small compared to those of decades ago. The sad reality: Easier to find but much smaller.

Leave a Reply

Your email address will not be published. Required fields are marked *