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Pemex looks for more efficiency
By Thomas Black
Bloomberg News
Petroleumworld.com 07 02 07
Petróleos Mexicanos, the third-biggest oil supplier to the U.S., must improve its operating capabilities and expand into new production areas, such as deepwater, to curb its dependence on the Cantarell oil field, said the company's head of production and exploration."Cantarell has made us highly dependent," said Pemex's Carlos Morales during a conference last week in the Gulf of Mexico port city of Veracruz. "The solutions we're going to face in the future are much smaller fields that require much more work and efficiency than we have today."
Pemex now must learn to handle the higher risks of producing oil in Gulf of Mexico waters more than 1,640 feet deep and tapping thousands of pockets of oil in the rugged terrain of southeastern Mexico known as Chicontepec as Cantarell declines at a rate of more than 15 percent this year, Morales said.
Cantarell, the world's third-largest oil field, caused Mexico's oil industry to boom when it first began pumping in 1979. The offshore field also caused complacency, Morales said.
With Cantarell, Pemex's daily production tripled almost overnight to 2.5 million barrels during the 1980s from 750,000 barrels per day in the previous 10 years. Mexico virtually stopped searching for new oil to replace Cantarell's reserves during the two decades after the field's production began.
Since 2000, Pemex has almost tripled spending on exploration to $12.8 billion this year, though it's unable to stem a decline in oil production.
Last week, Pemex Chief Executive Jesus Reyes Heroles said Pemex's goal was to maintain average crude oil production at an average of 3.1 million barrels per day from 2007 until 2012. Last year, Pemex produced 3.26 million barrels per day and had a peak output of 3.38 million barrels in 2004.
Cantarell output fell 12 percent in 2006 and is forecast to decline 15 percent this year. For the first five months of the year, the field has produced 17 percent less than the same period in 2006. The wells in Cantarell are in waters that average 197 feet deep.
It's not clear whether Pemex has the capabilities to produce successfully in deep waters and Chicontepec, which contains fractured oil deposits that require advanced drilling techniques, said David Shields, an independent energy analyst based in Mexico City. Mexican law doesn't allow Pemex to form partnerships with foreign oil companies to gain the technology and risk-sharing it needs, Shields said.
Pemex's decisions are often made by the Mexican president and the Finance Ministry, which controls Pemex's budget, and not by oil executives, he said.
"They have their hands tied," Shields said at the Veracruz conference. "I see Pemex as something that's not moving forward."
Bloomberg 29 06 07
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