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Mexican Oil Production Continues to Dive

By on January 11, 2010 in Commentary

At this point in time, anyone who knows anything about Mexican oil production knows it is declining rapidly, particularly production from the supergiant Cantarell complex.

In the early years of the decade 2000-2009 it seemed obvious, at least to me, that Cantarell, and Mexican, oil production would start declining around 2006.  Apparently it was not so obvious to the U.S. Dept. of Energy/Energy Info. Admin. (US DOE/EIA).  In their International Energy Outlook 2003 (IEO2003), the US DOE/EIA stated:

“Mexico is expected to adopt energy policies that will encourage the efficient development of its resource base.  Expected production volumes in Mexico exceed 4.2 million barrels per day by the end of the decade and remain near that level through 2025.”

Over the years, I’ve been critical of the US DOE/EIA’s wildly inaccurate estimates of future oil production for countries.  It has appeared to me that their projections have been based upon desire and demand projections rather than data analysis.

In my 2005 book, The Future of Global Oil Production, I stated:

Declining production from the Cantarell complex will strongly influence Mexico’s future oil production since Cantarell produces such a large percentage (~66% in 2004) of Mexico’s oil.  If production from the Cantarell complex starts declining in 2006, it’s realistic to expect Mexico’s oil production to decline as well.  The situation would be comparable to Alaska when the Prudhoe Bay field started declining.  The Ku-Zaap-Maloob development, and possibly others, will slow the decline of Mexican oil production but it’s unrealistic to assume, as the US DOE/EIA does, that production can increase until 2010 and remain near that level through 2025.

In my book, I had a graph of historical and projected Cantarell oil production (Figure 1). The Cantarell complex actually started declining a year earlier (2005) than I was projecting in Figure 1 and didn’t quite reach the peak level I projected.

Figure 1: Historical (1980-2002) and projected oil production for the Cantarell complex

Jean Laherrere places the estimated ultimate recovery (EUR) for Cantarell at ~19 Gb, which correlates with data from Simmons & Co. Int’l.  At the end of 2009, Cantarell’s cumulative production will be ~13.3 Gb.  An average decline rate of 4.0%/year after 2009 would give an ultimate recovery of ~19 Gb.  It could be that the 19 Gb estimate is inflated, meaning that the average future decline rate could be greater than 4.0%/year.

Table I shows production/decline rates for Cantarell since 2004 (tables I-IV from Pemex).

Table I: Cantarell Production and Decline Rates

Year

Production Rate (mb/d)

Absolute Decline (b/d)

% Decline

2004

2.14

2005

2.04

100,000

4.67

2006

1.80

240,000

11.76

2007

1.49

310,000

17.22

2008

1.04

450,000

30.20

2009

.70a

340,000

32.69

2004-09 Production Decline

1,440,000

67.29

aData through October 2009 from various sources

As Cantarell’s production has declined, Mexico’s liquid hydrocarbons production has declined as well, in spite of a rapid production increase from the Ku-Zaap-Maloob complex.  Table II contains Mexico’s total liquid hydrocarbons production from 2004 to the present.

Table II:  Mexican Total Liquid Hydrocarbons Production and Decline Rates

Year

Production Rate (mb/d)

Absolute Decline (b/d)

% Decline

2004

3.825

2005

3.760

65,000

1.70

2006

3.683

77,000

2.05

2007

3.471

212,000

5.76

2008

3.157

314,000

9.05

2009

2.976a

181,000

5.73

2004-09 Prod. Decline

849,000

22.20

aData through October 2009

Mexico’s liquid hydrocarbons production decline rate has been lower than that of the Cantarell complex largely due to rapidly increasing production from the Ku-Zaap-Maloob complex (Table III).

Table III:  Ku-Zaap-Maloob Oil Production and Incline Rates

Year

Production Rate (b/d)

Absolute Increase (b/d)

% Increase

2004

304,400

2005

321,700

17,300

5.68

2006

403,800

82,100

25.52

2007

527,200

123,400

30.56

2008

706,100

178,900

33.93

2009

800,000a

93,900

13.30

2004-09 Prod. Decline

495,600

162.81

aData is an estimate for year based upon several reported monthly values

The Ku-Zaap-Maloob complex is now at its projected peak.  Based upon my data, the Ku-Zaap-Maloob complex will have produced 2.9 Gb of oil at the end of 2009 (Ku produced for many years prior to expansion).  I have come across an EUR value for Ku-Zaap-Maloob of 4.9 Gb although I don’t know how accurate it is.

A representative of Pemex has claimed that Ku-Zaap-Maloob can produce at its 2009 rate for the next 7 years but that would put the cumulative recovery in 2016 at 4.96 Gb.  Pemex representatives have had a strong tendency to exaggerate production rates so I’m skeptical of the claim.   If the 4.9 Gb EUR is accurate, then Ku-Zaap-Maloob would have to decline at an average rate of about 13%/year after this year.  It will be interesting to see what happens.

In 2006, Vincente Fox announced that Pemex would invest $37.5 billion over 20 years in the Chicontepec Basin with the expectation that production would ultimately increase to over 1 mb/d.  The problem is that Chicontepec has a complex geology which does not lend itself to easy oil extraction.  During the summer of 2009, the production rate for Chicontepec was ~30,000 b/d, not much higher than in 2008.  Production was projected to reach 60,000 b/d by the end of 2009 but that doesn’t appear likely.

Spending money on oil exploration does not ensure finding large quantities of oil, as the U.S. experience during the late 1970s/early 1980s proved.  Some analysts make the case that ~90% of Mexico’s Gulf of Mexico (GOM) has not been explored and that with exploration, large quantities of oil will be discovered.

Geologically, Mexico’s GOM consists of two distinct regions: the southern GOM and the northern GOM.  The southern GOM is where Cantarell, Ku-Zaap-Maloob and other prolific offshore fields are located and where almost all of the Mexican GOM oil has been discovered.  The region has been sufficiently explored so that all, or almost all, of the major fields have been discovered so I don’t expect much in terms of new discoveries in this region.   The reservoirs in the southern GOM consist of carbonate reef structures.

In Mexico’s northern GOM, the rock that could conceivably contain reservoirs is sandstone.  The sandstone is not as thick and uniform as farther north, in the U.S. GOM, and the rock quality is not considered good.  Some experts feel that good reservoirs are unlikely in this region and that prospects for significant oil discoveries are poor.  To date there have not been any significant exploration successes in the region.

While Mexican oil production has declined, so have Mexico’s net total liquid hydrocarbons exports, as shown in Table IV.

Table IV:  Mexican Net Total Liquid Hydrocarbons Exportsa

Year

Net Exports (mb/d)

Absolute Decline (b/d)

% Decline

2004

1.789

2005

1.670

119,000

6.65

2006

1.612

58,000

3.47

2007

1.371

241,000

14.95

2008

1.043

328,000

23.92

2009b

0.974

69,000

6.62

2004-2009 Export Decline

815,000

45.56

aNet total liquid hydrocarbons exports are the difference between (crude oil + refined product exports) – refined product imports

bData through October 2009

It appears likely that Mexico’s oil exports will decline to zero within the next 10 years, with implications for the U.S. which imports most of the oil that Mexico exports.

Colin Campbell has estimated Mexico’s EUR at 55 Gb.  Based upon that value and a cumulative production at the end of 2009 of 38.3 Gb, it would suggest an average decline rate for future Mexican oil production of about 5%/year.

Roger Blanchard teaches chemistry at Lake Superior State University and authored book The Future of Global Oil Production: Facts, Figures, Trends and Projections by Region, McFarland & Company (2005).  He also grows fruit trees and hay on acreage outside Sault Ste. Marie (MI).

(Note: Commentaries do not necessarily represent ASPO-USA’s positions; they are personal statements and observations by informed commentators.)

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  • Mariana Pereira

    Does anybody know what is the production obejective for Mexico, for weach region, or where I can find this data??
    Thanks you!

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  • http://energiaadebate.com David Shields

    Roger: This is a highly interesting and well-informed piece. As a Pemex watcher here is Mexico, it seems very much in line with what I am observing and expecting. Can we be in touch?

  • Stu

    I seen a figure of 588mbd for october production at Cantarell somewhere on the internet a month or so ago. I now can not find that report, also I can not find any reports for November or December production levels. So what’s going on, have they stopped publishing data due to the negative impacts of publsihing the decline rates. Have they starting putting their heads up their arses and hope nobody notices that they declines are continuing. I read a brief article that said in October Cantarell showed signs of slowing production declines. Well that would figure wouldn’t it, as the overall production decreases and the numbers shrink, there is less to deduct from. I suppose when production reaches zero they will report that they have successfully arrested the decline at Cantarall lol

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