Friday, June 27, 2008

Mexico's Oil Fields On The Decline

Plummeting output from the Cantarell oil field could be trouble for Mexico and the U.S., reports Byron King today. Byron’s had his eye on Pemex, Mexico’s state-owned oil company. The Cantarell field, Mexico’s biggest source of oil, is in a rapid state of decline. Check out this chart:
“Pemex has accelerated the depletion of the Cantarell field,” says Byron. “In the ’90s, Mexico's government wanted to raise more revenues from oil sales. So Pemex built the world's largest nitrogen injection project right on top of Cantarell. One could say that the project worked too well. Now the easy oil is out of the field, and output from Cantarell is declining around 14% a year.”
For Mexico and the U.S., that’s a huge problem. Over 40% of Mexican federal revenues come from Pemex profits. At the current rate of Mexican growth and the Cantarell’s depletion, Mexico will cease to be an oil exporter by 2012. “That will be a disaster for Mexico,” says Byron.
Mexico is the third largest source of imported oil for the U.S. They send over around 1.2 million barrels a day.

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