Mexico's Pemex to Spend $6B to Maintain Output at Cantarell

Rig Zone ^ | July 1, 2014 | Reuters

[thackney]

Mexico's state-run oil company Pemex will launch a $6 billion investment in 2017 aimed at maintaining current levels of production at its once-supergiant Cantarell field over the next decade, a Pemex official said on Tuesday.

Discovered in 1976, output from the offshore Cantarell field once supplied over 2 million barrels per day (bpd), or more than half of Mexico's total crude production.

But output at the field has fallen more than 80 percent since 2004 to hover around 340,000 barrels per day (bpd).

The investment will counteract the natural decline of Cantarell by squeezing out an additional 100,000 bpd per year via secondary recovery over the course of a decade, said Miguel Angel Lozada, Pemex's Cantarell administrator.

Lozada said that Akal, Cantarell's most productive sub-field, will be stabilized with the plan.

"By doing this we can make sure that Akal's output will remain steady at between 180,000 and 200,000 bpd for a longer period of time," he said.

[thackney]

excerpted for Reuters content

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The Cantarell field is Pemex Exploración y Producción's heavy oilfield, located 100km off the coast of the Yucatan Peninsula in the Gulf of Mexico. When it was built in the early 1980s, it was the largest offshore development project in the world, with a total installed cost of more than $5bn.

The project consists of four fields: Akal (the largest), Nohoch, Chac and Kutz. The reservoirs are formed from carbonate breccia of Upper Cretaceous age, the rubble from the asteroid impact that created the Chicxulub Crater.

[chud]

My brother has worked in the energy industry and he says that the drug cartel issue down in Mexico is only half their problem; the drying up of the Cantarell field is even bigger.
Mexico is already technically a failed state, but it is headed for outright collapse because none of the US oil companies want to help get what little oil they have out of Cantarell since they still remember how the Mexican gov’t screwed private companies by nationalizing the oil fields.
Better seal the borders asap.

[Clay Moore]

I read some years ago that Pemex is basically a quasi-private corporation who is taxed by the Mexican government more than they actually earn. The result is that there is no money available to survice the oil fields. So you have wells that start producing brine and end up being shut-in where a little maintenance would have extended production for years longer.

[thackney]

Pemex is basically a quasi-private corporation

No. It is 100% owned by the Mexican Government.

who is taxed by the Mexican government more than they actually earn

That would be the case for essentially all private oil companies around the world. Governments typically take 2~4 times what company keeps as profit.

PEMEX is used to fund the government. As a result they do not put enough back into the development of new and existing fields.