Mexico Finally Gets Oil Out Of Deep Water
Mexico may have finally had success in deep drilling for oil in its sections of the Gulf of Mexico. According to the Financial Times, the state oil company Pemex has hit an oil well just south of the maritime boundary with the US. Trion 1, the successful well, lies in the Perdido Fold Belt, a formation known for its rich oil reserves on the US side of the line. The discovery was confirmed on Wednesday by the Mexican President.
Premex has been searching for oil in the Gulf for most of the past ten years but with little success prior to the Trion discovery. The only other well that can be considered a success – albeit a modest one – was the Lakach well, which produces natural gas mainly, but its value has been greatly undermined by the recent shale gas gold rush.
Trion shows a lot of promise though and both Premex and President Calderon have waxed enthusiastically about the prospect. According to a statement from Premex, the well has a flow rate of 10 thousand barrels per day. The company also said that the region is one of Mexico most promising prospects. President Calderon added to the sense of optimism, saying that the discovery could be an indication of a great oil potential in Mexico’s share of the Perdido field: between four and 10 billion barrels of crude oil and its equivalent in natural gas.
!m(/uploads/story/312/thumbs/pic1_inline.png)If those numbers turn out to be accurate, then the discovery of Trion couldn’t have come at a better time for Mexico. The country relies heavily on oil production, representing as it does one-third of Mexico’s income, but some of the country’s biggest oil fields are nearing depletion. For example, the gigantic Cantarell field in the Sound of Campeche has seen a dramatic drop in production – down from 2.5 million-plus barrels a day at its peak to a mere 400 million bpd today. As a result, Mexico’s overall crude output, which peaked at 3.4 million bpd in 2004, has decreased significantly, standing now at 2.5 million bpd. In these circumstances, it’s easy to see why the country is putting so much hope in Trion and Perdido.
But as the Financial Times points out, not everyone is convinced that the region carries so much potential. David Shields, an independent oil analyst based in Mexico City, described Mr. Calderon’s prognoses as “politically inspired speculation”. According to Shields, the president’s claims can’t be confirmed without a serious investment of time and effort.
Perhaps the major problem here is that Mexico and Premex are essentially going it alone in these initiatives. This is attributable to the way the Mexican constitution regulates oil production in the country. Mexican law, as explained by Luis Miguel Labardini, a partner of the Mexico City-based Ernesto Marcos y Asociados consultancy, says that only the state can be the owner of oil in the country. This will surely deflect any potential partners, leaving Premex shouldering alone the burdens and risks of exploration and development.
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