Mexico’s Largest Oil Field in Premature Decline

Petróleos Mexicanos (Pemex), Mexico’s state oil monopoly, said it expects production at its Cantarell oil field to begin declining this year, earlier than previously forecast.

Cantarell is the largest oil field in Mexico, and the eighth largest in the world. The field, which has been in production since 1979, had produced 2.11 million barrels per day in 2004. Pemex expects that to decline by 5% to 2.0 mbpd in 2005.

Pemex had earlier forecast that Cantarell, which accounted for more than 60% of Pemex’ oil production last year, would not begin declining until at least 2006.

Pemex plans to invest as much as $11.5 billion this year, up from $10.1 billion in 2004, to boost production in other fields, including exploration of deep-water deposits for the first time, to make up for the Cantarell decline. Pemex has doubled its debt in four years to $45 billion to finance annual investments of about $10 billion.

The production chart at the right…, although a bit busy, provides some insight into the lifecycle of a major oil field. [See original article for an enlarged version of the graph.]

Production (the blue line with diamond-shaped data markers) at Cantarell began in 1979, and rapidly reached a plateau, until it began declining around 1999. Pemex began injecting nitrogen (the purple line with triangular markers) into the oil field in 2000.

Gas injection (or steam, or water, or another gas, such as CO2) slows the natural decline of pressure in a reservoir, and can dramatically increase production.

In this case, production eventually almost doubled.

But some experts assert that the inevitable decline after peak production is reached in a field that has been through such enhanced production procedures, will be more sudden and dramatic than expected. An example of this in 2004 was the Yibal oilfield in Oman. (Earlier post)

Matthew Simmons, in particular, worries about this happening to the giant Saudi oilfield Ghawar, and about the potential damage to the reservoir that can be done in the process of enhanced recovery. (Earlier post)

Pemex says that it intends to offset the decline in Cantarell, and boost its overall oil production this year, by increasing output from its Ku-Maloob-Zaap complex and light marine crude field.

However, the smaller fields Pemex is tapping may not be enough to make up for the output reduction in Cantarell, which is forecast to decline at rates of more than 10% in later years, according to energy consultant John Padilla of IPD Latin America, as quoted by Bloomberg.

Pemex is the third-largest producer of crude in the world, and the ninth largest integrated major oil company. It provides 16% of the imports to the US—behind Canada and jockeying with Saudi Arabia for second or third place.

Resources:
Pemex Outlook 2005