Volume 44, Number 174,
July-September 2013

Challenges to Exploring and Producing Crude Oil in the 2012-2018 Term, Fabio Barbosa Cano, Mexico, iiec-unam, 2012.

The author of this work seeks to answer the following question: “Is the fall of oil production in Mexico an issue of a lack of investment or an exhaustion of underground geological resources?” (11).

To do so, Barbosa Cano reviews the results of applying new technologies in the tertiary recovery of resources, which has improved for some major land and sea projects. "It is clear that some giant fields have entered their final phases, and that no amount of resources will be able to ameliorate the rates of decline, as their production curves are becoming asymptotic. However, we are not facing abrupt exhaustion of resources, because there is still significant potential" (12).

To explain the issue, the author examines three sectors that make up the current and future supply: 1) the situation for giant oil fields and the main projects, 2) the results of exploration over the past 10 years and 3) programs to rehabilitate, optimize and re-enter mature fields" (13).

This work is made up of five sections, and seeks to explain the contradictory phenomena described by the author, regarding "whether [...] crude is being exhausted and the geological supply in Mexico is constantly falling" (12).

Deep-water exploration off the Gulf of Mexico is the subject of chapter 1. This section describes the number of successes and failures and discusses the success rate. It also examines the most promising areas and talks about activities by number of set of equipment in operation. Fabio Barbosa writes: "Considering that the initial explicit objective was to find oil that would allow the nation to maintain its crude exports, to the date, the results have been poor. Extra heavy crude has only been found in four fields, in a new province near Campeche. As drilling advances in this new province, extensions in the shelves of the Northeastern Marine Region have been shown to be ever more widespread, and at the same time, challenging due to their geological complexity [...], the quality of extra heavy crude and difficulty in ensuring their flow and transport. The design of the extraction project has not yet come to an end. This is one of the major challenges for extraction and production in the next term" (p.16).

Chapter 2 provides a thorough explanation of the results of exploration in the territory and in deep waters during the 2000-2011 time period and the classification of new fields based on criteria used in the United States. Barbosa Cano explains the following: “The number of new fields is only an indicator of the intensity of exploration, but the volumes of discovered reserves are scarce […] In the old age of exploration, they were concentrated in the cretaceous, the most valuable rocks. In the new stage, 2001-2010, they returned to tertiary recovery, where, with a few exceptions, they have only found gas. […] The geography of discoveries has shown advances in new areas […], in keeping with prior patterns. As Pemex progressed in this new 2001-2010 period, moving into deeper zones, such as the continental shelf, they have found extra heavy crude. […] Oil engineers say colloquially that the ‘best place to find oil is where it has already been discovered’” (44-47).

Chapter 3 describes the state of giant fields, where there have been efforts to apply criteria from the International Energy Agency (iea) to measure and compare their decline. This chapter also discusses production curves and different levels of maturity, as well as the state of major projects. The author explains: “The iea has formulated criteria to characterize the decline of giant fields around the world. These parameters are used to distinguish the different phases of exhaustion. […] In Mexico, the peak of production is interpreted as a synonym for the beginning of the end, or the beginning of the decline […] Our research provides solid evidence that new technologies will not work like magic. Indiscriminate application of new technologies will not automatically achieve increased production” (93 and 101).

The author uses chapter 4 to briefly summarize the experiences of reopening closed wells, which had been abandoned for decades, writing: “Re-entering a closed well requires an extremely detailed prior study, well by well, to be carried out by specialized personnel with modern and technical tools. The primary objective is to determine the reasons why they were closed and prepare a diagnostic study, which will depend on the measures applied, and could eventually conclude that the well shall be definitively closed (oddly enough, this operation is called ‘killing’ the well). […] Re-entering a well does not follow a prescribed methodology, nor is it an infallible process” (103-104).

Fabio Barbosa concludes this work in chapter 5, describing the areas that he believes are growing and listing others that could be the target of future exploration campaigns. He also clarifies that he is not proposing their exploitation, because, as he insists throughout the text, under current political conditions, this would simply amount to plundering the resources. Consequently, he merely seeks to identify geological areas that might offer possibilities, which foreign capital would consider “business opportunities.” He adds the following: “[…] we have described nine areas: four in the Gulf of Mexico and another four in the Southeastern basins on land. The Northern region only offered the Chicontepec project, which is probably the most important in terms of estimated volume underground. […] The National Hydrocarbon Commission, for example, has mentioned the Mexican Sea basin in Durango and partly in Chihuahua, […] and in reality, 100% of Mexican territory has been the target of intense exploration for over a century” (122-123). He concludes the text, saying: “Oil activities must continue to undergo study and daily scrutiny. Although the role of oil is falling, it will continue to be a central theme for the Mexican economy, as well as policies and relations between Mexico and the United States” (130).

Overall, the work provides readers with a very interesting perspective on the state of the oil sector in Mexico over the past decade, especially in the areas of exploitation and exporting of crude. It provides rather useful information about the application of new technologies in tertiary recovery, which has improved for some of the major land and sea projects. In summary, this text is a required read for persons interested in studying the topic, as well as for those that would like to gain more insight into energy policy measures that could have a positive effect against privatizing the oil sector.

Irma Delgado
Institute of Economic Research – unam

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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