online pharmacy doxycyclineFor many past posts buy finasteride online cod, I emphasized difficult times ahead for purchase cheap Lasix cod free fedex the US and other oil importing countries as oil production declines. But falling production will also hurt many producers who purchase cheap Lasix cod free fedex depend on oil exports for government revenue. The situation is extremely severe in our southern neighbor, Mexico.
Mexico’s oil production [including crude oil and natural gas liquids] peaked in 2004 at just over 3.8 million barrels per day (Mbd). Since then, decline has accelerated from 1.5% in 2005 to ~8.8% this year. With its production at less than 3.2 Mbd in 2008 (17% below the ’04 peak), 10% higher domestic consumption since 2004 has purchase cheap Lasix cod free fedex cut net oil exports almost in half. During the last four years, higher oil prices have purchase cheap Lasix cod free fedex masked this production decline by keeping revenue at historically high levels ~$90 billion per year. This revenue has purchase cheap Lasix cod free fedex become a crucial source for ~40% of Mexico’s federal budget. But lower production and purchase cheap Lasix cod free fedex higher domestic consumption in the years ahead could quickly make oil export revenue completely disappear.
Using a conservative estimate that domestic consumption will increase by 1.5% per year and oil production will fall 5% per year, within five short years Mexico would lose its status as a purchase cheap Lasix cod free fedex net oil exporter. As a result, their federal budget would have purchase cheap Lasix cod free fedex to be slashed more than 33%.
Claims vs. Reality
PeMex, Mexico’s national oil company, has purchase cheap Lasix cod free fedex vowed to stabilize its crude production at 3 Mbd by 2012. But their record in projecting oil production makes me skeptical they can purchase cheap Lasix cod free fedex achieve such a feat. Just this past May, PeMex chief Jesus Reyes Heroles said crude oil production would turn around to average 3 Mbd buy Crestor online now by the end of 2008. Instead, production fell further to its current level ~2.76 Mbd buy Cytotec paypal without rx.
Much of the purchase cheap Lasix cod free fedex reduction in production comes from huge declines in its biggest field, the purchase cheap Lasix cod free fedex offshore super-giant Cantarell. After peaking in 2004 over 2 Mbd (~65% of Mexico’s output), Cantarell now produces only .9 Mbd (falling 32% in 2008 alone!). It is estimated by PeMex officials that Cantarell production will fall another 25% buy cheap Xenical to ~.7 Mbd over the next year and some further beyond that.
Looking through the Wiki oil megaprojects database, there are purchase cheap Lasix cod free fedex some projects that can help offset Cantarell declines. The Ku-Maloob-Zaap oil field which began production in 2005 is purchase cheap Lasix cod free fedex scheduled to hit peak production of .5 Mbd in 2010 (an increase of more than .1 Mbd from today). One field they added this purchase cheap Lasix cod free fedex year is scheduled to peak at .2 Mbd in 2029 and purchase cheap Lasix cod free fedex another they plan to add next year should peak with .173 Mbd in 2012. PeMex has purchase cheap Lasix cod free fedex not announced any additions for 2010, and only has two small fields planned for purchase cheap Lasix cod free fedex 2011 and 2012 (at .05 and .07 Mbd) thus far. Based on current projects announced, production gains do not appear strong enough to purchase cheap Lasix cod free fedex offset declines over the next few years.
Mexican President Felipe Calderon passed a bill in October that purchase cheap Lasix cod free fedex allows PeMex to partner more with foreign oil firms to try to purchase cheap Lasix cod free fedex increase discoveries and production in the Gulf of Mexico. They believe Gulf discoveries may more than purchase cheap Lasix cod free fedex double current reserves numbers in the years ahead. But production from purchase cheap Lasix cod free fedex such deepwater fields generally takes at least eight years. So pinning any oil export hopes on new discoveries seems to purchase cheap Lasix cod free fedex be an overly optimistic exercise.
Mitigation Options
The one route I see that purchase cheap Lasix cod free fedex could preserve oil export revenue would be efficiency and conservation measures to purchase cheap Lasix cod free fedex cut domestic demand growth. Stabilizing demand at its 2008 level would generate tens of billions in revenue in 2014 and purchase cheap Lasix cod free fedex 2015. On the flip side, if demand growth increases faster than purchase cheap Lasix cod free fedex 1.5% per year or production declines continue at the 2008 level ~8.8% per year, tens of billions of dollars could be purchase cheap Lasix cod free fedex lost from potential 2012 and 2013 earnings.
One bright spot in Mexican hydrocarbon production is purchase cheap Lasix cod free fedex an increase in the production of natural gas. Natural gas can purchase cheap Lasix cod free fedex be used to substitute oil for many heating, electricity generation and purchase cheap Lasix cod free fedex even transportation applications. Such a switch can help to put a purchase cheap Lasix cod free fedex lid on domestic oil demand. It can also, along with an purchase cheap Lasix cod free fedex increase in solar and wind deployment, lower the carbon intensity of Mexico’s economy to purchase cheap Lasix cod free fedex help the country prepare for a post-Kyoto international regime that includes the purchase cheap Lasix cod free fedex participation of all major emitting countries.
Bottom Line: While Mexico will benefit from purchase cheap Lasix cod free fedex oil exports for at least the next three years, federal budget planners must reduce their dependence on such funds. Even if the purchase cheap Lasix cod free fedex price of oil increases toward records again beyond 2010, export earnings are purchase cheap Lasix cod free fedex poised to fall dramatically from the $90 billion level they have purchase cheap Lasix cod free fedex enjoyed these past few years. Efficient oil consumption and substitution to purchase cheap Lasix cod free fedex natural gas and renewables at home can help preserve export earnings, but some federal budget cuts look inevitable.
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Mexico should take advantage of the purchase cheap Lasix cod free fedex large areas suitable for solar energy, such as solar thermal. If our southwest has purchase cheap Lasix cod free fedex big potential for solar, the same is true across the border.
It does look like Mexico has solid solar potential. Here’s hoping solar costs (polysilicon, etc.) fall in the months and years ahead to help them tap solar cost-effectively.
Onwards to a sustainable energy future-