PEMEX: The age of easy oil has come to an end

Mexican oil production will fall to 2.7 million to 2.8 million barrels a day next year as the country's main oil field continues to decline rapidly, Carlos Morales, the head of exploration and production at Petroleos Mexicanos, said.

Mexican output has slid by 20% since peaking in 2004, and officials warn that the country will see exports completely dry up over the next decade unless Pemex accelerates oil exploration in new areas such as the deep waters of the Gulf of Mexico.

Cantarell is producing just over 1 million barrels a day, and Pemex expects it to fall to around 600,000 barrels a day by end-2012. Mexico's second-largest oil field, Ku-Maloob-Zaap, will also head into retirement in 2010 after hitting peak production of 800,000 barrels a day.

"The age of easy oil has come to an end," Morales told lawmakers at a forum. "We don't expect to find another Cantarell or Ku-Maloob-Zaap."

Pemex expects production from fields currently in operation to fall by 1.8 million barrels a day by 2020. This means the company must find and develop new pools of oil, such as the Chicontepec basin in northern Mexico.

Pemex plans to boost output at Chicontepec to 600,000 barrels a day by 2020, up from a trickle at present. Chicontepec is a geologically challenging area where oil wells only produce 50 to 400 barrels a day, compared with wells at Cantarell that currently average 6,000 barrels a day.

"At Chicontepec we will need 70 wells just to replace one well at Cantarell," Morales said.

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