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Mexico's Oil Bonanza Starts To Dry Up.
San Francisco Chronicle ^ | 6-30-06 | Robert Collier

Posted on 07/02/2006 1:02:47 AM PDT by txdoda

(06-30) 04:00 PDT Cardenas, Mexico -- Gonzalo Rodriguez has an unenviable task as the boss of a major oil field -- ripping out a large part of the pumping and compressing machinery that collects the output from scores of wells.

"Unfortunately, we don't need this capacity anymore," he said. "This isn't like the old days, and they aren't coming back."

Like much of Mexico's giant oil production apparatus, this area, known as the Bellota oil field, is in an apparently unstoppable decline. At current extraction rates, the nation has only 10 years of proven oil reserves remaining. And as Mexico prepares to vote in Sunday's presidential election, the leading candidates disagree bitterly about what, if anything, can be done to halt the impending collapse of the industry that forms the backbone of the national economy.

Left-of-center candidate Andres Lopez Obrador wants to de-emphasize production of crude oil and focus instead on refined products such as gasoline and plastics, while his main challenger, conservative Felipe Calderon, proposes opening the industry to foreign oil corporations to help increase crude exports.

Because Mexico is the second-largest source of U.S. oil imports, the outcome of this struggle will have a huge effect on U.S. energy security in the coming decades. Oil income accounts for more than 40 percent of the Mexican federal government's annual revenues, so the decline of oil output could leave the country's next president with a nightmarish budget crisis.

Oil industry experts say that whoever wins Sunday's election will be forced to play an increasingly weak hand of economic cards........

(Excerpt) Read more at sfgate.com ...


TOPICS: Business/Economy; Crime/Corruption; Culture/Society; Foreign Affairs; Mexico; News/Current Events; US: Arizona; US: California; US: New Mexico; US: Texas
KEYWORDS: closetheborders; energy; illegalimmigration; mexicanelections; mexico; oilproduction
Hmmmm......Long Read, but covers the apparently unstoppable decline in production of oil in Mexico, with comments from the leading candidates in today's presidental election..

(my comment)..BUILD THE WALL & BUILD IT FAST

1 posted on 07/02/2006 1:02:50 AM PDT by txdoda
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To: txdoda

No prob. Mex. can drill off the coast of Fla./USA. Anyone but USA can, that is.


2 posted on 07/02/2006 1:10:21 AM PDT by Waco
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To: txdoda
Left-of-center candidate Andres Lopez Obrador wants to de-emphasize production of crude oil and focus instead on refined products such as gasoline and plastics, while his main challenger,

Well, I'll be dipped. Mexican moonbats! Sheesh! I'd be drilling gasoline wells if that could be done. Where does this nitwit think the gasoline, etc. come from?

conservative Felipe Calderon, proposes opening the industry to foreign oil corporations to help increase crude exports...

Well, at least someone down there 'gets it'.

3 posted on 07/02/2006 1:11:57 AM PDT by Smokin' Joe (How often God must weep at humans' folly.)
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To: Smokin' Joe
"No prob. Mex. can drill off the coast of Fla./USA. Anyone but USA can, that is."

However....they don't have the money nor technology to do it.

Pemex doesn't turn a profit.

4 posted on 07/02/2006 1:17:21 AM PDT by spokeshave (I'd rather go hunting with Dick Cheney than drive over a bridge with Ted Kennedy)
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To: txdoda
Situated in the hot, swampy lowlands of southeast Mexico's Tabasco state, the Bellota complex was built in 1992 and remains one of the country's most modern petroleum facilities. But daily output from surrounding fields has fallen to only 35,000 barrels of oil, about one-quarter of the average during the 1990s, said Rodriguez, the oil-field boss

There is a solution. Drill and develop other areas, and pipeline the crude to the refinery complexes.

101, really, but it requires major investment, and you can't do that if the government is siphoning off the money to buy votes.

5 posted on 07/02/2006 1:18:57 AM PDT by Smokin' Joe (How often God must weep at humans' folly.)
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To: Waco

No prob. Mex. can drill off the coast of Fla./USA. Anyone but USA can, that is.>>>>>>>


http://www.freerepublic.com/focus/f-news/1658689/posts

Maybe our "Stuck on Stupid Senate" will approve this now.....(in less than 6/7 hundred pages)


6 posted on 07/02/2006 1:21:50 AM PDT by txdoda (Voters to Gov't .......Re: post 9-11 Border Security....... ""The results are Unacceptable."")
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To: txdoda

Not drilling the oil Americans would like to drill.


7 posted on 07/02/2006 1:21:52 AM PDT by Paleo Conservative
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To: Paleo Conservative
Not drilling the oil Americans would like to drill.

LOL.....best 'quote' from the article...""Mexico must find its own solutions."

Too bad this guy wasn't running for president, down there.

8 posted on 07/02/2006 1:29:28 AM PDT by txdoda (Voters to Gov't .......Re: post 9-11 Border Security....... ""The results are Unacceptable."")
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To: Smokin' Joe
conservative Felipe Calderon, proposes opening the industry to foreign oil corporations to help increase crude exports...

Well, at least someone down there 'gets it'.

Fox has tried to 'open up" Pemex to foreign investors & the mex. congress wouldn't let him.

Should be interesting to see the outcome of the mex. congress. elections too.

9 posted on 07/02/2006 1:36:52 AM PDT by txdoda (Voters to Gov't .......Re: post 9-11 Border Security....... ""The results are Unacceptable."")
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To: Smokin' Joe
I was involved in the Mexican oil exploration.
Please see my thread "Looters of Mexico".
Money is in old pesos.

http://www.freerepublic.com/focus/f-news/1299642/posts
10 posted on 07/02/2006 1:40:17 AM PDT by HuntsvilleTxVeteran ("Remember the Alamo, Goliad and WACO, It is Time for a new San Jacinto")
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To: txdoda; Smokin' Joe
conservative Felipe Calderon, proposes opening the industry to foreign oil corporations to help increase crude exports.

Easier said than done. It's harder than getting Congress to open up offshore exploration along the US coast. The Mexican constitution prohibits any foreign company from drilling or operating oil and gas wells in Mexico. They also prohibit any domestic competitor to the state monopoly Pemex. Unlike the US, the state owns all mineral rights. If you are unfortunate in having oil and gas under your land, that's tough. Pemex will damage your property to extract it without paying any royalties or damages.

11 posted on 07/02/2006 1:48:12 AM PDT by Paleo Conservative
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To: HuntsvilleTxVeteran
LOL......& from this article.

""Calderon wants to privatize Pemex, but that's just a recipe for more corruption," said Ricardo Decle, a petroleum engineer who was frog-marched off his workplace by soldiers in 2004 as part of a purge of about 50 dissenting technical staff and is now chief of a group of local Pemex retirees. "In Pemex, there is no transparency, nobody watches over the contracts. For starters, they ask for a 10 percent (bribe) off the top of the price. When anyone complains, they are repressed. This is the way business is done here."

The only chance I see to help America and Mexico is to seal the border, deport the people who are not here legaly. We also need to arm the Mexican people so they can have a chance against the looters with their armies.

I remeber reading you very good thread when you posted it.

I too, have always thought it should be up to the mexican people to clean up their own gov't.

12 posted on 07/02/2006 1:55:30 AM PDT by txdoda (Voters to Gov't .......Re: post 9-11 Border Security....... ""The results are Unacceptable."")
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To: Paleo Conservative; HuntsvilleTxVeteran; txdoda
I have to say that I like our system better, but then I am working on a wellsite right now. I get to FReep between describing samples and during connections.

The oil company setup is bad enough, corruption is a definite problem, and the looting of the oil company to subsidize social programs has its limits.

At some point you simply do not have the money to keep up with declining production. They are slowly killing the golden goose down there.

I hope more people are aware of this next time our Congress brings up "windfall profits" taxes, and keep that camel's nose out from under the tent.

13 posted on 07/02/2006 1:57:34 AM PDT by Smokin' Joe (How often God must weep at humans' folly.)
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To: Paleo Conservative
Easier said than done.

That's for sure.

The Mexican constitution prohibits any foreign company from drilling or operating oil and gas wells in Mexico.

Yep, & I don't really expect to see the mex. congress changing *that much* in these elections......Plus any mex. president will still have to be *controlled*.

14 posted on 07/02/2006 2:06:34 AM PDT by txdoda (Voters to Gov't .......Re: post 9-11 Border Security....... ""The results are Unacceptable."")
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To: txdoda

Doesn't look good.


15 posted on 07/02/2006 2:06:48 AM PDT by hershey
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To: Smokin' Joe
They are slowly killing the golden goose down there.

yep, & I hate to say it, but I don't think we've *really* seen a 'run for the border', yet.

16 posted on 07/02/2006 2:12:51 AM PDT by txdoda (Voters to Gov't .......Re: post 9-11 Border Security....... ""The results are Unacceptable."")
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To: Smokin' Joe

Major investment needed is right. And guess whose hand is heading for your wallet. Fox suggested the US 'invest in rebuilding Mexico's infrastructure' as a way of luring Mexicans to return home. (That's the carrot). Oil fields are included, along with roads, schools, hospitals, etc.. Like it or not, North American Union here we come.


17 posted on 07/02/2006 2:15:39 AM PDT by hershey
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To: txdoda

The Mexican people won't clean it up.

The average Mexican is as corrupt as their government.

Bribes are a way of life there and they're proud of it...


18 posted on 07/02/2006 2:24:22 AM PDT by DB ()
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To: hershey; Smokin' Joe

If they sell us a large percentage of the oil rights in some areas, they'll get investment from us in energy infrastructure. When production declines so much that their budget situation becomes desperate, then Mexico will probably allow foreign investment in some oil fields. Those fields will quickly become the most efficient producers in Mexico. But no Americans want to invest in public works projects in Mexico because there's no payback for us. I doubt that Congress will ever vote for any significant foreign investment for Mexico.


19 posted on 07/02/2006 2:30:57 AM PDT by defenderSD (Just when you think it's never going to happen, that's when it happens.)
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To: DB
"Bribes are a way of life there and they're proud of it..."

Ah yes, la mordida (the bite) in Mexico. It's also a way of life in India, from what I hear. I worked with a guy from India who said his father had to "bribe seven people" to get a telephone line installed. Now THAT's a culture of bribery. People from India are generally very impressed with the US when they visit here.

20 posted on 07/02/2006 2:34:08 AM PDT by defenderSD (Just when you think it's never going to happen, that's when it happens.)
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To: Smokin' Joe

"Lopez Obrador wants to de-emphasize production of crude oil and focus instead on refined products."

I suspect that what he wants to do is increase Mexico's manufacturing base, rather than shipping all the crude to the US, where we do the manufacturing. More refined products produced in Mexico, fewer illigals?

Mexico is very resistant to foreign economic intervention. Years ago when I studied there I was surprised to discover that foreigners could not buy beach front property. You had to have a Mexican partner to get around that one.

Perhaps Mexico will be able to expand its sugar cane production like Brazil to achieve less dependence on petroleum for transport. Does anyone know the potential for that?


21 posted on 07/02/2006 2:48:25 AM PDT by gleeaikin
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To: gleeaikin
Mexico is very resistant to foreign economic intervention. Years ago when I studied there I was surprised to discover that foreigners could not buy beach front property. You had to have a Mexican partner to get around that one.

My wife and her late husband got sucked in on that one. They bought property in Baja CA, with a local as "front man," then lost it all during a currency devaluation. No way I'd ever invest a penny in Mexico.

22 posted on 07/02/2006 3:21:36 AM PDT by JoeFromSidney (My book is out. Read excerpts at www.thejusticecooperative.com)
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To: txdoda
In reality, probably the best thing that every happend to them. It will lift the "oil curse." Without oil, the government won't have a source of income independent of the people. They'll have to allow some entrepreneurship.
23 posted on 07/02/2006 3:23:53 AM PDT by JoeFromSidney (My book is out. Read excerpts at www.thejusticecooperative.com)
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To: HuntsvilleTxVeteran

The illegal invasion has been going on for years, your thread was posted in 2004. As you said than the illegals are coming to rape and pillage and they still are.

For years the borders were left wide open and basically they still are. The open border advocates insist it should be left open for cheap labor. Cheap labor is costing the American taxpayer a fortune not to mention the dangers because of the illegals. They aren't all "good hard working nice people".

With the upcoming election we have no idea who will be the neighboring country's leaders. Fox is bad enough. What if we get a Chavez-like neighbor? Our Congress along with all the amnesty-loving-open-border-guest-worker lovers are placing this entire country and taxpayers in jeopardy for many reasons and yet they have the audacitiy to call us who can see the dangers names.

The illegals are NOT for "Truth, Justice and the American Way". They are raping and pillaging this country and it's citizens!


24 posted on 07/02/2006 3:42:35 AM PDT by stopem (God Bless the U.S.A the Troops who protect her, and their Commander In Chief !)
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To: hershey

"Like it or not, North American Union here we come."....only if we're negligent in how this is accomplished. Would make more senes to "annex", for starters, the six Mexican border states....as the next six American states. TRhey really could use a dose of the Dept of Justice to clean them up.......


25 posted on 07/02/2006 3:54:32 AM PDT by mo
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To: defenderSD
Ah yes, la mordida (the bite) in Mexico. It's also a way of life in India...

It's also a way of life in China and any other country that our companies send their jobs off to. Someone in that foreign country has to be the master for our stockholders.

26 posted on 07/02/2006 4:44:52 AM PDT by raybbr (You think it's bad now - wait till the anchor babies start to vote.)
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To: gleeaikin

It does not make much sense to build refineries with a declining production base unless they anticipate cutting off exports of crude oil, and then not much. If they cannot feed the refineries, what good are they? Are they going to import crude, refine it, and export products? Something here isn't making a heck of a lot of sense to me.


27 posted on 07/02/2006 4:54:59 AM PDT by Smokin' Joe (How often God must weep at humans' folly.)
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To: txdoda

The oil patch question comes in the context of the broader question of how do you make Mexico a first class country. This is something that Vincente Fox has brought up frequently recently.

The trouble is that no one quite sees that the very best thing we could do for Mexico is to send their now well trained citizens home.

Suddenly Mexico would have a skilled workforce who knew something about how a world class country worked.

Think these folk would propel a great leap forward for Mexico?

I do.

Basically the ruling class in Mexico is preditory to its own detriment and will not change of its own volition--even if those changes were in its own interest. But it can be forced to change.

The Mexicans in the USA have had the picture of what a well run country looks like tatooed on the back of their eyeballs. And they'll have an idea of how to get there. Send them back to Mexico and they'll get a revolution in Mexico that'll do that country some good.

The shock troops for that would be the 12 million repatriated Mexican citizens. Having seen what a well run country looks like they would not want to be stuffed back in the old wineskin.

There's something more.

I follow water desalination research pretty closely. While water desalination costs have dropped to about a third of what they were 15 years ago--the rate at which prices will drop over the next seven years will accelerate considerably. imo in even the next five years we will see desalination costs drop to 1/10th of today's costs. Or even faster than the fall the 3/4 fall that the LLNL researchers suggest.
http://www.physorg.com/news67262683.html
Basically, the foundations are being laid today to make it economically feasable to to turn all the world's deserts green. (The proper way to look at this is to recall that cars, tv's and computers were at first rich men's toys but when prices came down they changed the world. Desalinised water is still relatively speaking -- a rich man's toy. But when the price drops sufficiently--desalinised water will change the world--because most deserts are right beside the ocean. Pumping the water 1000 miles inland will require that the scientists collapse the cost cracking out hydrogen from water. I think that this nut will be cracked sooner than desalination.)

imho cheap desalinised water will do for the republicans (if they can get this on their agenda or even the democrats if the pubbies drop the ball) what the great dam building projects & the tva of the 1930's & 40's did for democrats because 1/3 of the US is deserts. We would increase the habitable size of the USA by 1/3.

Dirt cheap desalinised water will also do things like make it possible to double the habitable size of Mexico. Cheap water is no magic bullet but it will give the Mexican Nationalists a way to dream while the Mexican people do the real work.

A first generation crop that might be appropriate would be one that India has chosen for ist biofuels program. The crop is Jatropha Curcas - a bush. This shrub produces a seed containing oil. This oil works well for biodiesel production ( see http://www.d1plc.com ).

Jatropha Curcas is native to Mexico and Central America (probably originated there). This shrub can be grown in large plantations on marginal soil - assuming some reasonable amount of, say, desalinated water).

Think Jatropha Curas could take up the slack from current oil production? I do.


And desalinated water in tandem with repatriation of now skilled Mexican citizens would propel Mexico into being a world class country.

Oh and one last thing. Mexico will need a stronger dose of of the Peruvian Hernando Desoto ideas. Basically DeSoto asked the question why are some countries poor and some countries rich. The basic answers is that in poor countries most of their economy is informal or off the books and their property--ie--land is not formally recognized. (Therefor these countries have no borrowing power.)De Soto's solutions are being implimented successfully in countries around the world. http://www.ild.org.pe/home.htm

Hernando de Soto's organization was invited to Mexico and did some work on the question. He says that only 6 percent of Mexican enterprises are legal, the rest are informal or off the books. So how do you reverse that so that only 6% of the economy is informal -- as is the case the USA. De Soto would provide the ideas around which the 12 million american trained Mexican returnees could rally.

There is a winner here. The winner is Mexico.

The US profits too by having a prosperous politically stable country with a broad middle class to the south as we do to the north.


28 posted on 07/02/2006 5:05:19 AM PDT by ckilmer
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To: txdoda

Swell... another reason to become a criminal alien in the USA...


29 posted on 07/02/2006 6:12:35 AM PDT by pabianice
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To: ckilmer
Mexico could take a lesson from Alberta. The Canadian government still owns the resources but allows virtually anyone to come in an develop them (while collecting an over-ride, permit fees, etc). There are jobs aplenty in Calgary, Edmonton, Fort McMurry because private companies have incentives and governments do not.
30 posted on 07/02/2006 6:51:40 AM PDT by Eric in the Ozarks (BTUs are my Beat.)
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To: JoeFromSidney

"Without oil, the government won't have a source of income independent of the people"

You do not understand the "third world" socialist mentality. It's not how much you have it's that you control whatever you do have.

Mexico is in no more danger of getting less corrupt, less competent government or more freedom and economic development with oil than without oil.

If they had and respected a system of laws and property ownership, what you say might occur, but without a legacy of ownership and freedom, all the decline in oil production means to the average mexican is there will be less luxury consumed by the ruling class.


31 posted on 07/02/2006 6:54:19 AM PDT by RFEngineer
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To: Paleo Conservative
Unlike the US, the state owns all mineral rights. If you are unfortunate in having oil and gas under your land, that's tough. Pemex will damage your property to extract it without paying any royalties or damages.

This is precisely WHY Mexico's oil is running out. If you don't own mineral rights under your own land, or explore in competition with the government, then where's the incentive to find more oil?

32 posted on 07/02/2006 7:07:54 AM PDT by BlazingArizona
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To: Smokin' Joe
There was one other thing Carter did besides the "windfall tax" and that was to force the oil companies to subsidize the oil companies that had little or very poor exploration.

He made them sell oil to these companies at less than replacement costs.
33 posted on 07/02/2006 7:28:10 AM PDT by HuntsvilleTxVeteran ("Remember the Alamo, Goliad and WACO, It is Time for a new San Jacinto")
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To: hershey
Doesn't look good.

Sure doesn't, either in mexico, @ our borders, or @ the gas pumps.....

34 posted on 07/02/2006 9:43:50 AM PDT by txdoda (Voters to Gov't .......Re: post 9-11 Border Security....... ""The results are Unacceptable."")
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To: hershey
Fox suggested

Fox's *suggestions haven't counted for awhile now.....

the outcome of today's elections should be very interesting.

35 posted on 07/02/2006 9:51:56 AM PDT by txdoda (Voters to Gov't .......Re: post 9-11 Border Security....... ""The results are Unacceptable."")
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