One More Reason to Expand Domestic Drilling
11:23 AM, Jul 29, 2008 • By BRIAN FAUGHNAN
Mexico is our third-leading supplier of foreign oil, but Mexico's national oil company -- Pemex -- faces serious challenges. Pemex will be unable to produce from new deep-water fields without an infusion of private capital, and the Mexican constitution forbids private investment in the petroleum sector. With the Cantarell field in decline, Mexican oil production will fall off dramatically.
Mexican president Felipe Calderon has proposed a reform package to enable Pemex to contract with private companies. In contrast to the package proposed by former president Vicente Fox, this one seems to have a chance of passage. But the socialist opposition party has staged a series of non-binding referenda in parts of the country, and the results could chill the move for reform:
According to the head of Pemex, Mexico's production of oil will fall by about 1.2 million barrels per day by 2015 without this reform. The U.S. currently imports slightly less than that. There's no doubt that if Mexico's production tailed off so dramatically, we would bear the brunt of it. Suddenly canals might seem practical.