Petroleos Mexicanos Strikes Black Gold
Jared Cummans: The Mexican juggernaut Petroleos Mexicanos (PEMEX) has discovered a major oil field that could yield an impressive amount of the fossil fuel. The company is already the fourth-largest producer of oil in the world, and will now look to further its position. As it stands, the well site is estimated to contain 500 million barrels with another 500 million expected to lie in the surrounding area. The site, now named Navegante 1, is an extremely significant find, especially compared to the overall output of Mexico [for more crude oil news and analysis subscribe to our free newsletter].
As it stands, Mexico is responsible for about 2.9 million barrels of crude production each day; that’s just over one billion barrels in a year. Navegante 1 and its surrounding area contains enough oil to power Mexico’s oil production for an entire year, though it certainly won’t be extracted in such an aggressive manner. The crude deposit lies roughly four miles below the surface of the earth and is the most significant solid-ground discovery that the nation has seen in nearly a decade.
Finally Paid Off
For anyone who has been following PEMEX for some time, you will know that this is the result of constant drilling efforts and a bleak outlook. Prior to the last few months, the company had fallen short of the mark on nearly two dozen drills, leaving their future of production in serious question. But their $10 billion exploration budget has not only led to the finding of Nevegante 1, but also two offshore wells. The three combined are expected to add a monstrous 30 billion barrels to world reserves, putting the company in an excellent position for the future [see also Can Oil Fix U.S. Unemployment?].
Now comes the tough part, actually extracting all of these reserves. Sources have estimated that it will require an annual budget of $35 billion to develop the three simultaneously, but PEMEX only has a government-approved budget of just under $23 billion. The company will have to petition for the remaining $12 billion annually, but obtaining these funds could be significant for not only this crude producer, but the country as a whole.
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