Tuesday, February 12, 2019

Most Interesting Story All Week? -- February 12, 2019 -- Mexican President Flip-Flops -- Will Allow Fracking

There is increasing talk that Pemex could fail.

When Mexico's new president was running for office, he said he would ban fracking in his country -- even though the prolific Eagle Ford in Texas extended south into northern Mexico.

Yesterday Argus Media reported that President AMLO has had a change of heart. He will allow -- or should we say, his regulators will allow -- Pemex to frack .... drum roll .... four wells.

Why the change of heart? AMLO says the technology has gotten better, has gotten safer. LOL.

Some data points:
  • Pemex will invest up to $203 million under the two-well drilling scenario.
Let's stop there.

Let's do the "cut and paste" from the article:
Pemex will invest up to $203 million in the exploration plans under the two-well drilling scenario, with the potential to incorporate up to 201 million boe into national reserves.
So, the data points:
  • two wells
    • $203 million (am I missing something here?)
  • two wells
    • 201 million boe 
Back-of-the-envelope: I don't even want to think about it. LOL.

For newbies: in the Bakken,
  • about $8 million / well
  • EUR for a single well: 1.3 million bbls crude oil
Other data point from the article:
Mexico's 3P oil reserves dropped by 40 percent to 25.5 billion boe from 42.2 billion boe between 1 January 2014 and 1 January 2018, according to the annual reserves report, according to data published just last week.

2 comments:

  1. He hates fracking, then he doesn't hate fracking, could that be because he can now demand a personal under the table cut to an offshore account. He is a quick study of the Clintons, Obamas and our congress.

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    Replies
    1. Agree completely.

      But in addition and much more importantly, some argue convincingly that Pemex is doomed. Saudi Arabia is in deep trouble with oil at $50, but my hunch is that Mexico may be in much deeper trouble.

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