Sunday, March 3, 2013

Energy Independence in North America ... Canada And Mexico Will 'Drill, Baby, Drill' ... What About the U.S.?

Well, unreal as it may seem, serious steps toward North America energy independence are finally taking place --- at least in two out of the three big North American countries.

Both Canada and Mexico are implementing measures to increase in a big way their energy output. But what about us?

Well, we still have a 'greenish' and Democratic Party political problem to solve, which we will at some point, if only as a result of our economy continuing to struggle while our 'progressively' led welfare stare becomes more and more unaffordable.

Necessity is the mother of invention, of course, and more energy availability and affordability is now becoming an absolute necessity.

Pemex Executive Says Oil Output Set to Rise lays out for us the Mexican plans:

"Mexico's level of crude-oil production will move higher as new wells come online at existing fields, giving state-run oil monopoly Petroleos Mexicanos, or Pemex, time to develop shale oil and gas resources in the medium term, followed by deep-water fields in subsequent years, the company's production chief said Friday.

 "We now see conditions for a return to higher output," Carlos Morales, Pemex's head of exploration and production, said in an interview. "Today we are producing 2.565 million barrels a day," he said. "We hope to be reaching the end of the administration [2018] with production around three million barrels a day.". . .

The Pemex production chief says he expects the company's mix of oil sources to keep the production cost of crude around the current $6.80 per barrel. But while production over the next eight years or so will be dominated by existing projects, Pemex will be moving aggressively on exploiting shale oil and gas deposits, particularly those that are part of the Eagle Ford formation in Texas that crosses the border into Mexico.

"We have drilled wells in shale that produce crude," Mr. Morales said. "The cost is around $30 per barrel," which is more expensive than the relatively easy oil in the shallow waters of the Gulf of Mexico but still highly profitable at current oil prices, he added.

Pemex thinks Mexico could have as much as 60 billion barrels of crude oil equivalent in shale deposits, about evenly divided between oil and gas, Mr. Morales said. In the next few years, shale resources could undergo huge development because the technology to do so is already being widely used in the U.S.

Further in the future, Pemex will develop what it expects to be very large oil fields in the deep waters of the Gulf of Mexico, where the company is exploring, with promising results, Mr. Morales said. The first deep-water gas production is expected in 2015, and the first deep-water oil in 2018.

Mexico's new president, Enrique Pe├▒a Nieto, is planning to unveil a proposal to overhaul the nation's energy laws to allow more private investment in the oil industry, as current restrictions on private involvement make expensive plays such as deep-water oil prohibitive for a single company like Pemex to finance.

Mr. Morales . . . said that Mexico has abundant petroleum resources but that the question is how quickly the nation wants to exploit them and how much investment that will involve.

Pemex said Thursday it plans to invest a record $25.3 billion this year, four-fifths of which will go into upstream activities, including $3 billion for exploration.

Pemex had record sales of $126.6 billion in 2012, up from $111.4 billion in 2011, as double-digit growth in domestic sales offset practically flat export sales. The company also paid a record $69.4 billion to the federal government in taxes and duties, leaving it with a net profit of just under $400 million. Oil and related taxes and royalties make up about a third of Mexico's federal budgets, and Pemex occasionally reports quarterly net losses as a result."

Summing Up

The U.S. has the technology. Mexico apparently now has the will to use it.

Both countries have an abundance of available energy, as does Canada.

And the market potential, including profitability and the opportunity for lots of jobs, tax revenues and strong economic growth is right there before our eyes.

Accordingly, achieving true North American energy independence is essentially now in the hands of the U.S. politicians in general, and President Obama and the Democratic Party in particular.

The Keystone XL Pipeline, offshore drilling, stepped up drilling on private lands, allowing exports of natural gas and so forth are all there for the taking.

And they're all low cost and high output possibilities with greater national security, in addition to all the aforementioned economic benefits, the inevitable result.

So why are we as a nation spending so much time and energy debating and wringing our hands over the sequester?

Aren't our politicians something? Something bad, that is.

And our media? Ditto for them, too.

Let's talk about the stuff that matters the most. And high on that 'must discuss' list must be energy independence.

That's my take.

Thanks. Bob.

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