The discovery of a vast new oil deposit in central Mexico will "significantly" increase the country's potential oil reserves but not by 50 percent as has been reported, Jose Diaz Serrano, president of Mexico's state oil monopoly said yesterday.
Although the new deposit has been provisionally calculated to hold a massive 106 billion barrels, "this figure cannot just be added to Mexico's present reserve because we do not know yet how much of the deposit is recoverable at current prices and with current technology," Diaz Serrano said.
Qualified sources said that Premex, the state oil company, estimates that only about 7 percent of the Chicontepec "heavy quality oil" deposits could be simply pumped up while perhaps 25 or 30 percent would require water flooding, a system that is more expensive but widely used in Mexico and elsewhere. The rest of the oil may not be recoverable without highly expensive methods, they said.
Pemex chief Diaz Serrano spoke at a news conference called "to clarify" U.S. press reports saying that as a result of the latest discoveries, Mexico's potential reserves could jump from 200 to 300 billion barrels, making Mexico the world's leader in oil reserve.
"We are not racing with anyone to win out on the reserve figure," said the Pemex chief with some irritation. He denied reports that Mexico will automatically have 300 billion potential barrels.
"We just cannot say that," he said. "We have no idea whether this is true or false. The viability of the deposits is still under study."
However, at year's end when Pemex traditionally publishes its reserve figures, the country's proven, probable and potential reserves "will be increased significantly" as the result of the discovery, Diaz Serrano said.
The confusion surrounding Mexico's giant new oil riches stemmed from an address by the Pemex chief on Nov. 12 before the Latin American Petrochemical Congress in which he spoke of "vast deposits in an area we called Chicontepec." In an area of 1,320 square miles and at a depth between 210 and 5400 feet, he said, "we calculated with reliable and abundant information that the rock holds somewhat more than 100 billion barrels of oil and some 40 trillion cubic feet of natural gas."
Development of the whole area, which would require the drilling of about 16,000 wells and construction of about 1,800 miles of road, would need vast supplies and require the doubling of Mexico's current industrial capacity, according to the Pemex chief.
Diaz Serrano's speech, which Pemex officials said was intended as an incentive to Mexico's deficient industrial sector, then backfired when a foreign news agency simply added the 100 billion barrels from Chicontepec to the present 200 billion official potential reserves.
Diaz Serrano declined to respond questions about the need for such a vast development project while Pemex was still unsure of the recoverebility of the new reserve.
But qualified sources familiar with the energy picture here said that Pemex traditionally has been extremely conservative in announcing new reserves before they had been certified by an international auditing firm. The sources explained that the structures at Chincontepec were rather like the Texas oil fields requiring a vast number of low production wells, "perhaps at the rate of 200 or 300 barrels per day per well."