The unforgettable song “What a Difference a Day Makes” was originally written by Mexican songwriter María Grever in 1934. Made world famous by Dinah Washington in 1959, it has endured dozens of re-recordings, at least once every decade. In energy matters, a decade is sufficient to see the impact on a country of policies, investment, technology, demographics and aspects of the energy transition.

So let’s look back over the decade in energy that ended just before the pandemic, comparing 2009 to 2019 amongst the four energy oil and gas giants of the Americas – Mexico, Brazil, USA and Venezuela. I have deliberately included the actual numbers; my interpretation is intentionally brief and perhaps your views differ; all numbers however are verified and cross-checked.

Oil production and reserves

The transformation of USA oil production, driven largely by the shale revolution and fracking technology is clear to see. Oil production in 2009 was 7.27 million barrels per day (mmb/d) and by 2019 was more than doubled at 17.04 mmb/d. A true transformation, recognising that both Alaska and shallow water US Gulf of Mexico are mature & declined in importance. Steady growth was seen in Brazil from 2.02 to 2.88 mmb/d, this increase being underpinned by multiple new deepwater and ultra deepwater developments.

In Mexico, the steep fall in oil production from 2.98 to 1.92 mmb/d is well documented. Decline at the mature supergiant Cantarell field and continual under-investment need no further comment here. In the latter half of the decade, energy reform brought additional investors who by end 2019 were contributing 0.05 mmb/d. In Venezuela, the lack of investment and effective withdrawal of many investors is crystal clear, production collapsing from 3.04 to 0.92 mmb/d. From being ahead of both Mexico and Brazil in 2009, its oil production is now far behind.

The ability of fracking to access previously uncommercial reservoirs dramatically increased oil reserves in the USA. Proven reserves surged from 30.9 billion barrels (bn bbls) to 68.9. Venezuela also added to its large reserves base moving from 211 to 304 bn bbls although much of this is low quality extra-heavy oil that is difficult to produce and refine. Brazil was able to increase production off a negligible fall in reserves, down from 12.9 to 12.7 bn bbls.

Mexico however saw a steep fall in reserves. Of the four countries, Mexico now has by far the lowest oil reserves. Its decades-long struggles to replenish 100% of annual production are reflected in a very worrying decline of reserves from 11.9 to 5.8 bn bbls.

Natural gas production and reserves

The shale revolution also drove USA natural gas production much higher from 53.9 billion cubic feet per day (bcf/d) to 89.1. Brazil also pushed higher from 1.2 to 1.5 bcf/d. Venezuela edged lower from 3.1 to 2.6 bcf/d, whereas Mexico showed by far the largest fall, from 5.1 to 3.3 bcf/d.

Natural gas reserves increased strongly in the USA, as might be expected, from 261.9 trillion cubic feet (tcf) to 454.5. Venezuela also increased reserves from 198.5 to 222.5 tcf. Brazil was able to increase production from a reserves base that stayed flat at 13.3 tcf. However, Mexico’s gas reserves fell markedly from 12.0 to 6.3 tcf flagging real cause for concern.

Energy consumption

Changes in energy consumption are a complex mix resulting from economic growth, changes in population (which reflects the number of energy consumers), technology changes, investment and of course government policies and regulations. Primary energy consumption, oil and natural gas consumption and refinery throughputs are each important indicators.

The population of all four countries grew between 2009 and 2019. The USA had the highest growth in total numbers, from 306million (m) to 328m, followed by Brazil from 194m to 211m. Mexico had the highest percentage growth, increasing from 112 to 128m. In Venezuela, the population barely grew from 27m to 28m. This however does not reflect an outflow of over 5m migrants, mostly of working age and including many skilled and educated professionals, into other countries across the Americas; this represents one of world’s largest mass migrations in recent times.

The decade saw oil prices in 2009 average US$ 61.92 per barrel (West Texas prices /bbl) and at US$ 57.03/bbl in 2019. The average for each year of 2009 through 2019 was in a range US$ 43-98/bbl.

Against this backdrop, total primary energy consumption in the USA grew from 89.9 Exajoules (EJ) to 94.7 EJ, Brazil grew from 10.0 to 12.4 EJ and Mexico grew from 7.1 to 7.7 EJ. In Venezuela however, consumption fell from 3.5 to 2.2 EJ reflecting the impacts of economic contraction and hyperinflation particularly during the last 6 years; one of the biggest sustained contractions in Latin American history.

Per capita consumption of primary energy offers further insight. Only Brazil’s population became more energy intensive, per capita consumption increasing from 51.5 to 58.8 Gigajoules (GJ), most likely reflecting its steady growth in GDP and rising middle class. The fall was dramatic in Venezuela from 125.9 to 78.1. Mexico fell from 63.1 to 60.5. The USA fell marginally from 293.6 to 292.2 GJ but even so at the end of the decade its consumption was 4 to 5 times higher per person than either Mexico, Brazil or Venezuela.

Both oil and natural gas consumption grew in the USA and Brazil underpinning their economic growth. In the USA, oil consumption moved up from 18.0 to 19.4 mmb/d and gas from 59.7 to 81.9 bcf/d. In Brazil, oil consumption rose from 2.1 to 2.4 mmb/d and gas from 2.0 to 3.5 bcf/d. Both countries also continually produced and consumed the bulk of the world’s biofuels.

In Mexico, oil consumption fell slightly from 2.0 to 1.7 mmb/d, but the big change was in gas consumption used mostly for power generation; this increased from 6.3 to 8.8 bcf/d. When combined with Mexico’s fall in gas production, imports have skyrocketed from 1.2 to 5.5 bcf/d.

In Venezuela, oil and natural gas consumption fell, oil from 0.7 to 0.4 mmb/d and gas from 3.3 to 2.6 bcf/d contributing to the strong economic contraction.

Finally, refinery throughput. The USA went from strength to strength, based around its gigantic refining and petrochemicals capability concentrated along the US Gulf Coast. Refinery throughput rose from 14.34 million barrels per day (mmb/d) to 16.60. Elsewhere saw declines, Brazil marginally down from 1.78 to 1.75 mmb/d, Mexico down significantly from 1.12 to 0.59, while Venezuela collapsed from 0.96 to 0.14 mmb/d.

Emissions

This will be a surprise for many. The USA shows the largest drop in emissions! With cheap natural gas displacing coal, helped by intense gas-on-gas competition, more efficient vehicle engines, a tripling in renewable power and the growing uptake of electric & hybrid cars, emissions fell from 5,298 million metric tonnes of CO2 (mmt) to 4,965 mmt. In Venezuela, emissions also fell from 173 to 102 mmt largely due to the lower economy activity.

Mexico recorded a modest increase, from 434 to 455 mmt. Brazil jumped from 351 to 441 mmt as hydrocarbons helped fuel an expanding economy.

In summary

The numbers clearly reflect how the USA has powered ahead using its new found oil and natural gas reserves released by fracking and other technology advances. Natural gas for power, always seen as a bridge to a low carbon future, is replacing coal and oil, leading to lower emissions. Expansions in refining created added value supplying a fast expanding population. Yes, the USA remains addicted to oil but it is no longer dependent upon large imports of crude.

Within the decade, Brazil has surged far ahead of Mexico in terms of oil production, oil reserves, natural gas reserves and refining. In part this was due to multiple successful offshore deepwater bid rounds bringing international expertise and investment often partnered with the State oil company know-how. Typically seen as trailing Mexico a decade ago in oil and gas production, Brazil is now well ahead and has become a global industry hot spot attracting huge investment. 

Mexico clearly has deeply worrying trends with notable falls in both oil and natural gas production, and both oil and natural gas reserves, as well as a significant fall in refinery throughput. The many decades of underinvestment in the hydrocarbon sector are now painfully exposed. Added to this, current limitations on private sector investment make growth harder. Mexico’s role as a key oil exporter in the region is much diminished and it must now seek more distant markets. The true potential of offshore deep-water resources and onshore shale remains unknown. Certainly in natural gas and refining the past decade has seen Mexico become dependent on overseas suppliers.

In Venezuela, the numbers are perhaps no surprise. Venezuela began the decade as an important OPEC producer and regional oil exporter. But the increasing burden of ideological economic and social policies, as well as international sanctions and an exodus of expertise, all deterred and frustrated investors. This is reflected in the collapse of oil production and refining throughput, despite having a plentiful natural resource base. In recent years, increased borrowing against future oil production to supplement budget needs carries great risks. It is difficult to envisage an industry resurgence before resolving the complex political issues. Resources that are under the ground often have little real value until you bring them to the surface. With a fast moving energy transition, many of their hydrocarbon reserves might never be produced.

Oh what a difference a decade can make!

Mr. Chris Sladen runs an advisory service offering insights to inform, shape a decision, and guide the next steps for energy ventures. Chris has a unique global experience having worked in the energy sector of over 40 countries. This is underpinned by extensive knowledge of petroleum systems and where best to find oil and gas, notably in the Gulf of Mexico & nearby areas, and NE & SE Asia, as well as the development of midstream, downstream & renewables investments in many emerging economies. Chris has extensive experience acquired on the Boards of companies, subsidiaries, business chambers & organisations. Chris has a career of over 40 years in the energy sector, living in Mexico (2001-2018), Russia, Vietnam, Mongolia, China & UK.

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