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Paul Vedeld
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Paul Vedeld is a Professor in Environment and Development Studies at the University of Life Sciences Norway (UMB). He holds a M.Sc. in Natural Resource Management and a Ph.D. in Resource, Agriculture and Development Economics. He has also conducted studies in social anthropology and philosophy of science.

In addition to academic work, he worked for two years in India with environment and development programs for the Norwegian government and one year as political advisor for development issues in the Norwegian Parliament. He has also worked as consultant for Norad, NMFA, World Bank, GEF, IFAD, DANIDA, SIDA and other donors.

He has field experiences from a number of countries in East and Southern Africa, Central America and Asia (India) and more than 20 years of working experience as a teacher and researcher at UMB.

His main research interests are within environment and development studies from neo-institutional perspectives, looking into environmental governance and policy analysis, analysis of linkages between rural livelihoods, local institutions, poverty and the environment, protected area management, environmental conflicts and stakeholder analyses, and also more theoretical studies of education and interdisciplinarity within the environment and development field using sociological and philosophy of science perspectives.

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National Humanities Center
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The National Humanities Center is an independent American institute for advanced study in all fields of the humanities. Privately incorporated and governed by a distinguished board of trustees from academic, professional, and public life, the Center was planned under the auspices of the American Academy of Arts and Sciences and began operation in 1978. It provides a national focus for work in the liberal arts, drawing attention to the enduring value of ancient and modern history, language and literature, ethical and moral reflection, artistic and cultural traditions, and critical thought in every area of humanistic investigation. By encouraging excellence in scholarship, the Center seeks to insure the continuing strength of the liberal arts and to affirm the importance of the humanities in American life.

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Featured Environmental Classic

Undersea (historical)

Originally Published As:
Title: Undersea
Author: Rachel Louise Carson
Source: Atlantic Monthly, 78 (September 1937), pp. 55–67
Year published: 1937


EDITOR'S NOTE: This paper is among Carson's earliest published work. It was originally titled “The World of Waters” and was written as an introduction to a U.S. Bureau of Fisheries brochure in 1935. She was encouraged to submit it to Atlantic Monthly, where it was published by editor Edward Weeks. Its publication marked Carson’s literary debut as a writer of critical merit. “Undersea” subsequently became the basis of Carson’s first book, Under the Sea-Wind (1941). “Undersea” introduces two of Carson’s signature themes: the ancient and enduring ecology that dominates ocean life, and the material immortality that encompasses even the smallest organism. From these four pages in Atlantic Monthly, Carson later admitted, “everything else followed.”


Who has known the ocean? Neither you nor I, with our earth-bound senses, know the foam and surge of the tide that beats over the crab hiding under the seaweed of his tidepool home; or the lilt of the long, slow swells of mid-ocean, where shoals of wandering fish prey and are preyed upon, and the dolphin breaks the waves to breathe the upper atmosphere. Nor can we know the vicissitudes of life on the ocean floor, where the sunlight, filtering through a hundred feet of water, makes but a fleeting, bluish twilight, in which dwell sponge and mollusk and starfish and coral, where swarms of diminutive fish twinkle through the dusk like a silver rain of meteors, and eels lie in wait among the rocks. Even less is it given to man to descend those six incomprehensible miles into the recesses of the abyss, where reign utter silence and unvarying cold and eternal night.

To sense this world of waters known to the creatures of the sea we must shed our human perceptions of length and breadth and time and place, and enter vicariously into a universe of all-pervading water. For to the sea’s children nothing is so important as the fluidity of their world. It is water that they breathe; water that brings them food; water through which they see, by filtered sunshine from which first the red rays, then the greens, and finally the purples have been strained; water through which they sense vibrations equivalent to sound. And indeed it is nothing more or less than sea water, in all its varying conditions of temperature, saltiness, and pressure, that forms the invisible barriers that confine each marine type within a special zone of life – one to the shore line, another to some submarine chasm on the far slopes of the continental shelf, and yet another, perhaps, to an imperceptibly defined stratum at mid-depths of ocean.

There are comparatively few living things whose shifting pattern of life embraces both land and sea. Such are creatures of the tide pools among the rocks and of the mud flats sloping away from dune and beach grass to the water’s edge. Between low water and the flotsam and jetsam of the high-tide mark, land and sea wage a never-ending conflict for possession.

As on land the coming of night brings a change over the face of field and forest, sending some wild things into the save retreat of their burrows and bringing others forth to prowl and forage, so at ebb tide the creatures of the waters largely disappear from sight, and in their place come marauders from the land to search the tide pools and to probe the sands for the silent, waiting fauna of the shore.

Twice between succeeding dawns, as the waters abandon pursuit of the beckoning moon and fall back, foot by foot, periwinkle and starfish and crab are cast upon the mercy of the sands. Every heap of brine-drenched seaweed, every pool forgotten by the retreating sea in recess of sand or rock, offers sanctuary from sun and biting sand.

In the tide pools, seas in miniature, sponges of the simpler kinds encrust the rocks, each hungrily drawing in through its myriad mouths the nutriment-laden water. Starfishes and sea anemones are common dwellers in such rock-grit pools. Shell-less cousins of the snail, the naked sea slugs are spots of brilliant rose and bronze, spreading arborescent gills to the waters, while the tube worms, architects of the tide pools, fashion their conical dwellings of sand grains, cemented on against another in glistening mosai.

On the sands the clams burrow down in search of coolness and moisture, and oysters close their all-excluding shells and wait for the return of the water. Crabs crowd into damp rock caverns, where periwinkles cling to the walls. Colonies of gnome-like shrimps find refuge under dripping strands of brown, leathery week heaped on the beach.

Hard upon the retreating sea press invaders from the land. Shore birds patter along the beach by day, and legions of the ghost crab shuffle across the damp sands by night. Chief, perhaps, among he plunderers is man, probing the soft mud flats and dipping his nets into the shallow waters.

At last comes a tentative ripple, then another, and finally the full, surging sweep of the incoming tide. The folk of the pools awake-clams stir in the mud. Barnacles open their shells and begin a rhythmic sifting of the waters. One by one, brilliant-hued flowers blossom in the shallow water as tubeworms extend cautious tentacles.

The ocean is a place of paradoxes. It is the home of the great white shark, two-thousand-pound killer of the seas, and of the hundred-foot blue whale, the largest animal that ever lived. It is also the home of living things so small that your two hands might scoop up as many of them as there are stars in the Milky Way. And it is because of the flowering of astronomical numbers of these diminutive plants, known as diatoms, that the surface of waters of the ocean are in reality boundless pastures. Every marine animal, from the smallest to the sharks and whales, is ultimately dependent for its food upon these microscopic entities of the vegetable life of the ocean. Within their fragile walls, the sea performs a vital alchemy that utilizes the sterile chemical elements dissolved in the water and welds them with the torch of sunlight into the stuff of life. Only through this little-understood synthesis of proteins, fats, and carbohydrates by myriad plant “producers” is the mineral wealth of the sea made available to the animal “consumers” that browse as they float with the currents. Drifting endlessly, midway between the sea of air above and the depths of the abyss below, these strange creatures and the marine inflorescence that sustains them are called “plankton” – the wanderers.

Many of the fishes, as well as the bottom-dwelling mollusks and worms and starfish, begin life as temporary members of this roving company, for the ocean cradles their young in its surface waters. The sea is not a solicitous foster mother. The delicate eggs and fragile larvae are buffeted by storms raging across the open ocean and preyed upon by diminutive monsters, the hungry glass worms and comb jellies of the plankton.

These ocean pastures are also the domain of vast shoals of adult fishes: herring, anchovy, menhaden, and mackerel, feeding upon the animals of the plankton and in their turn preyed upon; for here the dogfish hunt in packs, and the ravenous bluefish, like roving buccaneers, take their booty where they find it.

Dropping downward a scant hundred feet to the white sand beneath, an undersea traveler would discover a land where the noonday sun is swathed in twilight blues and purples, and where the blackness of midnight is eerily aglow with the cold phosphorescence of living things. Dwelling among the crepuscular shadows of the ocean floor are creatures whose terrestrial counterparts are drab and commonplace, but which are themselves invested with delicate beauty by the sea. Crystal cones form the shells of pteropods or winged snails hat drift downward from the surface to these dim regions by day; and the translucent spires of lovely ianthina are tinged with Tyrian purple.

Other creatures of the sea’s bottom may be fantastic rather than beautiful. Spine-studded urchins, like rotund hedgehogs of the sea, tumble over the sands, where mollusks lie with slightly opened shells, busily straining the water for debris. Life flows on monotonously for these passive sifters of the currents, who move little or not at all from year to year. Among the rock ledges, eels and cunners forage greedily, while the lobster feels his way with nimble wariness through the perpetual twilight.

Farther out on the continental shelf, the ocean floor is scarred with deep ravines, perhaps the valleys of drowned rivers, and dotted with undersea plateaus. Hosts of fish graze on these submerged islands, which are richly carpeted with sluggish or sessile forms of life. Chief among the ground fish are haddock, cods, flounders and their mightier relative, the halibut. From these and shallower waters man, the predator, exacts a yearly tribute of nearly thirty billion pounds of fish.

If the underwater traveler might continue to explore the ocean floor, he would traverse miles of level prairie lands; he would ascend the sloping sides of hills; and he would skirt deep and ragged crevasses yawning suddenly at his feet. Through the gathering darkness, he would come at last to the edge of the continental shelf. The ceiling of the ocean would lie a hundred fathoms above him, and his feet would rest upon the brink of a slope that drops precipitously another mile, and then descends more gently into an inky void that is the abyss.

What human mind can visualize conditions in the uttermost depths of the ocean? Increasing with every foot of depth, enormous pressures reach, three thousand fathoms down, the inconceivable magnitude of three tons to every square inch of surface. In these silent deeps a glacial cold prevails, a bleak iciness which never varies, summer or winter, years melting into centuries, and centuries into ages of geologic time. There, too, darkness reigns – the blackness of primeval night in which the ocean came into being, unbroken, through eons of succeeding time, by the gray light of dawn.

It is easy to understand why early students of the ocean believed these regions were devoid of life, but strange creatures have now been dredged from the depths to bear mute and fragmentary testimony concerning life in the abyss.

The “monsters” of the deep sea are small, voracious fishes with gaping, tooth-studded jaws, some with sensitive feelers serving the function of eyes, other bearing luminous torches or lures to search out or entice their living prey. Through the night of the abyss, the flickering lights of these foragers move to and fro. Many of the sessile bottom dwellers glow with a strange radiance suffusing the entire body, while other swimming creatures may have tiny, glittering lights picked out in rows and patterns.

The deep-sea prawn and the abyssal cuttlefish eject a luminous cloud, and under cover of this pillar of fire escape from their enemies.

Monotones of red and brown and lusterless black are the prevailing colors in the deep sea, allowing the wearers to reflect the minimum of the phosphorescent gleams, and to blend into the safe obscurity of the surrounding gloom.

On the muddy bottom of the abyss, treacherous oozes threaten to engulf small scavengers as they busily sift the debris for food. Crabs and prawns pick their way over the yielding mud on stilt-like legs; sea spiders creep over sponges raised on delicate stalks above the slime.

Because the last vestige of plant life was left behind in the shallow zone penetrated by the rays of the sun, the inhabitants of these depths contrast strangely with the self-supporting assemblage of the surface waters. Preying one upon another, the abyssal creatures are ultimately dependent upon the slow rain of dead plants and animals from above. Every living thing of the ocean, plant and animal alike, returns to the water at the end of its own life span the materials that had been temporarily assembled to form its body. So there descends into the depths a gentle, never-ending rain of the disintegrating particles of what once were living creatures of the sunlit surface waters, or of those twilight regions beneath.

Here in the sea mingle elements which, in their long and amazing history, have lent life and strength and beauty to a bewildering variety of living creatures. Ions of calcium, now free in the water, were borrowed years ago from the from the sea to form part of the protective armor of a mollusk, returned to the main reservoir when their temporary owner had ceased to have need of them, and later incorporated into the delicate statuary of a coral reef. Here are atoms of silica, once imprisoned in a layer of flint in the subterranean darkness; later, within the fragile shell of a diatom, tossed by waves and warmed by the sun; and again entering into the exquisite structure of a radiolarian shell, that miracle of ephemeral beauty that might be the work of a fairy glass-blower with a snowflake as his pattern.

Except for the precipitous slopes and regions swept bare by the submarine currents, the ocean floor is covered with primeval oozes which have been accumulating for eons deposits of varied origins; earth-born materials freighted seaward by rivers or worn from the shores of continents by the ceaseless grinding of waves; volcanic dust transported long distances by wind, floating lightly on the surface and eventually sinking into the depths to mingle with the products of no less mighty eruptions of submarine volcanoes; spherules of iron and nickel from interstellar space; and substances of organic origin – the siliceous skeletons of Radiolaria and the frustules of diatoms, the limey remains of algae and corals, and the shells of minute Foraminifera and delicate pelagic snails.

While the bottoms near the shore are covered with detritus from the land, the remains of the floating and swimming creatures of the sea prevail in the deep waters of the open ocean. Beneath tropical seas, in depths of 1000 to 1500 fathoms, calcareous oozes cover nearly a third of the ocean floor; while the colder waters of the temperate and polar regions release to the underlying bottom the siliceous remains of diatoms and Radiolaria. In the red clay that carpets the great deeps at 3000 fathoms or more, such delicate skeletons are extremely rare. Among the few organic remains not dissolved before they reach these cold and silent depths are the ear bones of whales and the teeth of sharks.

Thus we see the parts of the plan fall into place: the water receiving from earth and air the simple materials, storing them up until the gathering energy of the spring sun wakens the sleeping plants to a burst of dynamic activity, hungry swarms of planktonic animals growing and multiplying upon the abundant plants, and themselves falling prey to the shoals of fish; all, in the end, to be redissolved into their component substances when the inexorable laws of the sea demand it. Individual elements are lost to view, only to reappear again and again in different incarnations in a kind of material immortality. Kindred forces to those which, in some period inconceivably remote, gave birth to that primeval bit of protoplasm tossing on the ancient seas continue their mighty and incomprehensible work. Against this cosmic background the life span of a particular plant or animal appears, not as a drama complete in itself, but only as a brief interlude in a panorama of endless change.

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Featured Map

Qaidam Basin semi-desert

Introduction

The Qaidam Desert is a high basin surrounded by mountains where cold temperatures and lack of water limit vegetative growth. Because the basin has no outlet to the sea, water that flows into the basin from surrounding mountains can only evaporate, creating saline soil conditions (Qaidam is the Mongolian word for salt). This ecoregion has historically supported populations of wild ungulates including goitered gazelle, blue sheep, wild yak, Asiatic wild ass, and argali as well as predators such as brown bears, wolves and lynx, as well as the rare Bactrian camel (Camelus bactrianus) and Przewalski's horse (Equus przewalskii). Surveys reveal that these populations have declined in recent years, while the human population of the basin has increased.

Location and General Description

The Qaidam is a graben, or sunken valley, that lies between the Altun Mountains to the north (highest peaks exceed 6,000 meters (m)) and the Kunlun Mountains to the south (highest peaks exceed 7,000 m). The western part of the Qilian Mountain Range also encloses the Qaidam Basin. It is about 850 kilometers (km) east-to-west and about 300 km north-to-south with an elevation of 2,700 to 3000 m.

Because of high elevation and great distance from the moderating effects of the ocean, the Qaidam Basin has a severe climate despite its position at lower temperate latitudes. Winters are long and very cold, and the region is subject to high winds and sandstorms during spring. Mean annual temperature is about -6oC, although temperatures during the warm season average 18 to 20oC on the floor of the basin. The Qaidam lies north of numerous other mountain ranges that it is almost completely cut off from the South Asian monsoon that brings large amounts of precipitation to much of the Tibetan Plateau. Mountains to the north block incursions of arctic moisture. As a result, the center of the basin, especially the western part, is one of the driest places in China (mean precipitation is 35 millimeters (mm) per year) while higher elevations near the base of the mountains receive somewhat more precipitation, mostly during summer thunderstorms.

Most of the Qaidam Basin supports sparse desert vegetation on gravelly, well-drained soils. A typical pattern is scattered shrubs on the upper parts of alluvial fans where ground water lies closer to the surface, and in canyons where rivers emerge from the mountains. Flat areas farther from the mountains may almost completely lack vegetation. The eastern part of the basin receives more precipitation and has a relatively higher level of vegetation coverage. Dominant species include the cold-tolerant, xerophytic shrub, Haloxylon ammodendron (Goosefoot Family Chenopodiaceae), the tamarisk (Reaumuria spp.), and the gymnosperm Ephedra przewalski. Other species include Nitraria vannoides, Salsola collina, and Tamarix spp. The western part of the basin consists of arid desert with almost no vegetation at all, including expanses of gravel, and shifting sand. Other areas of the basin are covered in salt deposits as much as 15 m deep.

The southern part of the Qaidam Basin, where elevations are lowest, acts as a sink for rivers flowing from the adjacent mountain ranges. Extensive saline meadows and salt marshes occur in this part of the basin. Characteristic vegetation in this frigid, flooded, saline/alkaline environment consists of Koresia littledalei, Aneurolepidium dasistachyum, and Polygonum sibiricum.

Surrounding mountain slopes at higher elevations support shrubs adapted to cold, windy, semi-arid conditions. This alpine desert vegetation consists mainly of Ajania tibetica and the cushion plant Ceratoides compacta. Small needle-grasses like Stipa subsessiliflora form a thin ground cover in such places.

Oases, watered by snowmelt from the surrounding mountains, support forests of the poplar Populus diversifolia. The ecology of these places has been severely altered by irrigated agriculture.

Biodiversity Features

Large mammals recorded during a 1986 survey of the Qaidam Basin and adjoining mountain valleys include the predators brown bear (Ursus arctos), wolf (Canis lupus), red fox (Vulpus vulpus), lynx (Felis lynx) and the ungulates goitered gazelle (Gazella subgutturosa), blue sheep (Pseudois nayau). Wooly hare (Lepus oiostolus) was also found. Mammals recorded in 1972 that were not detected in 1986 include Asiatic wild ass (Equus kiang) and wild yak (Bos grunniens). Hides of a number of other mammal species were also recorded in 1986, although these might not have come from Qaidam Basin populations.

Qaidam Basin is one of the few places in China where Bactrian camels (Camelus bactrianus) and Przewalski's horse (Equus przewalskii) have been reported in recent years, although it is unlikely that either of these severely endangered mammals remains in the Qaidam Basin today. The basin does support a large number of domestic Bactrian camels. Scrubby and forested mountain valleys on the slopes to the south of the Qaidam Basin contain some of the richest wildlife habitat and wildlife populations, including musk deer (Moschus spp.) and Tibetan antelope (Pantholops hodgsoni).

Although reptiles in the region are not well-studied, at least one endemic lizard, the toad-headed agamid (Phrynocephalus vlangalii), occurs here.

Current Status

Between 1946 and 1986, the human population of the Qaidam Basin increased 27-fold to 270,000. This increase was accompanied by a severe reduction in forest cover and an expansion of agriculture into marginal areas. Affected forests include Populus diversifolia in valley oases and conifer forest stands in outlying mountain valleys. Livestock grazing and hunting have also increased. The result of these trends has been a decline in wildlife throughout the region.

The Qaidam Basin currently lacks nature reserves or other types of protected areas, although salt marshes at the center of the basin could offer significant habitat for birds such as black-necked crane (Grus nigricollis) and bar-headed goose (Anser indicus).

Types and Severity of Threats

Mining of salt and potash are some of the extractive industries that occur here. Oil exploration and development of oil fields is another potentially disruptive activity that takes place. The Qaidam Basin is the site of the Dulan agricultural resettlement plan in which large numbers of farmers from other parts of China are slated for settlement in areas inhabited by ethnic Tibetan herders. This project, initially endorsed by the World Bank but later discontinued amid international controversy, is still supported by the Chinese Central Government. Resettlement of 61,000 people to this area will accompany planting of windbreak forests and increased irrigation.

Justification of Ecoregion Delineation

The ecoregion boundary is based on CVMCC Vegetation Map of China classes shrubby desert, sparse alpine vegetation, but also includes some saline shrub and meadow in the alluvial areas and sand dunes. This is comparable to the Qaidam Basin biogeographic subunit in the Takla-Makan-Gobi Desert according to Mackinnon et al.

Additional Information on this Ecoregion

Further Reading

  • Cai, Guiquan, Liu Yongsheng and B.W. O'Gara. 1990. Observations of large mammals in the Qaidam Basin and its periperhal mountainous areas in the People's Republic of China. Canadian Journal of Zoology 68: 2021-2024.
  • Chinese Vegetation Map Compilation Committee (CVMCC). 1979. Vegetation map of China. Map (1:10,000,000). Science Press, Beijing, China.
  • Laidler L. and L. Keith. 1996. China's threatened wildlife. Blandford, London. ISBN: 0713727055
  • Lu, J. 1995. Ecological significance and classification of Chinese wetlands. Vegetatio 118: 49-56.
  • MacKinnon, J. 1996. Wild China. The MIT Press, Cambridge, MA. ISBN: 0262133296
  • MacKinnon, J., Meng Sha, C. Cheung, G. Carey, Zhu Xiang and D. Melville. 1996. A Biodiversity Review of China. Worldwide Fund for Nature (WWF) International, Hong Kong.
  • Zhao, Ji. editor. Zheng Guangmei, Wang Huadong, Xu Jialin. 1990. The Natural History of China. McGraw Hill Publishing Company, New York. ISBN: 0070107521
  • Zhang, Baiping. 1995. Geoecology and sustainable mountain development in the Kunlun Mountains, China. Mountain Research and Development 15(3): 283-292.



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Country Profile

Energy profile of Mexico

Introduction

Mexico’s economy continued to experience strong growth in 2005, with gross domestic product (GDP) increasing by 3.0 percent in 2005, after growing by 4.4 percent in 2004. This growth is a sharp contrast to the earlier part of the decade, when Mexico’s GDP growth was very small or negative. A combination of high global oil prices and economic recovery in the United States has driven the economic recovery in Mexico.

The oil sector is a crucial component of Mexico’s economy. While its importance to the general Mexican economy has declined, the oil sector still generates over 10 percent of the country’s export earnings and one-third of government revenues. Another important part of the Mexican economy is the maquiladora sector, consisting of manufacturing plants located near the U.S. border. The maquiladora plants import raw materials from the United States, and then re-export the finished products duty free to the U.S. Other key economic sectors include the nonfuel mining sector and the manufacturing of automobiles and machine tools.

In July 2006, Felipe Calderon was elected as Mexico’s new president. The results of the election could have an important effect on the country’s energy sector, due to the strong state presence in the sector. According to press reports, Calderon has talked of allowing private companies to participate in new upstream energy projects, which could help stem Mexico’s declining crude oil production and lessen natural gas imports. In December 2006, Calderon appointed Jesus Reyes Heroles, a former energy minister and ambassador to the United States, as the new head of state oil monopoly Pemex, and Georgina Kessel as Energy Secretary.

Oil

According to the Oil and Gas Journal (OGJ), Mexico had 12.9 billion barrels of proven oil reserves as of January 1, 2006, the third-largest amount of conventional crude oil reserves in the Western Hemisphere. Most reserves consist of heavy crude oil varieties, with a specific gravity of less than 25° API. The largest concentration of remaining reserves occurs offshore in the southern part of the country, especially in the Campeche Basin.

Mexico is the fifth-largest producer of oil in the world. The country produced an average of 3.7 4 million barrels per day (bbl/d) of total oil liquids during 2006, a 1.2 percent decline from 2005 and a 2.5 percent decline from 2004. Of Mexico’s oil production, about 88 percent was crude oil and condensate, the rest consisting of natural gas liquids (NGL) and refinery gain. Many analysts believe that Mexican oil production has peaked, and that the country’s production will continue to decline in the coming years. EIA forecasts that Mexico will produce 3. 6 million bbl/d of oil in 2007, down from 3.8 million bbl/d in 2005 and 3.7 million bbl/d in 2006, mainly driven by declining production at its super-giant Cantarell field (please see below for a more detailed discussion of Cantarell).

Mexico’s proven reserves have declined in recent years. According to state-owned Pemex, Mexico’s reserves/production ratio (based on previous-year production levels) fell from 20 years in 2002 to 10 years in 2006. Analysts believe that Pemex does not have sufficient funds available for exploration and investment to reverse the decline, owing to high financial burdens placed upon the company by the Mexican government.

Sector Organization

The Mexican constitution provides that the Mexican nation owns all hydrocarbon resources in the country. In 1938, Mexico nationalized its oil sector, creating Petroleos Mexicanos Pemex) as the sole oil operator in the country. In 1992, Pemex divided into four operating subsidiaries: Exploration and Production, Gas and Basic Petrochemicals, Petrochemicals, and Refining. Pemex is the largest company in Mexico and one of the largest oil and natural gas companies in the world.

Pemex faces a variety of challenges in increasing its oil exploration and production (E&P) activities. First, Pemex has a complicated relationship with Mexico’s federal government. Pemex has been a steady source of funds for the government, sending an estimated 60 percent of its revenues to the federal government in 2005. In addition, Mexico’s Congress must approve Pemex’s budget each year. This has the effect of constraining Pemex’s ability to fund additional E&P investments. In the years that Pemex generated above-average revenues, the federal government took a larger stake of these earnings through taxes. Conversely, in years that Pemex generated below-average revenues, Congress cut Pemex’s E&P budget to make up for government deficits. Another source of revenue for Pemex is the Proyectos de Impacto Diferido en el Registro del Gasto (PIDIREGAS) scheme, whereby Pemex can finance new infrastructure projects through partnerships with private contractors.

These fiscal imbalances have led to Pemex carrying a high debt load. According to its 2005 financial statements, Pemex held $46 billion in long-term debt and an additional $34 billion in liabilities it faces for employee pensions. The mounting debt load could hinder Pemex’s access to international capital markets and prohibit increased spending on exploration and production.

Exploration and Production

Most of Mexico’s oil production occurs in the Gulf of Campeche, located off the south-eastern coast of the country in the Gulf of Mexico. In 2005, this area accounted for 73 percent of Mexico’s total crude oil production. There are other important production centers in onshore basins in the northern and southern parts of the country.

The Cantarell oil field, located in the Gulf of Campeche, is one of the largest oil fields in the world. In 2005, Cantarell produced 2.0 million bbl/d of crude oil, or 60 percent of the national total. The field consists of four major subfields: Akal, Nohoch, Chac, and Kutz. Production at Cantarell began in 1979, but production began to decline due to falling reservoir pressure. In 1997, Pemex developed a plan to reserve the field’s decline by injecting nitrogen into the reservoir to maintain pressure. The plan was a great success, with production at Cantarell in 2004 double the level seen in 1995. Other expansion plans at the field should continue to add incremental production increases: Pemex is currently developing the untapped Sihil field, located beneath Cantarell, which contains an estimated 400 million barrels of recoverable reserves.

However, Pemex has warned that Cantarell production has now entered a stage of long-term decline. According to Pemex, Cantarell produced 2.14 million bbl/d of crude oil during Jan-Sept 2004, versus 2.06 million bbl/d in 2005 and 1.85 million bbl/d in 2006 during the same period. Cantarell production will likely continue to decline by an estimated 14 percent per year going forward, despite any incremental gains by incorporating additional satellite fields.

The two other major oil production centers in the Gulf of Campeche are Ku-Maloob-Zaap (KMZ) and Abkatun-Pol-Chuc. Located adjacent to Cantarell, the KMZ complex produced 321,700 bbl/d of crude oil in 2005. Production at the field has risen by 50 percent over the past decade, and Pemex hopes that continued development of the field will replace some of the decline in Cantarell production. Off the coast of Tabasco state, the Abkatun-Pol-Chuch facility produced 299,800 bbl/d of crude oil in 2005. Production there has declined steadily, down over 50 percent from 1996.

Important onshore production centers in the southern part of the country include Bellota-Jujo and Samaria-Luna. There is less crude oil production in the northern part of the country, which produced only 8 3,5 00 bbl/d of crude oil production in 2005; the largest field in the North is Poza Rica.

Increasing Investment in Exploration and Production

In order to offset declining production at Cantarell, Pemex hopes to expand production at the KMZ field complex. By pursuing a nitrogen re-injection program similar to the one used at Cantarell, Pemex hopes to increase production at KMZ to 800,000 bbl/d by 2010. There is some evidence that these expansion plans are already beginning to show returns: according to Pemex, production at KMZ during Jan-Sept 2006 was almost 30 percent higher than production during the same period a year ago, though some of this increase could be attributed to lower-than-average production in 2005 due to heightened hurricane activity in the Gulf of Mexico. Another source of new crude oil production is Pemex’s Crudeo Ligero Marino project, which aims to increase offshore production of lighter crude varieties by 250,000 bbl/d by 2010.

Regarding new production assets, Pemex has started development of the onshore Chicontepec project, located northeast of Mexico City. Chincotepec contains an estimated 6.5 billion barrels of provable reserves. As of the end of 2004, Pemex reported that it had drilled 93 exploratory and 1,004 development wells in the area. However, the Chincotepec project is still in the very early stages of development, and there are no solid estimates available as to its full production potential.

Crude Varieties

Most of Mexico’s crude oil production consists of heavy crude varieties. During 2005, 72 percent of the country’s crude oil production was of Maya, which averages 22° API and 3.5-4.0 percent sulfur content. The country also produces two lighter crude streams, Isthmus (34° API) and Olmeca (39° API). In general, Mexico retains most of the lighter crude streams for domestic consumption and exports the bulk of its Maya production to the U.S. Gulf Coast, which has the sophisticated refining capacity necessary to process these heavy crudes.

Oil Exports

In 2005, Mexico exported 1.82 million bbl/d of crude oil. Of this amount, 90 percent went to the United States. Mexico is consistently one of the top three exporters of crude oil to the United States, along with Canada, Saudi Arabia, and Venezuela.

Pipelines

Pemex operates an extensive pipeline network in Mexico that connects major production centers with domestic refineries and export terminals. This network consists of over 453 pipelines spanning 2,900 miles, with the largest concentration occurring in the southern part of the country.

Downstream

According to the Oil and Gas Journal (OGJ), Mexico has six refineries, all operated by Pemex, with a total refining capacity of 1.68 million bbl/d. The largest facility in the country is the 330,000-bbl/d Salina Cruz facility. Pemex also controls 50 percent of the 334,000-bbl/d Deer Park refinery in Texas.

Despite its status as one of the world’s largest crude oil exporters, Mexico is a net importer of refined petroleum products. In 2005, Mexico imported 333,7000 bbl/d of refined petroleum products, while exporting 187,100 bbl/d. Of these imports, gasoline represented 51 percent. A resumption of brisk economic growth is one cause for the increase in refined product imports. Pemex has stated that it needs to spend at least $19 billion over the next eight years in order to make up for domestic shortfalls in gasoline production. The company has recently completed a series of refinery upgrades, and additional capacity should become available by 2008.

Natural Gas

According to the Oil and Gas Journal (OGJ), Mexico had 16.0 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2006. According to Pemex, the Southern Region of the country contains the largest share of proven reserves. However, the Northern Region will likely be the center of future reserves growth, as it contains almost ten times as many probable and possible natural gas reserves as the Southern Region. According to EIA, Mexico produced 1.46 Tcf of natural gas in 2004, up from 1.40 in 2003. In addition, the country consumed 1.78 Tcf of natural gas in 2004. Preliminary data from Pemex indicate that Mexico produced 1.62 Tcf of natural gas in 2005.

Mexico’s natural gas production has grown in recent years, following steady declines during the late 1990s. During that time, natural gas consumption has grown steadily, driven mostly by the electricity sector, whose share of total natural gas consumption increased from 16 percent in 1994 to 33 percent in 2004. On the other hand, Pemex itself is the single largest consumer of natural gas, representing 43 percent of domestic consumption in 2004. As a result of the domestic shortfall in natural gas production, Mexico imported 766 million cubic feet per day (MMcf/d) of natural gas in 2004 and 480 MMcf/d in 2005.

Sector Organization

State-owned Pemex holds a monopoly on natural gas exploration and production in Mexico. However, there is some private participation in ancillary services that support Pemex operations. The Mexican government opened the downstream natural gas sector to private operators in 1995, though no single company may participate in more than one industry function (transportation, storage, or distribution). It also created the Energy Regulatory Commission (CRE) to monitor the sector. CRE has awarded permits for natural gas distribution to Gas Natural, Tractebel, Gaz de France, Sempra Energy, Kinder Morgan, TXUEnergy, Grupo Diavaz, and Grupo Imperial.

Participation by Private Operators in the Upstream Sector

Mexico’s constitution restricts private operators in the upstream natural gas sector. However, Pemex introduced multiple service contracts (MSC) in an attempt to increase non-associated natural gas production. Under an MSC, Pemex can hire a private contractor (including both foreign and domestic firms) to conduct production activities in proven reserve areas, for which Pemex pays cash for these services. At no time do these private operators gain ownership rights over the natural gas they produce, a provision to ensure compatibility of the MSC with Mexico’s constitution.

Despite the misgivings of some Mexican politicians who questioned the legality of MSCs, Pemex launched the first MSC bidding round in July 2003. The company awarded five blocks in the Burgos Basin to international and domestic operators: Repsol-YPF (Spain) received the Reynosa-Monterrey block; Petrobras (Brazil), Teikoku Oil (Japan), and Grupo Diavaz (Mexico) received the Cuervito and Fronterizo blocks; Tecpetrol (Argentina), Industrial Perforadora de Campeche (Mexico) received the Mision block; and Lewis Energy (U.S.) received the Olmos block. Pemex hoped that the five deals would bring $4.5 billion in new investment to the Burgos Basin.

Pemex held a second MSC bidding round in July 2004. The round included acreage in the Burgos Basin that did not receive bids in the first round (Padera-Anahuac and Ricos blocks) and newly available areas of the Sabinas Basin (Pirineo and Monclova blocks). Results from the round were mixed. Pemex awarded the Padera-Anahuac block to consortium of two Mexican oil services companies in November 2004 and the Pirineo block to a consortium of seven Latin American firms in February 2005. However, the Ricos block received no bids, while Pemex later canceled a successful bid on the Monclova block by a consortium of two U.S. and three Mexican companies.

The MSCs seem to be a step towards the gradual opening of Mexico’s upstream natural gas sector. Pemex hopes that private investment in the MSC blocks will eventually increase the country’s natural gas production by 600 million cubic feet per day (MMcf/d). However, this increased production will not fully mitigate increasing natural gas consumption, meaning that Mexico will depend upon increased production by Pemex or imports for the foreseeable future.

Exploration and Production

Mexico’s natural gas production is relatively spread throughout the country. Onshore fields in the northern part of the country represented 38 percent of Mexico’s natural gas production in 2005, with onshore fields in the south contributing 29 percent, and offshore fields in the Gulf of Campeche represented the remainder. The single largest field is Cantarell, in the Gulf of Campeche, which produced 720 million cubic feet per day (MMcf/d) in 2005. Other major fields include Caan (206 MMcf/d), Culebra (172 MMcf/d), and Muspac (115 MMcf/d).

Pipelines and Storage

Pemex operates over 5,700 miles of natural gas pipelines in Mexico. The company has eleven natural gas processing centers, which produced 436,000 bbl/d of natural gas liquids (NGLs, including condensates) and 215,000 bbl/d of liquefied petroleum gas (LPG) in 2005. Pemex also operates most of the country’s natural gas distribution network, which supplies processed natural gas to consumption centers. The natural gas pipeline network includes twelve active connections with the United States.

TransCanada won a contract in June 2005 from Mexico’s Comision Federal de Electricidad (CFE) to build, own, and operate the 80-mile Tamazunchale Pipeline. The system will extend from the Pemex natural gas processing facility in Naranjos to a gas-fired power plant near Tamazunchale. The pipeline will have an initial capacity of 170 million cubic feet per day (MMcf/d), but the contract has an option to increase capacity to 430 MMcf/d, if CFE constructs additional gas-fired power plants in the area. TransCanada planned to bring the project online by the end of December 2006. In July 2006, CRE awarded a permit to U.S.-based Tidelands for the construction of the 1-Bcf/d Terranova Oriente bi-direction pipeline, which would connect a proposed storage facility to the U.S. and Mexican grids.

Liquefied Natural Gas (LNG)

There is a single operating liquefied natural gas (LNG) terminal in Mexico, and one other currently under construction. In addition, there are several more plants in various stages of the planning process. Many of the facilities are near the U.S.-Mexico border in Baja California, with the intention to supply markets in both countries.

East Coast

Altamira, a joint venture of Royal Dutch Shell (50 percent), Total (25 percent), and Mitsui (25 percent) received its first LNG cargo in August 2006. The plant, located in Tamaulipas state, has an initial capacity of 500 million cubic feet per day (MMcf/d), with plans to increase the project to a peak capacity of 1.3 billion cubic feet per day (Bcf/d). CFE has signed a 15-year contract to purchase the entire output of the terminal for 15 years. Shell plans to supply the Altamira terminal with LNG from Nigeria.

West Coast

The Costa Azul project, near Ensenada, is currently under construction. Project leader Sempra Energy plans to begin operations in late 2008, with a peak capacity of 1 billion cubic feet per day (Bcf/d). Royal Dutch Shell had originally obtained a permit to build its own LNG receiving terminal in the area, but later decided to buy into a 50 percent share of Sempra’s project instead. During the first several years of operations, Shell plans to source its LNG supply from its Sakhalin-II project, then later from Chevron’s Gorgon LNG project in Australia. For its part, Sempra Energy has signed a supply deal with BP’s Tangguh project in Indonesia. Most of the natural gas will supply domestic customers in northwest Mexico, but some natural gas could also be exported to California or Arizona.

Chevron plans to build an offshore LNG receiving terminal near the Coronado Islands. The plant will have an initial capacity of 700 MMcf/d, later growing to 1.4 Bcf/d. Mexico’s federal government has approved the project, but Chevron must still obtain permission from local regulators. There has been some opposition to the project from local residents and environmental activists from both Mexico and the United States. Chevron could supply the project from its Gorgon LNG export terminal in Australia.

In February 2004, Repsol-YPF won a concession to build an LNG receiving terminal in Lazaro Cardenas, Michoacan state. According to Repsol-YPF, the plant should come online in 2007 with an initial capacity of 390 million cubic feet per day (MMcf/d), eventually ramping up to 1.0 Bcf/d. Tractebel LNG, a subsidiary of Suez, also has plans to build an LNG terminal at Lazaro Cardenas. The company has begun the preliminary development of the project, with startup slated for 2009. In 2003, Tractebel LNG signed a memorandum of understanding (MOU) with Peru LNG to supply the terminal.

In May 2004, DKRW signed an agreement with the state government of Sonora to build a 1.3-Bcf/d LNG receiving terminal at Puerto Libertad, on the Gulf of California. DKRW purchased land for the project in August 2004, and the plant could begin operations by 2009. The company has signed an agreement with El Paso to develop a pipeline system to distribute the natural gas within Sonora and to the United States.

In June 2006, CFE released the first public tenders for the construction of an LNG receiving terminal at the port of Manzanillo. The tender calls for the terminal to supply 500 MMcf/d of natural gas for 15 years, possibly expanding to 1.5 Bcf/d. CFE has targeted 2011 for the commencement of the plant’s operations.

Coal

Mexico had 1.3 billion short tons (Bst) of recoverable coal reserves in 2004. The majority of the coal reserves are in the state of Coahuila, in the northeastern part of the country. Mexico produced 12.5 million short tons (MMst) in 2004, while consuming 17.5 MMst. Imports come from the United States, Canada, Colombia, and Australia. Most coal consumption is for electricity generation, followed by steel-making. According to the Mexican government, the contribution of coal-fired power plants to the country’s electricity generation was 23 percent in 2005.

Electricity

Mexico had 49.6 gigawatts of installed generating capacity in 2004. The country generated 242.4 billion kilowatt-hours (Bkwh) of electric power in 2004. Of the total generated, 82 percent came from conventional thermal sources, 10 percent came from hydroelectricity, 4 percent came from nuclear power, and 4 percent came from other renewables. Mexico’s Energy Secretariat (Sener) forecasted that Mexico will need to spend $51 billion over the next decade to meet growing demand for electricity, entailing the construction of 28 gigawatts of additional generating capacity.

Mexico consumed 224.6 Bkwh of electric power in 2004. Demand for electric power has increased steadily over the last decade, and Sener forecasts that demand will grow by 6 percent per year for the next ten years. The regions that will see the largest increase are the Northeast, Baja California, and the Yucatan Peninsula, mainly due to growth in manufacturing and tourism.

Sector Organization

State-owned Comision Federal de Electricidad (CFE) is the dominant player in the generation sector, controlling about two-thirds of installed generating capacity. CFE also holds a monopoly on electricity transmission and distribution outside of Mexico City and some other municipalities; within those areas, state-owned Luz y Fuerza Centro (LFC) holds a monopoly on distribution activities. The Comision Reguladora de Energia (CRE) has principle regulatory oversight of the electricity sector.

Changes to Mexican law in 1992 opened the generation sector to private participation. Any company seeking to establish private electricity generating capacity or begin importing/exporting electric power must attain a permit from CRE; according to CRE, independent power producers (IPPs) control 9.3 gigawatts of generating capacity in the country. CFE also operates Mexico’s national transmission grid, which consists of 27,000 miles of high voltage lines, 28,000 miles of medium-voltage lines, and 370,000 miles of low-voltage distribution lines.

Conventional Thermal

In the national electricity system (excluding private generators), fuel oil is the dominant feedstock for conventional thermal electricity generation, followed by coal: in 2004, Sener reported that fuel oil represented 44 percent of the thermal feedstock for the country’s conventional thermal generation capacity, while natural gas represented 33 percent and coal represented 12 percent. However, nearly all private generators operate capacity fired by natural gas. As a result, the general trend in overall feedstock consumption has seen a decline in petroleum-based fuels and a growth in natural gas and coal.

Mexico will need to bring additional generating capacity online over the next several years in order to meet projected increases in demand. Natural gas-fired turbines will likely supply most of this capacity. In 2003, Union Fenosa, Sempra Energy, Transalta, and InterGen all commissioned new power plants, representing over 3,000 megawatts (MW) of generating capacity. In 2004, Iberdrola completed its gas-fired Altimira III and IV plants, with combined capacity of 1,040 MW; the company also completed Altamira V (1,200 MW) in October 2006. According to CRE, companies in Mexico plan to bring 1,600 MW of new generating capacity online in 2007, which includes independent power producers (Iberdrola’s 1,100-MW Tamazunchale), autoproducers (440 MW), and cogeneration (85 MW). In 2008, Generadora del Desierto plans to complete construction of a 600-MW, combined-cycle, gas-fired plant that will export power to the United States.

Other Sources

Mexico has a single nuclear power plant, the 1,400-MW Laguna Verde nuclear reactor in Veracruz, operated by CFE. In January 2007, CFE planned to issue a $300 million tender to increase the generating capacity of Laguna Verde by 20 percent. In November 2006, Mexico’s Energy Ministry recommended that the country build a second nuclear power plant in the country, which could help diversify the country’s electricity mix away from oil and natural gas.

Hydroelectricity supplied 10 percent of Mexico’s electricity generation in 2004. The largest plant in the country is the 2,400-MW Manuel Moreno Torres in Chiapas. Mexican engineering firm ICA is nearing completion of the 750-MW El Cajon hydroelectric dam in Nayarit; CFE began initial testing of the facility in November 2006.

CFE operates two wind power facilities, La Venta and Guerrero Negro, with combined capacity of 3 MW. In August 2005, CFE awarded a contract to a Spanish consortium of Iberdrola and Gamesa Eolica to increase the capacity of the La Venta facility by 80 MW. Mexico also has 960 MW of geothermal capacity spread amongst seven plants. The Cerro Prieto complex consists of four plants, with a combined capacity of 720 MW.

International Trade

Mexico has an active electricity trade with the United States. Mexico exported 1,600 megawatt-hours (MWh) of electricity to the United States in 2005, while importing 470 MWh. Many companies have built power plants near the U.S.-Mexico border with the aim of exporting all generation to the United States. CRE has issued permits for private companies to build up to 2,200 MW of generation capacity dedicated to export to the U.S. market, the largest of which is Sempra Energy’s 700 MW plant near Mexicali.

There are plans to connect Mexico with Guatemala and Belize as part of the Sistema de Interconexion Electrica para America Central (SIEPAC). The plan is part of a larger effort, the Plan Puebla-Panama, to create an integrated electric power market in Central America.

Environment

The Mexican Health Secretariat says that more than a third of Mexico's disease burden is the result of environmental factors, the most serious of which is air pollution. Though especially pressing in the country's largest cities (e.g. Mexico City, Guadalajara, and Ciudad Juarez), air pollution also has intensified along the border with the United States, because of the growing number of factories located there and increased truck traffic. Mexico City has the worst air pollution in the country and ranks among the most polluted cities in the world.

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