Cantarell Collapsing - Down 25% In Past 18 Months, May Hit 600Kb/d By 2013

[hatrack]

EDIT

"Mexico's oil production is in decline. There's probably no way to stop it," said Mike Rodgers, an expert at one of the top oil industry consulting firms, PFC Energy in Houston. Mexico is the second largest supplier of oil to the United States (about 1.5-million barrels a day). But output from its major fields is dwindling fast, according to official figures from the state-owned oil giant Petroleos Mexicanos (Pemex). The country's known oil reserves will run out in nine years, the government says, potentially undermining the nation's oil-dependent budget.

EDIT

Mexican output peaked at just over 3.4-million barrels a day in 2004. "I don't believe we'll ever see it that high again, no matter how much is invested," said David Shields, an oil industry consultant in Mexico City. Daily output at Mexico's biggest oil field, Cantarell, highlights the problem. Production there dropped by a staggering half a million barrels in the last 18 months, to 1.5-million barrels from 2-million. Once the world's second-biggest oil field, it is expected to continue losing production, down to as little as 600,000 barrels a day by 2013

EDIT

Pemex's lack of access to foreign financing and technology has left it hamstrung as it looks around for new fields. Pemex has said it can offset declines at Cantarell with new production from other fields. While several sites, onshore and offshore, have potential, it would take a decade of massive investment to bring them on stream, analysts say. "They really don't have a way to fix the problem," says Rodgers. "They could have if they had used some foresight. Now it's virtually impossible."

In his recent state of the union speech, Mexican President Felipe Calderon mentioned the nation's dwindling reserves. "Our petroleum reserves have been reducing constantly. It has to be said," he said, as if broaching a taboo subject.

EDIT

http://www.sptimes.com/2007/09/24/Worldandnation/Analysts_watch__wince.shtml

[phantom power]

1. Wow.

[brokensymmetry]

2. The party is over....

K&R

Thanks, Hatrack.

[AlecBGreen]

3. in a nutshell

"They really don't have a way to fix the problem," says Rodgers. "They could have if they had used some foresight. Now it's virtually impossible."

I have a sinking feeling we'll be hearing a lot of statements like this in the near future.

[phantom power]

4. That might be the motto for the 21st century.

[Gregorian]

5. 1000 barrels of oil per second.

That's a hard habit to sustain.

[Javaman]

6. Considering that Mexico is the second largest Non- OPEC provider

of our oil behind Canada, this pretty much sums up a little "peak" into our future.

This is why I think moron* and his room full of dopes are in such a rush to keep us in Iraq. Hoping that Iraq's oil will keep us humming long after Mexico goes belly up oil wise.

As far as 3rd world nations go, Mexico is a little bit better off than most because of us being their neighbor and because they have/had large reserves of oil.

but because their oil is nationalized and few of it's profits goes back into exploration and the rest goes for 40% of the nations budget and lining the pockets of Mexican politicians, they are in a phrase, in deep shit.

Mexico floated the idea of privatizing the oil. That was met with riots and protests. no one wanted their crooked politicians rewriting the constitution. Then the government thought about ethanol. Just on the word of possibly doing that, the price of corn skyrocketed. Needless to say, the people went crazy again and protested. And finally, this past july, mexico raised taxes. did the people go crazy? nope. they seem to be okay with taking more money out of their pockets. go figure.

So as the inevitable budget short falls become apparent in a couple of years (you can only tax people so much before they get pissed off), things are going to get tighter and tighter in mexico. Which means one thing, more illegals coming over. But in this case they will be more like refugees.

we are in for some very interesting times ahead.

Oh just ignore the rumblings coming out of Canada regarding keeping more of their own oil and natural gas to keep Canada afloat.

[GliderGuider]

7. Yeah, friends don't let friends abrogate NAFTA.

Ignore those gentle murmurs of protest from the Great White North. We don't mind, honest. We have LOTS of other clean water. Who lives in Fort McMurray anyhow? Nobody but Indians, oilmen and hookers. They're used to those conditions.

ob-:sarcasm:

[Javaman]

8. Frankly, beside the tar sands being a gigantic super fund waiting to happen...

I don't think it will ever prove to be the one all be all that the various oil corps investing billions into it hope it to be.

They are trying to get a nuclear reactor build to power the energy to extract the oil!! if that is not totally insane, I don't know what is.

What cracks me up is the popular belief by oil execs that if oil is at such and such a price then it becomes cost effective to continue the "research" into tar sands, but what happens when oil reaches 100-200 bucks a barrel? anyone that could use that crap won't be able to afford it to begin with.

they are at least 5 to 10 years out before they produce their first commercial barrel of oil. By then things will be way too late, and hopefully, no one will want the stuff because the global temp will be at such a point that no one will see the logic in wanting it.

but alas, people are stupid and we are never in a short supply of them.

[GliderGuider]

9. You may be confusing Canadian oil sands with Colorado oil shale.

Oil shale is still at the "subsidized R&D" stage, but the Canadian tar sands are going gangbusters, delivering over a million barrels of syncrude (sweet, light ambrosia) a day. Unfortunately the pollution, gas use and costs are making the whole enterprise burst at the seams.

Regarding the notion that $200 a barrel makes such ventures economically feasible, there is a new idea floating around called "The Law of Receding Horizons" that argues this is a mistaken idea. Basically, the "law" says that if all the infrastructure required to extract the synthetic crude exists in the same market context as the price of oil, there may never come a point when the venture is profitable. The cost of everything from steel to wages to money itself is influenced by the rising oil price, and as those prices rise, the "horizon of profitability" recedes on their backs like a mirage.

The only window of opportunity to turn a profit is if the oil price escalates on a different trajectory from the market as a whole. This can happen for a while, but oil is so intrinsically bound into the economy that such divergences tend to be short-lived - certainly shorter-lived than the investment cycle required for building new oil sands projects. That's why you are hearing companies like Suncor making anguished noises about cost overruns on new plants. The same economic facts of life are overrunning Colorado oil shale projects.

[phantom power]

10. Or, if a new energy source can be extracted with existing capital equipment.

Although the whole point seems to be that we apply *new* technology, so probably not.

[hatrack]

11. My favorite single "oil" shale stat -

There's more calories of energy in a cubic foot of Cap'n Crunch than there is in cubic foot of Green River Formation kerogen shale.

[Javaman]

12. yeah, I always get them confused. Great info, great post. :) nt