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The WSJ article is an update to one they did about a year ago, predicting a crash in Cantarell's production, based on leaked internal reports.
BTW, based on this article (and the previous NPR interview), it looks like Shields is predicting (at least) a net decline in Mexican production of 400,000 bpd from 12/06 to 12/07, and then another drop of 400,000 bpd from 12/07 to 12/08. Based on the NPR interview, I had been characterizing it as a 800,000 bpd drop from 2007 to 2008.
In any case, this would be a net decline of about 1.2 mbpd over a three year period (12/05 to 12/08), which would be an annual net decline rate of 15% per year. Note that if we use average annual values, we will get a lower annual decline rate, but IMO where we have declining (especially rapidly declining) production, month to month comparisons give us a better prediction of production for a given future month.
Unless Mexico drastically curtails their domestic consumption, at the projected decline rate, Mexico will effectively cease to be a net oil exporter by the end of 2008, just in time for the US presidential elections. I wonder how well efforts to curtail domestic oil consumption, in order to ship oil to the north, will go over in Mexico?
As Fireangel pointed out yesterday, there are media reports out suggesting that Saudi Arabia's crude + condensate production may have already fallen below 8 mbpd in December.
We do know that Saudi Arabia and Mexico are unilaterally curtailing crude oil shipments to refiners (below what the refiners want to buy).
FYI--exactly one year ago today I warned of a rapidly developing net oil export crisis: http://www.theoildrum.com/story/2006/1/27/14471/5832
Good story Jeffery. Well Good is a relative word here.
Mexico production has not declined that much from the start of the the year. So they have been able to compensate. However the decline is significant in terms of exports. You have made everyone an expert in considering exports rather than just total production. I know I just thought about total oil production before I read your posts.
In December of 2005 Mexico produced 3,388,000 barrels of oil per day, C+C. In December of 2006 Mexico produced 2,978,000 barrels of oil per day, C+C. That is a drop, December to December of 410,000 barrels per day.
You are probably looking at the average for 2005 verses 2006. They had hurricane Emily, plus platforms were abandoned for Katrina, Rita and Wilma for a short time. This caused the 2005 average to be quite lower than normal. That plus the fact that Mexican production decline has accellerated in the last three months. They have dropped 280,000 barrels per day in only the last three months. I would cause that very significant.
Ron Patterson
Hmmm...even though I've sworn off predictions as of late...I'm going to put my toe back in the water for this little prediction.
I am not 100% sure that we have passed world peak on C+C, we may know for sure in a year or two.
I am pretty sure that 2007 will be the year of "Peak Oil Awareness" in the general public and not just pockets of interested groups and communities. The "spillover" is ripe and there are more and more receptive ears even though gasoline prices are lower.
The public knows that something is not on the level with the war in Iraq and the threats to Iran from our President. They are starting to put the dots together.
Just a hunch.
Dragonfly,
"I am pretty sure that 2007 will be the year of "Peak Oil Awareness"
IMO it will not have to be a reduction in imports, climbing gas prices at the pumps, or any of the other that will be the cause for hysteria and resulting chaos.
It will simply have to be the acceptance by the public that WE ARE RUNNING OUT OF OIL.
Once that sinks into JoeSixPack's brainpan then he will become hysterical and start hoarding. All the rest will do likewise.
We will rapidly circle the drain as Amurkans realize that what they have been hearing is suddenly going to happen.
I believe this because over 30 yrs ago I was out and about when the oil embargo was put in place and what I witnessed then will be multiplied many many times over.
It will begin to feed on itself fanned by the MSM and their blowdried reports earnestly leaning into the camera and speaking of doom and armegeddon. The public like all good sheeple will respond. Where it goes from there is an unknown.
Once you see violence, chaos and other events up close you never forget just how little it takes to set one off.
Putting the dots together..yes...but only until the MSM goes nutso will the people believe anything. Thats the way they are now wired.
Those yelling doomer at me weren't here during WWII or Pearl Harbor or the backside of the depression and most likely have no recollection of 1973.
Recognition of Peak Oil could be delayed by an economic recession. Demand can drop faster than production if the economy sinks. This would totally cloud the issue. It is bad news either way. I keep wondering which TPTB would prefer. It kind of looks like they would prefer to keep the economy humming as fast as energy production allows. Damn the consequences. The choice over the last decade is obvious now. TPTB wanted economic growth over everything else. Eventually growth bumps into limits to growth. Peak Energy and environmental destruction are here.
The reign of King Dumbo has been a complete failure for those who dream of peace and environmental sanity.
Continuous recessions, followed by short revivals are the only serious scenarios about how PO will play out economically. One would be a fool to think that oil can get to $200 or even $100 and stay there without the this breaking the back of the economy along.
Those periods should continue until we complete our transition to an oil-free economy. Of course economic scenarious can not predict resource wars or the amount of suffering of the world's poor... economics usually shies away from such "externalities".
Hi Oaksmoke,
Thanks. Yes. "Recognition of Peak Oil could be delayed by an economic recession."
And, in addition, as someone may have already suggested, it's even possible we'll see on-going economic upheaval, without any general understanding of the underlying reasons.
>Once that sinks into JoeSixPack's brainpan then he will become hysterical and start hoarding. All the rest will do likewise.
I wouldn't be so certain of this. For one, I suspect the majority of public still believes that we can use technology to replace oil. The media, gov't and so called "experts" will flood the airwaves that a tech. solution is just a year or two away. So instead of hoarding or making any prepations they'll go on about their daily lives. Plus Joe Six pack is up to his eyeballs in debt and can't afford to hoard anything, except hoarding even more debt.
>I believe this because over 30 yrs ago I was out and about when the oil embargo was put in place and what I witnessed then will be multiplied many many times over.
For this to begin there would need to be shortages. I suspect that this time oil prices will rise resulting in decreased consumption rather than like sudden shortages during the 1970s. The only what I see this re-ocuring is when exporters begin to husband remaining reserves or if war breaks out in the middle east that disrupts exports. Not to say that these events won't occur, but I just don't see an crisis begining because of US public exceptance of PO. Hell, Most americans believe that the Oil companies have been suppressing technology that could replace oil. Another words, a crisis will orignate overseas do to a severe decline in exports, not because of US public sentiment.
Tin foil hat time...
Can anyone else see a line between the Cantarell crash and this Halliburton Press release?
I've been beating this drum for a while. Here's how I see it playing out, in an article I've posted in various places on the net:
Peak oil, global warming, food, biofuels and fascism - all rolled up into one neat but ugly little package. Coming to a border near you within 5 years.
Does anyone know where these detentions camps will be located?
I don't know how reliable the information is, but this site gives a list and a map. They seem to be mostly in the south, with the highest concentration (pun unintended) in Texas.
http://www.geocities.com/theawakeningnews/Police_State-Concentration_Cam...
I don't know how reliable the information is, but this site gives a list and a map. They seem to be mostly in the south, with the highest concentration (pun unintended) in Texas.
We have plenty of current inventory down here, and we should be able to keep these facilities full at the rate they countinue to pour in the country. I've lived in Central Texas most of my life, and can vouch that during the last 5 years the area has been completely transformed.
The map certainly has a lot of concentration camps. If there were that many, it would seem like employees involved with them would start leaking out the word.
Alternatively, if they exist at this time, they may not be staffed. Finding staff would seem like it would be tricky - unless Halliburton does it all.
Hi Gail,
A current detention facility (non-profit?)
http://www.ice.gov/pi/news/factsheets/huttodetentionfac.htm
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/26/AR200701...
A Culinary and Cultural Staple in Crisis
Mexico Grapples With Soaring Prices for Corn -- and Tortillas
By Manuel Roig-Franzia
Washington Post Foreign Service
Saturday, January 27, 2007; A01
Good find.
The Economist a few days back very rapidly dismissed the ethanol-white corn connection. So rapidly that I became suspicious that they had done zero real homework on the issue.
We definitely need more info on this. This begs as many questions as it answers.
Asebius,
Unless the white corn fetches the same price as the yellow(lower for white) this I would assume the wise farmer would fill his planter hoppers with yellow corn next year.
Simple market economics I suppose. We use plenty of white corn for ourselves so I think both prices will be in lockstep.
Since we raise none in my area, popcorn yes, then I can't get a good read on what the locals may do. Barring that I think they will go with the good prices.
Already plenty of winter wheat is in the ground due to the wheat runup last year however they might even rip that out and plant corn if wheat looks to be a loser. I have seen them do that before.
Mexico is going to be a handy barometer for us up north to see which way the cat is swinging on the line. Will it land on its feet? My childhood tests on the farm from throwing cats out the hayloft proved you can't tell precisely.
Sheesh.
Let the games of bait and delude begin.
Follow the yellow-caked road.
Airdale,
You wrote:
For sure. Even if world peak is down the road, Mexico's peak will provide a taste of the future.
BTW, Mexico has it's own migration problem with desperate folks crossing it's southern border in large numbers wanting access to the US.
In tomorrow's NYT:
http://www.nytimes.com/2007/01/28/world/americas/28mexico.html?ex=157680...
Typically white corn is priced at a premium to yellow corn because it yields less. Farmers have to be compensated for the lower yield with higher prices in order to be incented to plant the white corn. (Premiums used to be at least 25% I'm not currently knowledgable at what the current market premiums are) The primary reason for the lower yield is the lower focus by the plant breeders on white corn because it is typically less than 2% of the total corn crop. (White corn is primarily used as a human food. I.e. Tostitos, White Corn Meal and other ethnic foods.) Why is white corn inferior to yellow dent? As an animal feed it is at a disadvantage to yellow corn because its amino acid profile is short an essential amino acid required in the livestocks digestion. Since most corn in the U.S. has been grown to date for livestock feed white corn is disadvantaged.
The 100+ year-old push-pull affect of the US economy on Mexican migration is a very well documented historical phenomenon. This time circumstances are somewhat different. Many Mexican campesinos--subsistence farmers that own their own land or jointly in a collective called an ejido--were forced off their land due to NAFTA rules that allowed the dumping of highly subsidized, below market-priced US corn on the Mexican market; however, the land is still there, idle. I would expect a return to the land before a large influx into El Norte. You see, there's a communication grapevine that provides information about conditions both north and south, and conditions for the undocumented migrant are not good in El Norte and unlikely to improve for some time. Further, traditional campesinos use very few fossil fuel imputs; in a very real sense, the idea of permaculture comes from Mexico's terraced gardens and the complementary growing system of beans, squash and corn. Why risk death crossing the border or incarceration if you make it when it's much easier to return to the farm?
Pemex's bankruptcy and Cantarell's crashing presents a political crisis for Mexico's elite and threatens the stabilty of the small middle class, and the same can be said of El Norte. Their crisis presents a great opportunity for the long downtrodden majority to gain power a la Bolivia, Ecuador and Venezuela.
Personally, I find it rather ironic that Bush's ethanol policy will destabilize Mexico's illegitimate president after he did so much to have him installed in the first place. Considering the great lack of corporate media coverage of events in Mexico unless you know Spanish, it will be hard to see the precursors of the coming revolution beyond those that are already there and very active.
Karlof1,
I think it would be great if the Mexican peons and farmers could return to their previous way of life and a more sustainable one. This could then serve as a model for ours as we begin to circle the drain.
Maybe it isn't too late for them. Maybe they will decide that the gringos are rather stupid after all.
Perhaps we inadvertenly did them a favor by dumping that corn on them.
I thought Calderon was a rather savvy dude. Surely he can see what our future could possibly be up here. Then he might have to build his own wall and detention camps in the future to keep out the gringos who can't even raise corn anymore.
Joseph Palmer...your link is merely a link in look...for whatever reason there is no web address associated with it. What is the actual address of that halliburton press release?
I'll try it another way...
http://www.halliburton.com/default/main/halliburton/eng/news/source_file...
... for what ever reason
joe, the href= out is missing in your anchor tag: {a href=""}{/a}
Thanks!
I have no way to prove or verify this, so take this with a grain of salt:
I suspect that this may be in prepration for the collapse of the Mexican gov't. If Mexico does collapse there probably be a large number of people who wish to flee the chaos. The US would be a likely destination. The purpose of the detention camps would to be deal with this situation. Since Mexico is largely dependant on Oil exports, a production collapse definately has the potential to create a collapse.