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117 comments on Flesh on the bones of Mexican oil production
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From the WSJ article (February, 2006):
So the most optimistic scenario, assuming 2.0 mbpd for 2005, was for an annual decline rate of 11% per year.
So, the spread between the best case decline rate and worst case decline rate--based on an internal Pemex report--was 11% to about 40% per year. Note that Pemex had been talking in public about increasing production from Cantarell.
The one year decline for 2006 was 25%, from 12/05 to 12/06. They did report somewhat of a rebound for January, but they have just been oil that was not produced when the field was down due to surface problems. We will know soon; however, what we do know now is that Pemex is eliminating or reducing crude oil deliveries to several Gulf Coast refineries.
if nitrogen injection has been real sucessful at canatrell and now the plan is to divert nitrogen supply to neighboring fields, that 40% decline scenario seems at least as reasonable as that 14% decline scenario.
it has been my experience that a 22 degree api field can be waterflooded successfully depending on the rate and permeability anisotropy. the powder river basin (wyoming)has dozens of examples where the typical recovery from a water drive or a real successful waterflood is in the 40 % range. nothing in the same league with canatrell, however. maybe the nitrogen injection has done better i dunno.
I have closely watched Cantarell for the last 18 months. My tentative conclusion is that neither the best (-14%/yr) or worst (-40%/year) scenarios are coming to pass. Reality seems somewhere between #2 & #3 with -20% to -25% (early results). New production is coming on-line (as other older Mexican fields decline) and +100,000 b/day seems doable outside Cantarell (for at least a year or two).
I see net Mexican production down only -4% as highly unlikely. I also see at least minimal Mexican oil exports in 2010 (no -40% compounded).
Eaun is way too optmistic IMHO, Jeffrey a bit too pessimistic. But the future is still dark, especially for Mexico & the US.
Mexican oil export income is largely recycled into US imports. We actually have stuff that an oil exporter wants ! This is far less true of other oil exporters (Russia wants what from the US ? Venezuela is moving away from US imports, we refuse to sell to Iran, Nigeria, Norway, etc. traditionally buy little but aircraft & food from the US, KSA seems to be moving away from US imports, China is creating a large new market in Angola, etc.)
KSA can stop using "we have no customers" excuse though.
I keep wondering about what happens when oil soars to 100 euros/barrel and the world decides that they have "enough" US dollars. We can liquidate our foreign investments (gov't nationalizes as UK did during WW I & II ?) to buy "critical" imports for a while, but not for long.
Boeing will grab market share from Airbus (as the weak $ is doing today) but we have few other exports that can be "ramped up".
Best Hopes,
Alan
Imagine a collapse of the dollar, say to .5Euro. US imports of european autos would collapse, us exports, eg caterpiller, would surge.
Most asians, eg those that tie their currency to the dollar, would continue... there is already a dollar region and a euro one, and the dollar region is growing much faster than the euro one as the US provides needed liquidity to developing markets. Oil exporters may eventually tie to euroland, but slowly and quietly, raising the price of oil in dollars, anyway a good thing.