As Cantarell goes . . .
Posted by Heading Out on July 24, 2006 - 12:49pm
Topic: Supply/Production
Tags: cantarell, imports, mexico [list all tags]
Production at Cantarell, the world's second-largest oil complex, in the shallow gulf waters off the shore of Mexico's southern Campeche state, averaged just over 1.8 million barrels a day in May, according to the most recent government figures. That's a 7% drop from the first of the year and the lowest monthly output since July 2005, when Hurricane Emily forced the evacuation of thousands of oil workers from the region. . . . . . . Pemex predicted that the field will produce an average of 1.9 million barrels a day in 2006, a modest 6% drop from 2005, followed by double-digit annual declines that would reduce average production to 1.4 million barrels daily in 2008.While not unexpected, since Khebab just wrote on this last week it is the confirmation of the bad news we have been anticipating. (See also Glenn Morton's piece).Other studies aren't so optimistic. Seawater is threatening to swamp the wells of Cantarell as the field's pressure diminishes, a debilitating symptom of old age that makes it tougher to extract the remaining oil. Leaked internal reports of Pemex's own worst-case scenarios published in Mexican newspapers show production plummeting to about 520,000 barrels a day by the end of 2008 -- a 71% free-fall from May levels in less than three years.
Mexico City energy analyst David Shields said the swift drop over the first five months of 2006, and conversations with Pemex insiders have convinced him that prospects at Cantarell are worse than officials will admit publicly.
I love the roller coaster anology.
Since Mexico is our number 1 or 2 biggest supplier is it more significant that they are having supply problems while internal demand grows?
Should we worry more about the world peaking or a major supplier?
thank god for those Canadian oil sands ;) They'll save us.
Remarks like that astound me. The one thing everyone agrees on here is THERE ARE NO NEW SOURCES OF SUPPLY!
So where are the Chinese whipping up all this new supply?
:-)
Roger Conner known to you as ThatsItImout
They are arranging long term contracts with existing exporters. Some of these exporters had offered oil on the open market which was available to any buyer. China has essential locked up this production for thier own consumption leaving other importers to get oil from someone else. If this continues, some importers may have difficulty obtaining oil and will be forced to power down because they won't be able to import enough oil to meet demand.
New small fields will continue to show up. Even in the GoM.
MAJOR BREAKING NEWS MONDAY JULY 24 2006 6:50PM
CBS EVENING RUNS STORY SUPPOSEDLY ESPOSING OPEC/NON OPEC SECRET MEETINGS TO FIX OIL PRICE AND REDUCE PRODUCTION IN ALL COOPERATING COUNTRIES, INCLUDING NORWAY, RUSSIA, ANGOLA AND MAJOR OTHERS POSSIBLY MEXICO (??)
INTERNAL OPEC MEMO SAYS "SOMEDAY FUTURE SCHOLARS MAY LOOK BACK AND CALL THIS THE GOLDEN AGE OF PETROLEUM, WE MAY HOPE SO.
Claim is that secret OPEC AND NON OPEC PRICE AND PRODUCTION FIXING IS ADDING $1.00 A GALLON TO U.S. GASOLINE PRICE, THAT THERE IS STILL GREAT AMOUNTS OF OIL, BUT THAT OPEC AND NON OPEC PLAYERS NOT NORMALLY VIEWED AS COOPERATIVE ARE BREAKING INTO NEWER LEVEL OF COOPERATION AND MONOPOLY.
Whether true or not, this will have to be confronted, as it undercuts the "immenent peak" theory to the core.
Roger Conner known to you as ThatsItImout
It may be that OPEC would rather be hated--by claiming that production declines are voluntary--than risk military takeovers, by admitting that world oil production has peaked. This is the basis for incorporating major oil exporters into the major oil company/major oil exporter/energy analyst leg of the "Iron Triangle," i.e. their fear of their oil fields being seized.
ExxonMobil can say that they need all of their cash flow to bring on new oil fields outside the Middle East, and the housing/auto/finance group can say that high oil prices are temporary. So, go ahead an buy the large SUV, to drive the long commute, to the large mortgage--all advertised by the media group.
The fact that major oil producing nations and their dependents are stuck in a web of fakery and illusion is only indication of the house of cards falling all the harder.
This also, as mention a bazillion times here on TOD, has the added benefit of driving up prices further. And if there is no swing producer, then all the better--none of these countries can be punished through artificial price adjustments, simply because Washington no longer has the stroke to do so.
Just look at the desperation of Dick Cheney flying over to Kazakhstan in order to secure energy. We are indeed at the stage of using every possible option at our disposal to keep our imports plentiful and "cheap" (hah!).
In any event, however, our "leaders" (do we actually have any) could announce that either way, we must decrease our consumption for the indefinite future, because we will have less oil and because climate change mandates a decrease in the consumption of all forms of energy.
Also, in any event, this news just reiterates the fact that the world's producers have us by the gonads and we need more than some silly ass Bush vision of hydrogen and ethanol savings said nads in twenty years.
We could start by cutting our defense budget in half -- the half that clearly isn't making a dime's worth of difference in our ability to influence world events.
http://www.cbsnews.com/stories/1999/10/04/broadcasts/main64925.shtml?CMP=ILC-SearchStories
"Also tonight, there are many reasons for the high cost of gas. You've probably heard about increased demand in China, lack of refineries, and trouble in the Middle East. But what's the OPEC factor? Sharyl Attkisson investigates. "
Doesn't seem like it's a major story since it's not on their front page.
It was as Roger described it.
No Peak Oil - all a group fixing of prices.
Rick
The interesting points to me that stood out were,
Saudi Arabia seemed to not be at all caught off by the story and it's release, and
The dates given. If the dates given are accurate, it would put the start time right about the period of the "Plauteau" as described by many who closely follow world oil production. (Stuart, Simmons and others)
We have to consider the possibility that the OPEC plauteau is very planned, and they knew they had the leverage on production again with North Sea in apparent genuine geological peak.
The main point being this, that no "production stats" can be considered reliable in indicating near term peak or no near term peak, all are equally suspect, because the production volume is being played with. Thus, many months of dropping production would indicate absolutely nothing about the ability of the field or the nation to produce, and nothing about the geology, and instead be a part of the monopoly control being reexerted by certain big players. This is how we were caught out so badly in the 1970's-80's, and those who said fuel was short worldwide and gas and oil would NEVER get cheaper were made fools of.
The FACT that still stands out: WE THINK WE ARE RUNNING IN THE BLIND. WE ARE RUNNING SO MUCH MORE IN THE BLIND THAN WE CAN EVEN KNOW, INDIVIDUAL PLANNING FOR THE WORST IS BECOMING THE ONLY SAFE WAY.
Roger Conner known to you as ThatsItImout
You must have an impressive collection of bridges in Brooklyn, old chap.
And that still wouldn't say anything in favour of this posited diabolical Norwegian plot to reduce production.
What always puzzled me about the great oil price conspiracy is how long it took the conspirators to get their act together. Oddly enough, the conspirators were finally successful in controlling the oil market--and in forcing oil prices higher--just as the world hit the conventional 50% depletion mark.
My only point to this is that he also touched on how hard cornering this market would be. If you total the daily oil bill, this needs to trade hands in some form every day. The staggering amount of money that trades hands is so large that even a few select players couldn't manipulate it. If barrels of oil are $75 right now and there are 85M barrels (yeh i know there are lower priced long term contracts, but we're getting a worst case) so this total is $6.375Trillion dollars. Then again, if you control the fields, all this crap is nonsense.
You're being manipulated, Roger.
As I said above, from the exporter's point of view it is better to be hated than to be militarily occupied.
If people truly believed that Peak Oil is at hand, they would implement ELP (Economize/Localize/Produce), and stop buying and financing large SUV's to travel long distances to large mortgages. The auto/housing/finance industries would stop advertising, and many members of the MSM would be out of work.
By the way, I was interviewed at length by a reporter for a major paper (not one here in Texas) for a long article on where our oil comes from and on the pros and cons of Peak Oil. From what he has told me, it looks like his editors are sitting on the story.
To what lengths will the denial go? Probably we haven't seen anything yet.
Canterell has peaked! It's declining! Rapidly! Therefore, let's talk conspiracy. ******* idiots.
As always, a proud member of Homo Sapiens.
I think WestTexas is right, its just the latest story by the iron triangle. And it won't hold up very long. But some people will believe it because it reenforces their opinions.
Actually I think this is not even the start of it...
Some of the dieoff/conspiracy stories floating around here are much more ridiculous and embarrassing than this MSM story.
Regards.
This is community website focusing on "discussions about energy and our future". We talk about Peak Oil. Those of us who contribute make our case using the best methods at our disposal, through knowledge, data, theory and analysis.
There is no conceivable way that such controversial subjects are not going to attract some real whackos, wing nuts, crazies, call them what you want. I don't apologize for these people and I don't approve either. That's just the way it is. As far as the MSM goes, there will be great resistance until the tipping point has occurred. That said, I can only quote Alfred, Lord Tennyson.
Kind of inspiring, isn't it?Being still quite new to this I have been trying to politey point out the flaws in the whackos scaremongering stories. But it seems they have made up their mind about what the outcome is and peakoil is an excuse to rationalise it. I guess you are right that it is just how it is. I think from now on I will just pass over any of that BS. Some of you are really doing a great job.
I have a feeling that PO is starting to get more and more traction with the public.
Regards.
It DID sound pretty outrageous at the time ...
a) goiny to war in the middle east is not whacko.
b) dieoff is whacko.
c) pointing to (a) as if it justifies (b) is whacko.
In the end, they were still right.
So someone in Florida is suing because of this major stunner that OPEC would like to constrain competition? DUH! I can't imagine this will go very far, but who knows.
Anyway, I think the real news from 2001 until now has been the surprisingly rapid growth in demand from the US and Asia. Oil production has increased (until lately) and so the idea that collusion has driven up the prices isn't as persuasive as the argument that it has been demand-driven. From 2006 and beyond, the story may be changing, but the demand has grown despite rising prices until now. Canterell is the real news.
Aggregate nominal incomes are up, way up.
Unemployment is down.
Car (and especially SUV) sales have been going gangbusters for the past ten years, despite cars lasting longer and longer.
Commutes are getting longer and longer as people willingly drive for more than an hour each way to get decent schools for their kids and to get away from life in central cities and close-in suburbs. Much of this is "white flight" which has abated not one whit.
All economists know that gasoline demand is extremely price inelastic in the short run.
So why should we be surprised that Americans keep buying more and more gasoline? I do not know of a single economist who predicted a decline in U.S. gasoline sales during the past twelve months, a decline based on a price increase to levels only half what people pay in Europe.
At some price, quantity demanded will go down significantly and fairly quickly. My WAG is that level is $4.50 per gallon of gasoline in the U.S. When we reach that level depends upon the weather, among other unpredictable variables.
IMO we are right now at the beginning of a recession, though the National Bureau of Economic Statistics probably won't call one until after January. If indeed a serious recession materializes, that decline in GDP will shift the whole demand curve for gasoline downward and to left--and could cause an abrupt fall in gasoline prices for a short period of time.
All right, I have stuck my neck out now--a most uncomfortable posture.
It's a low probability bet to get an actual recession out of the next two quarters, but growth is definitely slowing so your neck isn't so far out there. After a Q1 real gdp of +5.6%, the consensus forecase Q2 of +3.1 % allows for a significant slowing, and Q3 numbers are already coming in lower, excepting jobless claims. Negative numbers still seem a ways off though.....