Peak Oil News: Peak Oil is Now Official

Sunday, March 19, 2006

Peak Oil is Now Official

Raise the Hammer

Mexico's supergiant Cantarell oilfield is now in decline. Can the rest of the world make up the shortfall?

By Trevor Shaw

A recent Kight Ridder article by Kevin Hall points out that world's number two oilfield, Mexico's supergiant Cantarell, has peaked.

Cantarell is second only to Saudia Arabia's Ghawar oilfield and has been pumping millions of barrels of light crude a day since 1976. According to Carlos Morales, production manager for Mexico's state owned oil company, Pemex, Cantarell's projected output will be 6 percent lower this year at 1.9 million barrels per day and down to 1.43 million barrels by 2008, the level of production in 2000.

A leaked internal memo from inside Pemex said water and gas were seeping into the massive offshore oil field. Cantarell is showing the signs of peaking.

Canterell's Output Levels Year Output
1994 1.0 mb/d
2000 1.5 mb/d
2004 2.13 mb/d (Peak)
2005 2.0 mb/d
2006 1.9 mb/d (projected)
2008 1.43 mb/d (projected)

To make up the decline of Cantarell, Pemex is spending billions to develop new fields such as Chicontepec. This will prove difficult for a company that lost $3.75 billion in 2005, during a time of record high crude prices.

The crude that is first produced from any field is light and sweet, it flows well, and is easy to refine. Not so the later output, and Pemex is faced with spending billions to reconfigure its refineries so they can handle heavier crude.

Pemex's Galindo, like many outside experts, thinks the era of easy, cheaply produced oil in Mexico appears to be over. The remaining crude left in Cantarell or in existing fields will most certainly be heavier and costlier.

The Cantarell field accounts for 60 percent of Mexico's total production. To make up for the anticipated decline of 500,000 bpd will be difficult to achieve and definitely more expensive if even possible. Mexico is the second-largest supplier of oil to the U.S. market. The decline will intensify America's dependence on Middle East oil.

Many experts - Matthew Simmons, Richard Heinberg, Colin Campbell, Bilaal Abdullah and members of the Association for the Study of Peak Oil - have said that when Ghawar Peaks so does the world.

Rumours and experts outside Saudi Aramco, Saudi Arabia's state controlled oil company, believe Ghawar has already peaked or is currently peaking. It is definitely showing symptoms. Some reports have stated that the water cut level is nearing 50 percent of the total liquids being pumped out by its more than 300 wellheads.

Combined with the news in January, 2006 from the Kuwait Oil Company that their super giant Burgan oil field has peaked, this strongly suggests we are in Peak Oil.

Do we need anymore convincing that Peak Oil is imminent? The world cannot sit idle waiting for a technological fix. If there was a solution or an immediate alternative do you think America would be spending billions to occupy Iraq? Our denial won't make the problem disappear. As Bilaal Abdulah's book notes, we need a global paradigm shift or we're all in big trouble.


At 6:23 PM, March 24, 2006, Blogger Orange said...

Did you notice that Pemex lost $3.75 billion in 2005?

What massive level of corruption is required to lose that much money while profitably selling that much oil?

At 3:58 PM, March 31, 2006, Anonymous Anonymous said...

Pemex is heavily taxed by the Mexican national government. It also doesn't allow foreign ownership and investment. Over 50% of its revenue went to the government and Pemex says it can't invest the required money to keep its wellhead pumping and is asking for either a reduction in taxes or loosening the laws governing its ownership and investorment. But I agree something isn't right when Pemex lost so much money when other energy companies made record profits.

At 3:58 PM, March 31, 2006, Blogger Abendigo said... on April 4 will publish a study of the Top 50 US Cities Best Prepared for an Oil Crisis. Here's a link to the study of the Top 10:


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