Sunday, August 31, 2008

Putting Cantarell's continued decline into perspective

PEMEX recently announced that Cantarell Field produced just 1,010,000 barrels of oil per day in July, versus 1,050,000 barrels per day in June. That's a drop of 40,000 barrels per day, in just one month. Now, an oilfield's production does fluctuate month-to-month, but to put this into perspective, a loss of 40,000 barrels per day is equal to 30% of the estimated peak production rate from Shell's Perdido project, which is being constructed in 8000' of water near the international boundary with Mexico!

The Perdido project ( is a multi-billion dollar, multi-year project using state-of-the-art technology. Yet the world's second largest oilfield is capable of dropping 30% of the ultimate, maximum rate of this project - in just one month!

What will we do when Mexico, the 5th (was 4th) largest exporter of oil to the U.S., has no more oil for us? Good question. Unfortunately, we'll find out the answer before long.

This is what Peak Oil is all about. World-wide, there are many oil and gas projects that need to be pursued. But they just can't keep up with the depletion from the "Giant" oilfields that we've unconsciously relied upon for years!

So, what do we need to be doing? We need to increase the rate of implementation of the following efforts:

  • energy conservation (this is where we can have the greatest effect, the soonest)
  • mass transportation retrofits (likely optimized and marketed bus and carpool efforts)
  • natural gas vehicles and stations (start with fleets to solve the Catch-22)
  • expanded natural gas drilling (solve infrastructure & supply problems)
  • wind energy (stop the tax credit hocus pocus - fix it for a reasonable time period)
  • vehicular electrical storage research (cost effective and reliable batteries or other devices)
  • design & production of more efficient cars (lighter, smaller EV's, plug-in hybrids and diesels)
  • offshore drilling (offshore West Coast, East Coast, Florida Coast)
  • biofuels research (enzyme & pyrolysis-based cellulosic ethanol, algae-based oil production)
  • nuclear plants (fast-track & standardize the design, licensing and construction)
  • coal plants (use best available, cost-effective clean up technology)
  • solar thermal innovations & implementations

Oil Prices Versus Contracting Economies

Here is something to keep in mind as you try to make sense of what is going on in the world, in terms of geopolitics, oil prices and macroeconomics:

"There is a world wide race going to between contracting economies and world oil production, the score of which will be kept in the price of oil."

Tom Whipple, 8/28/08

Tom Whipple is the editor of the Falls Church News-Press, in Falls Church, Virginia

Whipple goes on to say that a wildcard could exist in terms of OPEC's willingness to accept less than "X" dollars for a barrel of oil. In other words, if and when demand destruction and economic contraction drop overall demand and thus the price for oil, OPEC could once again begin restricting production to increase prices.

In summary, a short term drop in oil prices (6 months? 2 years?) does not mean that the effects of worldwide giant oilfield depletion (aka Peak Oil) are over, only that other macroeconomic events have taken precedence, for a bit. Let's hope that the efforts being slowly set in motion (conservation, mass transportation retrofits, natural gas vehicles, expanded natural gas drilling, wind energy, battery/electrical storage research, design/production of more efficient cars, offshore drilling, biofuels research, nuclear plants, coal plants, solar thermal innovations) are not slowed as we enter a possible "eye" of the Peak Oil hurricane.

Thursday, August 7, 2008

Mexican Production/Cantarell Update

From Oil & Gas Journal, July 28, 2008:
  • Total Mexican production, June 2008: 2.9 MMBO/D
  • June 2007: 3.21 MMBO/D
  • Average, first 6 months of 2008: 2.86 MMBO/D, decline of 9.7% from year earlier
  • Cantarell production, June 2008: 1.05 MMBO/D (MP note: See the February 2008 post on this blog - included is a production schedule which was "reverse engineered" from Pemex's statements at that time. Based on this Feb 2008 schedule, the rate wouldn't be down to 1.05 MMBO/D until the end of 2009. And, if declines continue as they are, production may well finish 2008 at the rates projected for the end of 2010! And this projection was done only 6 months ago. This is indicative of the overwhelming and surprisingly large declines experienced late in the "life" of a depletion drive oil field.)
  • "producing more gas at Cantarell, where gas is moving into wells that formerly produced oil" (MP note: not good in an oil field)