As someone who seeks to determine what is "really" going on - oil supply and demand-wise - this author finds the constant barrage of varying petroleum statistics to be confusing and essentially useless. Most useless are the inventory stats that show "gasoline inventories up", "distillate inventories down", "crude up", etc. - and usually by only a few percentage points. However, these are often picked up by the media to explain some minor movement in oil prices.
We are constructing a "reported demand matrix" which summarizes reported demand drops over the last few years, across a number of categories. However, this "demand matrix" currently remains a "confusion matrix".
In the meantime, here are some stats from Tom Whipple of ASPO-USA and the Falls-Church News-Press, from June 25, 2009:
Total demand for petroleum products in the US: down 6.6 % YOY
Distillate demand (which is mostly diesel at this time of year): down 9.3 % YOY
Jet fuel demand: down 13.9 percent, YOY
Gasoline consumption: up slightly (prices $1.40 less than last year)
Many of us believe liquid production peaked in 2008, and that initial declines should be in the 4-5 % per year range. So it looks like, on a gross estimate basis, demand destruction is outrunning Peak Oil, for now. On the other hand, Mexico, Venezuela and Nigeria - the third, fourth and fifth largest suppliers of imported crude to the US (not necessarily in that order) are experiencing catastrophic declines or loss of production for other reasons. More on that in the future.
Thursday, June 25, 2009
Wednesday, June 17, 2009
Raymond James reports on Mexico's Oil Production Decline
On June 15, 2009, the highly-regarded energy investment banking firm of Raymond James published a brief discussion of Mexico's oil exports, and of Cantarell Field. Their Raymond James Energy "Stat of the Week" paper was titled "Aye Carubma! Mexico's Oil Production Continues to Slide".
As previously noted on this blog, the Wall Street Journal picked up on the significance of this issue in early 2006. Nevertheless, most folks have never heard of Cantarell Field, and don't understand the significance of the near term loss of 1.4 million barrels of oil per day (MMBO/D) of oil imports into the United States, from Mexico. Nor do most folks realize that oil revenue provides some 40% of the total revenue for Mexico, the country! What happens when most of this goes away, in a year or two?
Highlights from this article:
Mexico's crude production currently accounts for about 7% of Non-OPEC production, and roughly 4 % of the world's.
"The falling output is the result of steep decline rates from maturing oil fields (mainly Cantarell Field), a lack of foreign investment, and a high tax burden on Pemex." (MP Note: Their deepwater needs to be developed, and they need help from US and other foreign companies in order to do so. And "living off PEMEX" needs to be stopped. Unfortunately, neither will make up for the decline of the huge, unique, now elderly field known as Cantarell.)
"These declines are so bad that Mexico may become an oil importer within the next five years." (MP Note: emphasis is theirs, and it understates the problem. What will they use to pay for the oil? What will they use to pay for the things that their oil revenue currently pays for?)
As we have mentioned in the past ,Cantarell Field in particular, and Mexico in general, are "Poster Children" for why some of us are really concerned about what is sometimes called "Peak Oil". Namely, we're not finding any more of these wonderful, easy to develop and produce, supergiant oil fields (Tupi doesn't compare), and production from the ones currently producing in the world can go away very, very quickly - as we see with Cantarell.
It is interesting to note that the RJ article doesn't relate the Mexico/Cantarell Field decline to "Peak Oil"; this despite the fact that their last article even focused on the fact that "Peak Oil" likely occurred in 2008! Also, they fail to point out where the US will obtain the oil it currently imports from Mexico. There may be a little surplus in the world, currently, due to the economic activity-based decline in demand, but that will likely be gone due to further depletion, within a year or two. Our guess is that it will be far sooner than five years when Mexico stops exporting.
As previously noted on this blog, the Wall Street Journal picked up on the significance of this issue in early 2006. Nevertheless, most folks have never heard of Cantarell Field, and don't understand the significance of the near term loss of 1.4 million barrels of oil per day (MMBO/D) of oil imports into the United States, from Mexico. Nor do most folks realize that oil revenue provides some 40% of the total revenue for Mexico, the country! What happens when most of this goes away, in a year or two?
Highlights from this article:
Mexico's crude production currently accounts for about 7% of Non-OPEC production, and roughly 4 % of the world's.
"The falling output is the result of steep decline rates from maturing oil fields (mainly Cantarell Field), a lack of foreign investment, and a high tax burden on Pemex." (MP Note: Their deepwater needs to be developed, and they need help from US and other foreign companies in order to do so. And "living off PEMEX" needs to be stopped. Unfortunately, neither will make up for the decline of the huge, unique, now elderly field known as Cantarell.)
"These declines are so bad that Mexico may become an oil importer within the next five years." (MP Note: emphasis is theirs, and it understates the problem. What will they use to pay for the oil? What will they use to pay for the things that their oil revenue currently pays for?)
As we have mentioned in the past ,Cantarell Field in particular, and Mexico in general, are "Poster Children" for why some of us are really concerned about what is sometimes called "Peak Oil". Namely, we're not finding any more of these wonderful, easy to develop and produce, supergiant oil fields (Tupi doesn't compare), and production from the ones currently producing in the world can go away very, very quickly - as we see with Cantarell.
It is interesting to note that the RJ article doesn't relate the Mexico/Cantarell Field decline to "Peak Oil"; this despite the fact that their last article even focused on the fact that "Peak Oil" likely occurred in 2008! Also, they fail to point out where the US will obtain the oil it currently imports from Mexico. There may be a little surplus in the world, currently, due to the economic activity-based decline in demand, but that will likely be gone due to further depletion, within a year or two. Our guess is that it will be far sooner than five years when Mexico stops exporting.
Subscribe to:
Posts (Atom)