All eyes on Cantarell

Tom Whipple: An energy consultant in Mexico City published parts of the study and later the Wall Street Journal got to examine the document. It seems there is only 825 feet between the gas cap over the oil and the water that is pushing into Cantarell from the bottom. This distance is closing at between 250 and 360 feet per year.The more pessimistic of the study's scenarios have Cantarell's production dropping from 2 million b/d to 875 thousand barrels a day by the end of next year and 520 thousand barrels a day by the end of 2008. If the pessimistic scenarios outlined in the PEMEX study come to pass, it will be very serious. The loss of nearly 1.5 million barrels a day of production capacity within three years will be very difficult to overcome either from other Mexican fields or from new production in other countries. Unlike political stoppages from exporters such as Iran or Nigeria , depletion can't be put right. Mexican exports will be seriously reduced or perhaps even eliminated forever.

Of course, I am a big believer in technology and the power of markets. However, there is a limit to how quickly these mechanisms can produce alternatives.

Comments

[phil jones]

There's a problem with markets for any kind of natural resource : price doesn't reflect how much of the resource there is, just how efficiently you are consuming it.

If you manage to pump it faster, price goes down, and everyone consumes more. If you can't, price goes up, and that incentivates people to look for more efficient ways to pump it. But price can't give you any information about it's actual scarcity.

[dan]

I'm no expert, but a collapse from 2mbpd to less than 600kbpd in the space of 3 years is an unprecedentedly catastrophic depletion rate - so I suspect that these are very pessimistic scenarios indeed.

Of course, if we're going to introduce market mechanisms into the equation, then PEMEX should drastically ramp down its production to better manage the depletion and benefit from the upside price swing that should result. They should also be backing other peak oilers in OPEC over production cuts.

[Carlos Ramirez]

i'm no expert on the matter but the meteor struck at today's yucatán peninsula 65 million years ago as far as i remember.

From this, stem two questions:

1. Cantarell sits 70miles SSW of the outer rim of the crater. So waht are we talking about here... another fragment of the meteor?

2. isn't 65 million years very little time for the formation of oil? i thought it was formed in the 150-220 million years window.

Tia for the corrections i might receive.