[Zardoz]

Connect the dots, folks: A sudden, super-steep decline of production, and the loss of oil export revenue, will precipitate severe economic hardship in Mexico. We all know what that will mean, don't we? There will be a huge increase in illegal immigration north, into the U.S.

Is that the "immigration emergency" KBR is talking about in their PR release about being awarded the detention camp contract? link

The Bush administration knows what's coming. They're experts on Peak Oil, but of course they're keeping very quiet about it. They're making all sorts of moves to prepare, and the building of 400 million bucks worth of concentration camps for Mexican illegals is just one of them.

[ej]

Cantarell has one of the worlds largest nitrogen injection programs. They've kept reservoir pressure up that way, along with water. As noted often, these programs do not add to additional production, they simply advance the curve so the decline rates at the end are much steeper. Look at what's happened to Oman!

The maquiladoras in Mexico run on cheap energy. If you think we have a displacement and imigration problem now, wait until Mexico has to somehow pay to import energy and pay first world prices for it. We are about to watch a massive economic collape take place on our Southern border.

There are unexploited Deep GOM areas. Mexico will have to liberalize their paternalistic approach to foreign investment to make those feasible, however, and it will take years to bring on stream if at all.

[shakespear1]

Deep GOM could be used by Mexico as a long term insurance policy.

[donshan]

I thought this quote from the WSJ article was revealing:

$this->bbcode_second_pass_quote('', 'P')emex says the study's most pessimistic scenarios represent a "do nothing" approach and are highly unlikely as long as the company carries out the right maintenance work on the field to work around the spreading gas and water, which make extracting oil much more difficult. Pemex officials privately say the report was intended by senior engineers at the company as a wake-up call to management and Mexico's Congress, which approves Pemex's budget each year, to act quickly to prevent a steep decline.

[Petrodollar]

...I recall readling a projected 14% decline rate post-peak for Cantarell, due to the use of massive nitrogen injection. That is why "technology" is such a double-edged sword when it comes to oil production.

Oh yes, here's that aritcle from 18 months ago...

http://www.energybulletin.net/1650.html

$this->bbcode_second_pass_quote('', '[')b]Mexico's Cantarell field decline deferred to 2006
by Rigzone staffer

August 12, 2004

The head of exploration and production at Mexican state oil monopoly Petroleos Mexicanos, or Pemex, said Thursday that the decline of the country's biggest oil field has been delayed until 2006.

...Cantarell supplies about two thirds of Mexico's 3.4 million barrels a day in crude oil output, producing 2.2 million barrels a day of heavy crude...

Ramirez said Thursday that the decline in Cantarell, originally expected last year, has been delayed until 2006, when the deposits are expected to begin declining at a rate of 14% a year.

[cudabachi]

According to some quick and dirty calcs, Mexico has about 30 residents for every barrel of oil produced; the U.S. about 54.

It might be we who are doing the illegal immigration.

[rogerhb]

$this->bbcode_second_pass_quote('', '1')/17/06 Latin Am. Mex. & NAFTA Rep. (Pg. Unavail. Online)
2006 WLNR 1040889

...

The next government will have to make some difficult decisions about the oil industry.

...

[Bleep]

Free "echo" article:
$this->bbcode_second_pass_quote('', '[')url=http://www.forbes.com/home/feeds/afx/2006/02/09/afx2512329.html]Mexican oil output could drop sharply - report (link)[/url]

LONDON (AFX) - Mexico's huge state-owned oil company, Petroleos Mexicanos, or Pemex, may be facing a steep decline in output that would further tighten global oil supply and add to global woes over high oil prices, the online edition of the Wall Street Journal reported.

[backstop]

Shakespear1 -

I guess they'd need to self-insure projects, with credible and verifiabale assets, to attract any substantial foreign investments -

at which point the weather becomes the measure of recoverable GOM reserves - as is happening in the North Sea fields.

regards,

Backstop

[emersonbiggins]

How far offshore does Mexico's mineral interests reside? Do those boundaries tend to coincide with the 'international waters' maritime law (10-15 miles offshore) provisions, or are there other treaties/provisions in place for mineral interests? (plz forgive my ignorance) The reason I ask is simple: why can't U.S. companies drill a few miles out further off of Mexico in 'international waters?' I suppose they can't because they'd be too far from a base of operations, unlike GOM operations out of Houston or New Orleans. And it's a political hot potato, of course.

[cudabachi]

I don't recall the exact figures, but think that perhaps the US claims out to something like 200 miles. Mexico probably does something similar.

I also seem to recall that offshore from the US/Mexican border, there was something of a doughnut hole......a no-drill zone that neither country has entered because both laid claims to the area and the claims have never been settled.

I need to do some research.

[emersonbiggins]

Here is a nice little PDF regarding U.S. sovereignty over their coastal waters. It doesn't really answer the Mexico question, but perhaps the situation is similar (as you alluded to).

Ocean Commission report (PDF)

[jsb1969]

As is commonly understood, if Saudi Arabia is in decline then the world is in decline. If then Ghawar is "possibly declining", is Saudi Arabia then likely in decline?

[DantesPeak]

An oil industry analyst and economist on Bloomberg today (missed the name) discussed his expectations that the price of oil would hit $90 – probably in 2006, and $100 by the end of 2007. This would be largely driven by the expected depletion of existing fields offsetting new production coming on stream. It appeared to be the analyst’s expectation that overall worldwide production would be increasing marginally the next two years; it was not clear that this person actually embraced the concept of worldwide PO. While Canterell was mentioned, and stated as being in decline, there was no statement what so ever in regards to the shocking fall off of production that may occur in the next few years.

As Petrodollar notes above, even the original druids of the PO cult may be underestimating the production collapse we will see in some fields after using the advanced techniques others above have (thankfully) explained.

It looks more and more that instead of the PTB sounding the PO alarm, we in the US will be just treated to ‘unexplained’ drops in the commercial weekly oil inventory levels in the next few years – due to falling imports. Meanwhile the Energy Policy Act of 2005 directs the Secretary of Energy to fill the Strategic Petroleum Reserve up to 1 billion barrels - at his/her discretion. I suggest they get going before China decides to fill its version of the SPR with 1 billion barrels too.

[cudabachi]

Thanks for the PDF Emerson. It shows that we're claiming a 200 mile 'economic zone'. Again, I suspect that Mexico is doing something similar.

As for your comments about drilling in deep "international waters", you've pretty well hit the nail on the head as it relates to getting the crude to the surface where it can be processed and delivered to market.

Many of the deep water GOM projects don't actually produce the crude directly to the surface above where they're drilled. They're completed using subsurface wellheads on the seafloor. The fluids are then produced through flowlines on the seafloor to shallow-water platforms and the gas, oil, water is separated and distributed from there.

In the North Sea, it was much more common to use Floating Production Facilities in the the deep water prospects but there was always a lot of resistence to the idea in the GOM. That may have changed over the last few years as I know a number of companies were lobbying the MMS to allow them to use such facilities.

[emersonbiggins]

$this->bbcode_second_pass_quote('cudabachi', 'I')n the North Sea, it was much more common to use Floating Production Facilities in the the deep water prospects but there was always a lot of resistence to the idea in the GOM. That may have changed over the last few years as I know a number of companies were lobbying the MMS to allow them to use such facilities.

[Novus]

I beleive Cliff Oil rather then a simple peak is being engineered by TPTB. All those large fields are long past their "natural" peaks. TPTB have to keep things growing, and keep people spending, and consuming or there will be huge political and economic consequences. Every day that we put off the day of reconning only makes that day worse.

[whereagles]

Cliff oil is indeed a very realistic scenario.. what oil companies are doing is finding ways to make a better oil-sucking straw. Great production just until the well dries up and then it's GAME OVER.

[shakespear1]

Cliff is possible. If you run these field on full throttle and water/gas breaks through then you need to cut the rates to reduce to intake of water. Plus high rates are not good for nice and even sweep of oil from the area around the well. You can develop what is called by-passed oil. To get it back once water breaks through is another issue not easily resolved.

[lsu2001]

$this->bbcode_second_pass_quote('emersonbiggins', '')$this->bbcode_second_pass_quote('cudabachi', 'I')n the North Sea, it was much more common to use Floating Production Facilities in the the deep water prospects but there was always a lot of resistence to the idea in the GOM. That may have changed over the last few years as I know a number of companies were lobbying the MMS to allow them to use such facilities.