[Gazzatrone]

It seems Pemex don't mind braving a bit of wind as they resume pumping again. I wonder if any arm twisting hs gone on that we don't know about. As i read and i can't find the link now that they were talking of suspending production for about 4 days. With the rise in price that the cease in production was bringing, almost $1.5 per day. Losing 2.4mb seemed enough to send prices almost to $100. Considering how much oil we use 2.4mb is a drop in the ocean. instances like this seem to further expose just how precarious our situation is.

[DantesPeak]

$this->bbcode_second_pass_quote('', 'M')exico 3 Gulf Oil Ports Remain Shut Tues Morning - Officials

DOW JONES NEWSWIRES
October 30, 2007 10:48 a.m.


MEXICO CITY (Dow Jones)--Mexico's three oil loading terminals in the Gulf of Mexico remained shut Tuesday morning due to strong winds and rough seas, said port officials.
The ports could reopen later Tuesday if conditions improve, they added. The ports include Pajaritos, Cayo Arcas and Dos Bocas. Pemex has shut in 600,000 barrels a day in output, partly because the company doesn't have enough storage capacity due to the port closures.
A Pemex official said earlier Tuesday that production would resume Tuesday or Wednesday.

[DantesPeak]

$this->bbcode_second_pass_quote('', 'P')emex: Ports Must Reopen To Resume 600,000 B/D Output

DOW JONES NEWSWIRES
October 30, 2007 11:36 a.m.

MEXICO CITY (Dow Jones)--Mexican state oil monopoly Petroleos Mexicanos is waiting for authorities to reopen three oil ports in the Gulf of Mexico to resume 600,000 barrels a day in output that is currently shut in, said a company spokeswoman.

She declined to give a time frame for when production would resume, saying it depended on the weather. A different company official said earlier on Tuesday that production would resume Tuesday or Wednesday.

The spokeswoman said that the ports must begin shipping oil to free up storage space to begin producing oil at the areas that are shut in.

[DantesPeak]

Production cuts extend another day. It looks like the total permanent loss of output is about 2 million barrels, not counting the 3,500 bpd lost per day from the time of the Usumacinta production platform accident. In addition, about 10 million barrels of shipments are delayed, 80% of those going to the US.

$this->bbcode_second_pass_quote('', 'P')emex: To Take 24 Hrs To Fully Resume Output After Ports Open

DOW JONES NEWSWIRES
October 30, 2007 4:20 p.m.

MEXICO CITY (Dow Jones)--It will take around 24 hours for Petroleos Mexicanos to fully restore 600,000 barrels a day of output after three oil loading ports in the Gulf of Mexico resume operations, a Petroleos Mexicanos spokesman said Tuesday.

The Cayo Arcas, Dos Bocas and Pajaritos oil ports were still shut as of midday Tuesday, but could possibly reopen later Tuesday afternoon, depending on weather.

Pemex, as the company is known, began shutting in production on Sunday amid bad weather as a cold front ran through the southern Gulf of Mexico, creating strong winds and waves of over 15 feet.

[DantesPeak]

$this->bbcode_second_pass_quote('Shannymara', '')$this->bbcode_second_pass_quote('DantesPeak', 'I')n addition, about 10 million barrels of shipments are delayed, 80% of those going to the US.

[DantesPeak]

PEMEX still having some problems getting restarted. I may have to revise upwards the shutin totals of my prior post.

$this->bbcode_second_pass_quote('', 'P')emex said that the port at Cayo Arcas was already open, but still closed Dos Bocas and Pajaritos.

On the latter terminal, said he hopes that tomorrow will be reopened and therefore can resume oil shipments from there.

The company did not specify the amount began to be shipped in Cayo Arcas.

[DantesPeak]

Just when you thought it was safe for PEMEX to go back in the water, they tell us that production cuts, were...well...worse than they had been letting us believe:


$this->bbcode_second_pass_quote('', 'M')EXICO CITY (Dow Jones)--Mexican state oil monopoly Petroleos Mexicanos said it expects to restore on Wednesday all the offshore production that was shut in this week in the Gulf of Mexico as a result of bad weather and port closures.

Pemex Chief Executive Jesus Reyes Heroles said at a press conference that the crude production that was shut in this week had been more than 1 million barrels a day.

He said Pemex has restored 800,000 barrels a day of output and will resume production of another 300,000 later in the day.

"Because the contingency lasted longer than expected, we had to continue shutting in more barrels," said Reyes Heroles.

On Sunday, Pemex said it only had to shut in 600,000 barrels a day, but the company eventually had to shut in nearly twice as much oil during the storm this week.

Carlos Morales Gil, Pemex's head of exploration and production, said the company's limited storage capacity was responsible for the size of the shut in. He said bad weather had affected the southern Gulf of Mexico "almost continually" since Oct. 23, causing oil ports to close and storage sites to fill up.

Mexico has three oil loading ports in the Gulf of Mexico. The largest is Cayo Arcas, which exports 800,000 barrels a day under normal conditions.

Morales Gil also said a crude pipeline to the Salina Cruz refinery was shut at the time, causing additional storage problems.

Pemex, one of the top foreign suppliers of crude to the U.S., produces about 3.1 million barrels a day of crude oil, of which it exports 1.7 million barrels a day.

Two of the three oil ports in the Gulf had reopened by Wednesday morning.

[pup55]

Here is a graph of PADDIII imports for the summer and fall this year.

I was going to make the point that it took about two weeks from the time Hurricane Dean hit, on August 22, to have the reduced imports show up along the gulf coast.

But, after looking at the graph, I do not think it ever really recovered to its normal levels. Certainly, it does not look as though PEMEX "caught up" with their production so as to recover any lost sales volume, like they said they were going to.

So, it is going to be hard to predict when the "lost volume" will show up in the imports, unfortunately. We may see it either next week, or the week after.

But, more alarmingly, the trend is decidedly down. I wonder if there was some production permanently shut in, or if this is an artifact of their long term decline.

Edit: Maybe the statement above about inventory explains it. All of that oil sitting around in tanks, cannot get to the US.

[Leanan]

Holy crap.

Business Week has the story not behind a paywall.

[Leanan]

I am really astonished there's not more coverage of this story. It's a humanitarian disaster on par with Katrina. And like Katrina, it's affected an area important to oil production.
Mexican President Calderon: Floods Cripple Mexico's Oil Industry
$this->bbcode_second_pass_quote('', 'M')exican President Felipe Calderon on Friday warned it would take time to rebuild what has been devastated by the non-stop flooding plaguing the country, including the oil industry, which was crippled by the catastrophe. "The storms have forced the closure of three of Mexico's main oil ports, preventing almost all exports and halting a fifth of the country's oil production. It has a strong economic impact" Calderon said in an interview.
The storm did not spare the Bay of Campeche, Mexico's main oil producing region and home to more than 100 oil platforms. Overall, the region normally exports about 1.7 million barrels of crude daily. Since, most of the production remains shut down, it would mean that Mexico's output would drop by 2.6 million barrels a day.

[Tyler_JC]

This event is easily going to propel oil to $100/barrel by week's end.

I believe the "supply cushion" is 100% gone now.

If OPEC can't suddenly increase production dramatically to compensate for the crash in Mexican oil production...the debate over the date of Peak Oil is OVER.

[Bas]

I surprised that a "normal" storm caused so much damage, after this summer's hurricane which passed through that area caused relatively little damage. The oil traders are probably quite aware of the problems though, looking at last week's records. As of now, the oil price has dropped by almost 80 cents in the last hour. And as for the media; maybe there's starting to be some natural disaster "fatigue". Southern Mexico is quite far away in the average Western mind, which may be a factor.

Coming back to the oil though, do you think traders really factored in the loss of production from Mexico yet? When is it expected to be fully operational again?

[DantesPeak]

Well my WAGs are as follows on PEMEX oil production and shipments:

Production lost by PEMEX from the innocuously named 'cold front 5':

Sunday 200,000 b
Monday 800,000 b
Tuesday 1,200,000 b
Wednesday 800,000 b
Thursday 500,000 b
Friday 200,000 b

Total offshore production losses: 3.7 million barrels.

This does not count the loss of a platform which produced 3,500 bpd from October 26 [edit], which is still not repaired (last reported on by PEMEX on October 31).

Shipments withheld by storm – 10 million barrels (this occurred before the production losses).

PEMEX says no on land based oil production is now being halted.

There also may be additional malfunctions occurring after last Friday, for which PEMEX is not telling us about, but they assumed to not be significant.

[Leanan]

I don't think it's fully factored in. There's almost no coverage of this. I looked this morning, in my usual morning news trawl, and the MSM were all saying things like "there were problems last week but Pemex says everything's okay now."

But if Villahermosa is flooded and/or being evacuated, things aren't okay. That's their Houston or New Orleans.

[DantesPeak]

$this->bbcode_second_pass_quote('Tyler_JC', 'T')his event is easily going to propel oil to $100/barrel by week's end. I believe the "supply cushion" is 100% gone now. If OPEC can't suddenly increase production dramatically to compensate for the crash in Mexican oil production...the debate over the date of Peak Oil is OVER.

[DantesPeak]

$this->bbcode_second_pass_quote('Bas', 'C')oming back to the oil though, do you think traders really factored in the loss of production from Mexico yet? When is it expected to be fully operational again?

[Bas]

$this->bbcode_second_pass_quote('Leanan', 'I') don't think it's fully factored in. There's almost no coverage of this. I looked this morning, in my usual morning news trawl, and the MSM were all saying things like "there were problems last week but Pemex says everything's okay now."

But if Villahermosa is flooded and/or being evacuated, things aren't okay. That's their Houston or New Orleans.

[Leanan]

There's a refinery in or near Villahermosa, but I don't know what they produce, or for where.

Villahermosa, the "Energy City of Mexico":



I guess that's one advantage horses and donkeys have over cars....

[Twilight]

The UK TV news media did trail video footage of the flooding as one of its lead news items before a pair of national news stories buried it over the weekend. What they did show however, was water completely submerging the ground floor of buildings, floodwater stretching all the way to the horizon, evacuations by boat of people clinging to buildings up to their necks in rising water, and that was in areas to which TV crews could get access.

As for why this damage was so much more severe than Hurricane Dean, that would be because Dean struck the sparsely-populated states of the Yucatan Peninsula and caused mostly wind damage. I am not sure how "normal" this storm actually is, but according to Bloomberg, it dumped nearly a month of rainfall in four days and caused a dam to burst, all in more densely-populated areas. As already observed, areas housing important infrastructure. This is bad news anywhere - the summer flooding in the UK was also caused by a weather system that held its position and dumped several inches of rain in quick torrents. Normal or not, a deluge of water is always more damaging than a couple of days of high winds. It reaches places wind cannot reach.

I am not surprised that while this news has dropped off the radar, Bloomberg have good coverage. On some level, they get it.

Unlike with Oman/Gonu, the impact of this event will be severe and almost immediate on the US supply picture and prices.

[Leanan]

There is coverage of this story in the UK, but all they say about oil infrastructure is that conditions are such that it's impossible to determine the extent of the damage. The focus has, rightfully, been on rescuing people from rooftops and getting them supplies. Some have been without food and water for three days. CSM has this list for those who want to help:
$this->bbcode_second_pass_quote('', 'A') partial list of organizations accepting donations to assist victims of flooding in Tabasco.
Red Cross: Call 800-HELP-NOWor 800-257-7575 (Spanish). http://www.redcross.org
Catholic Relief Services:877-HELP-CRS or http://www.crs.org
UNICEF: 800-4-UNICEF or http://www.unicefusa.org
World Vision:888-56-CHILD or http://www.worldvision.org
Operation USA:800-678-7255 or http://www.opusa.org

Commercial banks with relief-fund accounts set up by the Mexican government.
ScotiabankAccount 00100911240
HSBC bank Account 4000943274
Wells Fargo bank Account 599253401
Bancomer bank Account name: Ayuda Tabasco 2007, Account number: 2280300127
Source: Los Angeles Times, wire services, aid organizations.