Mexico’s Troubles Are Our Troubles

Falling Imports to U.S. Spell Domestic Profits

A new contender now tops my long list of worries: Mexico.

…Mexico is our #3 source of imports, providing 1.3 million barrels per day (mbpd), or about 6% of our total petroleum supply (EIA, Dec 2008 data).

Yet Mexico’s days as a top oil producer, and possibly its days as a democratic nation, are numbered.

Mexico’s largest oil field, Cantarell, is one of the four largest “supergiant” oil fields in the world, and was once the world’s second-largest producer (after Saudi Arabia’s Ghawar field). It peaked in 2003 at 2.1 mbpd, but thanks to a program of nitrogen injection that was pursued to maximize the rate of production (probably at the expense of long-term production), its production is crashing at an accelerating rate, currently about 38% per year. It is now producing about 0.77 mbpd, and will probably fall to 0.5 mbpd before tailing off at a gentler rate (or so Pemex hopes).

Energy and Capital