From: <>
Date: Mon Feb 13 2006 - 08:06:45 EST

When I got to the office today and browsed the weekend Wall Street Journal Asia, I found an interesting article on Cantarell, the world's second largest oil field.  A couple of quotes from below.  Pemex did a study which outlined 5 scenarios. Even the best scenario is scarry  and means a huge drop in Cantarell's production over the next 2 years.  HEre is what the paper had to say.

"The study, carried out last year by Pemex experts, outlines five scenarios for a decline at Cantarell, four of which are more pessimistic than the company's current public forecasts."

        "The worst two scenarios suggest a drastic decline in output to 875,000 barrels a day by the end of 2007 and to 520,000 barrels a day by the end of 2008. If such projections turn out to be correct, Mexico's overall oil exports would decline by about one milliion barrels a day--equal to about 63% of its daily crude exports to the U.S.--from its current 1.8 million.

        "Pemex says the study's most pessimistic scenarios are hihgly unlikely as long as the company carries out the right maintenance on the field to work around the spreading gas and water, which make extracting oil much more difficult." David Luhnow, "Meixo Adds to Oil Woes," Wall Street Journal Asia, Friday-Sunday, Feb, 10-12, 2006, p. 10

"But the study already promted the company in december to rpedict a slightly sharper decline at Cantarell than its previous forecasts--with output down 6% this year to an average rate of 1.9 million barrels a day and off to 1.43 million barrels as an average for 2008. That prediction now roughly matches the study's most optimistic scenario." David Luhnow, "Meixo Adds to Oil Woes," Wall Street Journal Asia, Friday-Sunday, Feb, 10-12, 2006, p. 10


        "Mexico has been bracing for a decline in Cantarell for years, and previous predictions of immminent decline have turned out to be wrong. But the internal study is the most complete look at the field to date. It says the distance between the layer of gas that sits atop the oil and the water that is creeping into the rocks below is now 250 meters and is diminishing at a rate of between 75 and 110 meters a year. The report recommends that Pemex scrap 26 of 30 new wells planned for the northern part of the field because of gas encroachment.

        "'In my mind, this report suggests a collapse scenario is the most likely,' says David Shields, an energy consultant in Mexico who first published the study's findings. Other analysts agree with Pemex's official assessment, however, Matthew Shaw, head of Latin America research for Scotland-based oil consultancy Wood MacKenzie, says he has never heard of a major field declining as fast as the worst-case outcomes outlined in the study." David Luhnow, "Meixo Adds to Oil Woes," Wall Street Journal Asia, Friday-Sunday, Feb, 10-12, 2006, p. 10


If the oil column is declining at 100 m / year and it is 250 m thick, grade school math can tell you how long the field will last.

Received on Mon Feb 13 08:13:02 2006

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