Jump to content
House Price Crash Forum
Sign in to follow this  
cashinmattress

The Eighth Largest Oil Field In The World Will Be Dead By The End Of Next Year

Recommended Posts

The eighth largest oil field in the world will be dead by the end of next year

The eighth largest oil field in the world will be dead by the end of next year. Shall I repeat that, or did you get it the first time? Like the Time to Die Speech of Rutger Hauer at the end of Blade Runner, the Cantarell complex has surely seen its share of ocean storms, human hopes, and stars since its discovery by a humble fisherman in 1976. If you’re wondering whether that fisherman has a name, the man who saw oil floating on the surface of the ocean as he gathered his nets, the answer is yes: Rudesindo Cantarell.

The days when you could find a supergiant oil field while fishing are over. Cantarell came late, in the oil age. That meant this global giant would receive all the best doctoring modern technology could provide. The result is that Cantarell was pumped out effectively and hard, especially after the technique to re-pressurize the field was adopted. This allowed for a spike high of daily production to be captured for several years, late in its life when a field would otherwise go into gentle decline. The result? Quicker monetization of the oil for the benefit of the Mexican state. But then the price: a catastrophic, fast crash.

Chris Nelder, energy analyst and author of Profit from the Peak, also watches Mexico quite keenly and we both had an enormously long telephone call about Cantarell back in early January, of this year 2009. While we both have been tracking the decline of Mexico’s oil production for years, and knew that Cantarell was crashing, I was shocked when Chris said, “Oh yeah. That field could head below 500 thousand barrels a day (kb/day) by the end of this year.â€

Now, one has to realize that this conversation was occurring just after New Year’s, and the most recently available data was for November, which had closed out just 5 weeks earlier. In that month, Cantarell produced 862 kb/day. In addition, Cantarell had started 2008 with January production of 1243 kb/day. Now let’s look at Cantarell’s production numbers for the most recent month of 2009, in July: 588 kb/day. As someone remarked on The Oil Drum, this looks to be a linear, rather than an exponential decline. Interesting observation. If Cantarell is indeed losing a steady 35 kb/day a month in production, then by Christmas of next year we’ll be close to zero.

I covered the implications of this supply crash in the March issue of my Gregor.us Monthly newsletter, Saga North America: How The North American Oil Crisis Will Force Ottawa, Washington, and Mexico City to Confront One Another As Never Before. In that report, I forecast the next oil crisis will unfold as Mexico loses the ability to export oil, starting sometime in late 2011. However, as so often is the case in this era of peak oil, that forecast now looks optimistic. Mexico will need all they oil they produce for their own economy. But to have an economy, Mexico will also need to solve the problem of another decline: the crash in oil revenues, upon which Mexico has depended for so many decades.

This is probably the reason that the US military has contingencies in place for state failure in Mexico.

Very worrying stuff.

Share this post


Link to post
Share on other sites

http://uk.reuters.com/article/idUKN2638112220080226

MEXICO CITY, Feb 26 (Reuters) - Crude oil output from Mexico's huge but aging Cantarell offshore field fell again to 1.243 million barrels per day in January, the lowest average monthly output level in several years, the energy ministry reported on Tuesday.

Cantarell, the jewel of Mexico's oil industry since the late 1970s, for years had produced 60 percent of Mexico's oil, but production has slid rapidly from its 2004 peaks.

Cantarell, which state oil monopoly Pemex sees declining at an annual rate of around 15 percent, produced an average of 1.260 million barrels per day in December, according to data on the energy ministry's Web site.

The sprawling oil field accounted for 42 percent of Mexico's total oil output in January, down from 43 percent in December.

A top supplier of crude to the United States, Pemex is trying to make up for Cantarell's decline with higher output at less developed fields such as the offshore Ku Maloob Zaap complex and the onshore Chicontepec field. (Reporting by Catherine Bremer; Editing by David Gregorio)

Share this post


Link to post
Share on other sites

http://www.peakoil.net/files/Cantarell%20I...n%20Problem.pdf

Since 2005, however, it has been increas-

ingly apparent that Mexico’s largest oil field

– Cantarell – is in irreversible decline. Cantarell

accounts for 26% of Mexico’s proven reserves

and provides more than half of the nation’s oil

output. But the field peaked in 2005 at 2.1 mil-

lion bpd and by 2008 has fallen to only 1.46

million bpd – a decline of 31%. Further, the

U.S. Energy Information Administration (EIA)

has suggested Cantarell will likely average

an annual decline rate of 14% through 2015.

And even that may be an underestimate. An

upstream industry magazine recently report-

ed that Mexico’s oil production dropped over

400,000 bpd in the first quarter of 2008 alone.

Additionally, estimated production in April is

down 12% from March levels.

The implications of Cantarell’s decline are

far reaching for both the U.S. and Mexico.

For the U.S., less oil supply from Mexico

means increased reliance on more distant and

potentially unstable sources. For Mexico, any

drop-off in oil exports could have reverberating

socioeconomic and political impacts, as many

social welfare programs are funded by oil reve-

nues. In 2006, for example, of the $97 billion in

sales by the state-owned Petroleos Mexicanos

(Pemex), $79 billion went to the Mexican gov-

ernment. This energy revenue windfall account-

ed for about 40% of the national budget

Share this post


Link to post
Share on other sites

http://www.bloomberg.com/apps/news?pid=206...id=axFgDS6z_n0Q

Petroleos Mexicanos, the state-owned oil company, said oil output in July fell 7.8 percent to 2.561 million barrels a day as production from its Cantarell field kept sinking.

A year earlier, daily production was 2.778 million barrels, Mexico City-based Pemex, as the company is known, said today on its Web site. Natural-gas output rose 2.2 percent to 7.1 billion cubic feet a day.

Pemex plans to spend a record $19.5 billion this year to discover deposits and develop wells to help offset the fastest drop in output since 1942. Production has fallen every month on a year-over-year basis since July 2006, according to Bloomberg and Pemex records.

Next month, the company expects production at its Chicontepec field to jump by about a third to 40,000 barrels a day. The company pumped 32,405 barrels a day from Chicontepec and 588,210 barrels a day from Cantarell in July, according to data published by the Energy Ministry today.

Cantarell accounted for 23 percent of total output, the lowest level since Pemex began publishing monthly records for the field in 1990.

Deepwater Developments

Pemex may spend more than $23 billion on Chicontepec and deepwater projects through 2012 to help offset the drop in output at its offshore Cantarell field, once the world’s third- largest field. Chicontepec is slated to reach 60,000 barrels a day by year’s end.

Pemex exported 1.31 million barrels a day in July, 5 percent fewer barrels compared with a year earlier. The company sold its crude for export at an average price of $60.80 a barrel, about half as much as a year earlier.

The Ghawar oil field in Saudi Arabia is the world’s largest field, followed by the Burgan deposit in Kuwait.

Share this post


Link to post
Share on other sites

http://www.energybulletin.net/node/1651

The second largest producing field in the world is the Cantarell complex in Mexico. It lies 85 kim from Ciudad del Carmen. The field was discovered in 1976 and put on production in 1979.

This is one of the geologically interesting oil fields because the producing formation was created when the Chicxulub meteor impacted the earth. The upper reservoir is a brecciated dolomite of Uppermost Cretaceous age. The breccia is from a shelf failure (underwater landslide) when the meteor hit. This 950 foot thick rubble became the reservoir for one of the biggest fields in the world. The lowermost part of the field is a Lower Cretaceous dolomitic limestone. The field is made up of a number of sub-fields or fault blocks. It has an overthrusted geological setting. These are Akal, Chac, Kutz and Nohoch. Akal was found first and the original well started producing at the rate of 34,000 barrels per day. A cross section of this field from Guzman and Marquez-Dominguez (2001, p. 346) is shown below:

Originally the field had 35 billion barrels of oil in place. Now, in place oil is not reserves. They expect to get around 50% of that oil out of the ground to market. The field reached an early peak in production of 1.1 million barrels per day in April of 1981 from 40 oil wells. By 1994 the production was down to 890,000 barrels of oil per day. At that time, cumulative production was 4.8 billion barrels. In 1995 it was producing 1 million barrels per day and the Mexican government decided to invest in that field to raise the production level. They built 26 new platforms, drilled lots of new wells and built the largest nitrogen extraction facility capable of injecting a billion cubic feet of nitrogen per day to maintain reservoir pressure. Doing this raised the oil production rate in 2001 to 2.2 million barrels per day. Today the field produces 2.1 million barrels.

To put this amount of production into perspectives, the largest field discovered in the US Gulf of Mexico will produce about 250,000 barrels per day. That field has about a billion barrels of reserves. If I were to find a field of that size, the company I worked for would probably make me president. For the world production, Cantarell represents 4 of the largest fields ever found in the US side of the Gulf. In 50 years of exploration in the US side of the Gulf of Mexico, only one one-billion-barrel oil field has been found. Bear this in mind as you read the rest.

A couple of weeks ago I ran into this from the oil industry rags I read. It is a chilling thought since this is the 2nd biggest producer of oil on earth. Ghawar produces 4.5 million bbl/day, Cantarell, 2.2 million bbl/day, Da Qing and Burgun around 1 million per day.

"Supergiant Cantarell continues to be the mainstay of Mexican oil production, with 2.1 MMb/d of output in 2003 up from 1.9 MMb/d in 2002. However, Cantarell is expected to decline rapidly over the next few years, falling as far as 1 MM b/d by 2008. This has given particular urgency to Pemex's efforts to develop other fields and move into deepwater." For now, Pemex's best alternative project is the heavy-oil complex known as Ku-Maloob-Zaap, in Campeche Bay close to Cantarell. Output from this complex was 288,000 b/d in 2003 and is expected to rise to about 800,000 b/d by the end of the decade." David Shields, "Pemex Ready to Drill in Deepwater Perdido Area," Offshore, June 2004, p. 38

Even the largest fields we find offshore in the deepwater today only produce about 250,000 bbl/day. It will take about 4 of them to replace this decline in Cantarell.

And even the heavy oil field they mention won't replace the loss of Cantarell by the end of the decade. And one must remember that all oil fields which are producing today, are in the process of declining.

The implications of this upcoming decline are tremendous to the world. This field produces half of what Ghawar does and it won't be doing that much longer. The effect on the energy supply will be felt and there is no way for that not to happen. On Aug. 3, 2004, the OPEC president stated that OPEC has no more spare capacity. They are pumping all out and can't satisfy the demand for oil. If fields like Cantarell begin declining, the problem of supplying the world with oil will only get worse.

Share this post


Link to post
Share on other sites

http://www.offshore-technology.com/projects/cantarell/

However, Cantarell is now in relentless decline. As long ago as August 2004, Pemex announced that actual oil output from the field was forecast to decline steeply from 2006 onwards, at a rate of 14% a year.

In March 2006 it was reported that Cantarell had peaked, with a second year of declining production in 2005.

For 2006, the field's output fell by 13.1%, according to Pemex, which also predicted another decline of 15% for 2007. And in May 2008, Mexico's Energy Ministry said output had fallen a further 33% to 1.07 million barrels a day – the lowest output at the field since March 1996.

In order to try to maintain heavy crude production in the Bay of Campeche, Pemex is focusing its efforts on the development of the Ku-Maloob-Zaap complex in an adjacent area, which can be connected to the existing facilities of Cantarell. Ku-Maloob-Zaap is expected to produce 0.8 million barrels a day by 2010.

Share this post


Link to post
Share on other sites

http://home.entouch.net/dmd/cantarell.htm

MexicanProduction.jpg

UPDATE 1 (Update 2 below)

Since I originally wrote this page in 2004, several things have happened. First, Cantarell has actually begun to decline. The most recent Upstream (May 11, 2007) quotes Jesus Reyes Heroles, the Pemex leader as saying that Cantarell would produce only 1.5 million barrels per day in 2007. This is compared with over 2 million in 2004. Secondly, the fall of Cantarell has begun to cause Mexico's overall production to drop. It is off 300,000 barrels per day over the past couple of years. Obviously, Mexico is spending money drilling elsewhere to try to stop the country's fall in oil production. This fall can be seen in the following chart which is up-to-date as of April 2008

Update 2 (Feb 2008)

I quoted this above in 2004.

"Supergiant Cantarell continues to be the mainstay of Mexican oil production, with 2.1 MMb/d of output in 2003 up from 1.9 MMb/d in 2002. However, Cantarell is expected to decline rapidly over the next few years, falling as far as 1 MM b/d by 2008. This has given particular urgency to Pemex's efforts to develop other fields and move into deepwater." For now, Pemex's best alternative project is the heavy-oil complex known as Ku-Maloob-Zaap, in Campeche Bay close to Cantarell. Output from this complex was 288,000 b/d in 2003 and is expected to rise to about 800,000 b/d by the end of the decade." David Shields, "Pemex Ready to Drill in Deepwater Perdido Area," Offshore, June 2004, p. 38

Share this post


Link to post
Share on other sites

http://www.energybulletin.net/node/21299

Mexico has clearly established itself as a critical supplier of oil to the U.S. But this is a relatively recent development that will soon begin to change. Prior to 1975, Mexico had little or no oil available for export. Great discoveries during 1972-75 in the states of Tabasco and Chiapas (the Reforma fields) suddenly transformed Mexico to a major oil exporter. But this was only a prelude.

Cantarell, A Unique Resource

In 1976, Mexico discovered one of the world’s truly great oilfields, Cantarell, in the Bay of Campeche west of Yucatan. The discoveries vaulted Mexico to No. 1 among all suppliers of oil to the U.S. during 1982-86. Mexico has been among the top three suppliers ever since, averaging about 1.5 million b/d since 2000 and 1.8 million b/d in the first half of 2006. Cantarell’s phenomenal production made this possible. The figure below shows Mexico’s oil production since 1965 and the dominance of these discoveries.

newswire_cantarell.png

Share this post


Link to post
Share on other sites

http://www.istockanalyst.com/article/viewa...ticleid/2574857

The oil industry along the Louisiana coast got off lightly from Hurricane Gustav. While 1.3 million barrels of oil and seven billion cubic feet of natural gas per day stopped pumping temporarily, most of the oil infrastructure escaped harm. And oil prices plummeted on that good news.

However, there's a much worse problem threatening oil production around the Gulf of Mexico ...

Unlike a hurricane, this problem is not short-term, and in fact it will only get worse over time. I'm talking about the steep, sharp drop in production at Mexico's biggest oil field, Cantarell.

I am getting increasingly frustrated by how little attention Americans are paying to this major crisis brewing in their backyard. So, I think maybe the mainstream news should start treating Cantarell the same way they do a hurricane. Maybe that would generate some attention!

After all, Cantarell's decline has already cost us — 1.2 million barrels per day — the same amount we lost from Gustav.

The only difference: The Cantarell losses are permanent rather than temporary.

A quick history of Cantrarell's oil field for those who can't be bothered to look.

Share this post


Link to post
Share on other sites
When it's the "first largest" I'll be bothered.

Cantarell was the second largest producer in the world at max.

Gwahar (1st by a big margin) won't crash as spectacularly, but the most productive northern end is being drawn down rapidly; it will be a case of gradually escalating costs and more work yielding less oil. It will still be yielding oil in 2050 (probably 2100!), but probably a 3% oil/97% water mix like East Texas does now.

The issue raised is that the big non-Opec exporters that came online after the oil crises of 193 and 1979 (Norway, the UK, Mexico, Alaska, etc) are now either not importers or in steep decline. Now the world export/import market depends almost entirely on the middle eastern OPEC nations and Russia/FSU.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   291 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.