[Texgreen] A giant sucking sound in Mexico

[Roger Baker]

"...An America that is distracted by loonball astronauts and celebrity
inquests has no clue about the meaning of Cantarell's decline, nor is
it in any position to appreciate the unprecedented gyrations that
await Mexico's economy and society. There will be ramifications to the
United States, of course, especially if the Mexican government's
predictions that oil exports will remain steady turns out to be too
optimistic. It stands to reason that a decline in Mexico's public
spending will result in greater economic hardship, which would likely
hasten the volume of illegal immigration into the United States. At
that point it may not be possible to hear the giant sucking sounds at
Cantarell above the cacophony occasioned by a swell of economic
refugees surging north of the border."

[My friend Tim Jones posted this elsewhere. BTW, the following has =20
very nice environmental science and photography posted on a nice =20
site. Good reference material on global warming:   <http://=20
groundtruthinvestigations.com/>    -- Roger]

                      *************************************

The Giant Sucking Sound, Revisited
<http://www.earthtoys.com/news.php?section=3Dview&id=3D2120http://=20
www.earthtoys.com/news.php?section=3Dview&id=3D2120>
http://tinyurl.com/32b4os
by Michael Vickerman, RENEW Wisconsin
Visit http://www.renewwisconsin.org for further information.

Petroleum and Natural Gas Watch, Vol. 6, Number 3,
February 12, 2007

Remember the metaphorical "giant sucking sound" that Ross Perot
invoked in the 1992 presidential debates? Perot employed that image
to characterize the rapid exodus of jobs to Mexico that would surely
result from ratifying the North American Free Trade Agreement.
Fifteen years later, that vivid phrase could appropriately describe
the increasingly desperate circumstances befalling Cantarell,
Mexico's largest oilfield, situated about 50 miles off the coast
of the Yucatan Peninsula.

The giant sucking sound you might hear at Cantarell is what happens
when hundreds of oil wells begin drawing gas and water from the very
reservoirs that used to yield copious quantities of petroleum. It's the
sound of an oilfield rolling over its peak.

To unknowing American ears, the name Cantarell evokes a casual,
Southwestern feeling, more suggestive of a dude ranch than the world's
No. 2 oil field. By far the most productive oil reservoir in the
Western Hemisphere, Cantarell was yielding more than two million
barrels per day (bpd) as recently as 2005, outperforming all other
fields save mighty Ghawar in Saudi Arabia. At $50 per barrel that
level of production translated to $100 million a day. When a wealth
generator of that magnitude starts to sputter and lose productivity,
other oilfields must pick up the slack or else the Mexican economy is
bound to take a hit.

Unfortunately, the most recent numbers from PEMEX, the state-owned oil
company, don't justify confidence. Output from Cantarell fell by
nearly 500,000 bpd to about 1.5 million bpd in December 2006, a 25%
decline from 2005's totals. Cantarell's swoon took PEMEX's total
output below the three million bpd level for the first time in six
years. PEMEX exports more than half of its crude to the United States
alone; only Canada exports a larger volume. Since Cantarell's output
is roughly equivalent to Mexico's total exports, production declines
will be felt in the United States, which will have no choice but to
offset the loss by purchasing more expensive crude on the
international market.

Make no mistake, a production crash at the world's second-largest
oilfield will have an effect on import volumes and the price of crude.
In fact, oil markets have already taken notice. In mid-January the per
barrel price of crude briefly sagged below the $50 mark. Since PEMEX's
admission two weeks ago, the markets have rebounded somewhat.

PEMEX is working to expand output from other fields to offset
continued losses at Cantarell, which are expected to average 15% a
year. To meet that objective, PEMEX will inject nitrogen into the
largest of the remaining oilfields, increasing reservoir pressure and
flow rates. No doubt that will help, as Mexican crude is on the heavy
side of the spectrum. But as demonstrated at Cantarell, where nitrogen
injections since 2000 produced substaintial gains in flow rates, once
the practice is discontinued, output drops sharply.

If the projected annual decline rate is accurate, Cantarell will drop
out of the million bpd club by 2010. As noted in the Wikipedia entry
for Cantarell: "This rapid decline is postulated to be a result of
production enhancement techniques causing faster oil extraction at the
expense of field longevity." Indeed, the consequences of nitrogen
injection on an oilfield are not at all dissimilar to the effects of
anabolic steroids on power hitters, both during and after usage.

To increase output at Cantarell, PEMEX constructed the world's largest
nitrogen-producing plant. This facility, which was dedicated entirely
to Cantarell, consists of four production lines, each with their own
air separation units and natural gas-fired tubines. A fair amount of
natural gas is sacrificed to capture nitrogen and pipe the gas 50
miles away to liberate more of Cantarell's crude from the sea bottom.
 >=46rom the perspective of the Mexican government, whose taxes on PEMEX
profits account for 37% of its budget, the effort was worth it, at
least while production was going up.

But now, having reached Cantarell's downslope, the Calder=F3n government
finds itself hopelessly squeezed between an implacable geological
reality and the need to find a replacement cash cow. But if the news
from Cantarell means that Mexico's overall oil-exporting capacity is
also in decline, then the government will have no choice but to limit
petroleum consumption at home to prop up PEMEX's export earnings, on
which it is so dependent.

The other large revenue generator for Mexico is tourism. Increasing
oil extraction activity has been a long-time pillar of Mexico's
economic strategy, to keep the cost of jet fuel low enough to ensure
more and more planefuls of Yankee and European tourists coming over to
visit its beaches, mountains and ruins. Mexico's dependence on tourism
revenues provides additional motivation to emphasize oil exports over
domestic consumption.

An America that is distracted by loonball astronauts and celebrity
inquests has no clue about the meaning of Cantarell's decline, nor is
it in any position to appreciate the unprecedented gyrations that
await Mexico's economy and society. There will be ramifications to the
United States, of course, especially if the Mexican government's
predictions that oil exports will remain steady turns out to be too
optimistic. It stands to reason that a decline in Mexico's public
spending will result in greater economic hardship, which would likely
hasten the volume of illegal immigration into the United States. At
that point it may not be possible to hear the giant sucking sounds at
Cantarell above the cacophony occasioned by a swell of economic
refugees surging north of the border.

Sources:

U.S. Dept. of Energy graphics:
http://www.eia.doe.gov/emeu/cabs/Mexico/images/oil_exports.gif

http://www.eia.doe.gov/emeu/cabs/Mexico/images/=20
crude_production_fields.gif

http://en.wikipedia.org/wiki/Cantarell_Field

"Flesh on the Bones of Mexican Oil Production, Euan Mearns, February =20
7, 2007.
http://www.theoildrum.com/node/2247

"Mexican oil production decline means that 4 out of 5 major OECD
producers are now in decline (Norway, UK, USA and Mexico), leaving
only Canada with growing production and this presents the OECD with a
growing problem of energy security."

"Mexico - Cantarell Crashing," Peak Oil Review
(Vol. 2, Number 5), January 29, 2007.
http://aspo-usa.com/

Petroleum and Natural Gas Watch is a RENEW Wisconsin initiative
tracking the supply demand equation for these fossil fuels, and =20
analyzing
its effects on prices, consumption levels, and the development of energy
conservation strategies and renewable energy alternatives. For more
information on the global and national petroleum andnatural gas supply
picture, visit "The End of Cheap Oil" section in RENEW Wisconsin's web
site: http://www.renewwisconsin.org. These commentaries also posted
on RENEW's blog: http://www.zmetro.com/community/us/wi/madison/renew
and Madison Peak Oil Group's
blog: http://www.madisonpeakoil-blog.blogspot.com