Last year, I expressed my concerns about the eventual impact of a rapid collapse of Cantarell on Mexico's oil production (story here ). The last production numbers from PEMEX seems to confirm the rapid decline of Cantarell as well as the inability of the Mexican to rapidly bring new production online. The Wall Street Journal (thanks to Jerôme ) published an article on Cantarell last week:

From the same article, the following chart says it all!In December 2006, production went below 3.0 mbpd for the first time since 2001. We have to keep in mind that Mexico is the second second source of oil imports for the United States (before Saudi Arabia) with nearly 1.606 mbpd in 2006.

Below are shown two results of the Hubbert Linearization (HL) applied on the monthly Mexican production for crude oil + condensate: The first fit is based on production data from 1992 to 2006 (green points) and predicts an URR around 70 Gb with a moderate decline. The cumulative production at the end of 2006 is 34.9 Gb. The second HL (Figure 2) is more pessimistic but reflects the stronger production decline observed since 2005.



Fig 2. Result of the Hubbert Linearization on the monthly crude oil+condensate production using the years 1991 to 2006.







Fig 3. Result of the Hubbert Linearization on the monthly crude oil + condensate production using the years 2005 and 2006.







Fig 4. Result of the Hubbert Linearization on Cantarell's production.

On Figure 5, different forecasts for Mexico are represented:

IEA World Energy Outlook 2006 : forecasts for Crude Oil (Table 3.2, p. 94).

IEA World Energy Outlook 2004 : forecast for All liquids (Table 3.5).

EIA, International Energy Outlook 2006 : World Oil Production Capacity by Region and Country, Reference Case, High and low prices scenarios, 1990-2030 (Table E1, p. 155). The recent drop in production since the beginning of 2006 has been very important (around 400 kbpd) and most forecasts have been overoptimistic. According to the logistic model (low variant) the production of crude oil could potentially cross domestic demand levels around 2013.



On Cantarell alone, the decline is quite impressive and the annual production decline rate could exceed 15% in the next few years.On Figure 5, different forecasts for Mexico are represented:The recent drop in production since the beginning of 2006 has been very important (around 400 kbpd) and most forecasts have been overoptimistic. According to the logistic model (low variant) the production of crude oil could potentially cross domestic demand levels around 2013.

Fig 5. Mexico's oil production and various forecasts (data sources explained in the footnotes ). PC= Productive capacities. Click to enlarge.



Some numerical values for the different forecasts shown on Figure 4 are given in the table below.





Forecast 2005 2006 2007 2010 2015 Peak Date Peak Value Crude oil + NGL Observed (EIA) 3.69 3.68 NA NA NA 2004-02 3.90 IEA (WEO, 2004) 3.93 4.02 4.09 4.20 4.14 2010 4.20 EIA Low Prices1 (IEO, 2006) 3.90 3.94 3.98 4.13 4.54 2030-01 5.80 EIA Reference Case1 (IEO, 2006) 3.88 3.90 3.93 4.02 4.22 2030-01 5.10 EIA High Prices1 (IEO, 2006) 3.84 3.85 3.86 3.93 4.40 2015-01 4.40 Crude Oil + Lease Condensate Observed (EIA) 3.27 3.25 NA NA NA 2004-05 3.45 IEA (WEO, 2006) 3.30 3.28 3.23 3.10 3.10 2005 3.30 Logistic Low 3.29 3.18 3.06 2.66 1.96 1999 3.63 Logistic Medium 3.28 3.29 3.29 3.24 3.01 2006 3.29 Demand IEA (WEO, 2006) 2.10 2.12 2.14 2.20 2.40 2030 3.10 Cantarell Observed 1.91 1.63 1.50 NA NA 2004-01 2.14 Logistic Cantarell 2.00 1.76 1.48 0.75 0.18 2003 2.28 Table I. Production figures in mbpd.1Productive capacities.



The Bottom Line

Mexican gasoline prices have increased by 20%. oil production has dropped by 11%. oil rig count has decreased by 20%. Cantarell's production has dropped by 30%. domestic oil demand has increased by 2.5%.

oil production may have dropped by 30%. Cantarell's production may have dropped by 80%. domestic oil demand may increase by 10%.



Fig 6. Production, demand and prices in January 2004 values. Click to enlarge.



Footnotes:

Production data sources:



1857-1958: from "API Facts and Figures Centennial edition 1959".

1959-1964: from "Twentieth Century Petroleum Statistics 2004" of DeGolyer & MacNaughton.

1965-2005: BP Statistical Review of World Energy.

EIA monthly data for NGPL production (1992-2005).

EIA data (Monthly Energy Review) for crude oil + condensate (1973-2005)



Monthly estimates from PEMEX for 2006.

Rig count from Baker Hughes .







Notations: mbpd= Millions of barrels per day

Gb= Billions of barrels (10 9 )

) Tb= Trillions of barrels (10 12 )

) NGPL= Natural Gas Plant Liquids

NGL= Natural Gas Liquids (lease condensate + NGPL)

URR= Ultimate Recoverable Resource

Further Reading:











Figure 6 below is summarizing the situation. Since 2004 (peak year):By 2012: