Cantarell (world's 3rd largest oil field) production down 34% in a single year

Cantarell's output dropped by more than 540,000 barrels a day in May from a year earlier as the deposit lost pressure, making it more difficult and expensive to extract crude. Pemex has been injecting nitrogen for more than 10 years to stimulate production.

The development peaked at 65 percent of the company's 3.3 million barrels of daily crude output in 2003. In May, it fell to 37 percent of total production.

The world's largest oil field is Ghawar in Saudi Arabia, followed by Burgan in Kuwait and Cantarell.
www.bloomberg.com...

So who all here still thinks that the speculators are dumping money into the oil commidity unfounded? They speculators are speculating on something. That something is the fact that oil production is declining. Should we really expect the prices of oil to drop when Saudi Arabia says they'll add an extra 200,000 barrels a day to the market? Not when oil production is down even more in other areas. Their increase is a net loss when you look at the world market.

Pemex is the proud owner of the world's largest nitrogen plant. What do they do with all that nitrogen? For the last 10 years they have been injecting it into the Cantrell field to keep the pressure up. All this does is speed up the recovery process and expedite the depletion rate. Pssst! Saudi Arabia is pumping over 7,000,000 barrels of sea water into it's fields. Any guesses as to where the next oil shock story is going to come from?

It's only a matter of time. Very little time till they see decline rates like Mexico is having. Expect to pay $10 a gallon for gasoline then.

[edit on 9-7-2008 by dbates]

Originally posted by dbates

Cantarell's output dropped by more than 540,000 barrels a day in May from a year earlier as the deposit lost pressure, making it more difficult and expensive to extract crude. Pemex has been injecting nitrogen for more than 10 years to stimulate production.

And yet the field keeps producing meaning that it is cheaper to inject nitrogen than to develop new fields even with oil being as cheaply extracted as it is in that region. This is just economics and it does not in my opinion prove anything about the availability of oil. In fact declining production can be very profitable if the decline is made up for by a rise in the prices of what you still sell. The fact that the remaining resource stays in the ground assures that you are in fact almost doubling ( or more) your profit in a long term analysis.

The development peaked at 65 percent of the company's 3.3 million barrels of daily crude output in 2003. In May, it fell to 37 percent of total production.

Which is not very revealing unless one knows more about the companies other investments and oil fields in operation. Basically the company has been injecting nitrogen for ten years and knowing that they were extracting resources from that field too fast they have diversified their holdings in the ten years since.

The world's largest oil field is Ghawar in Saudi Arabia, followed by Burgan in Kuwait and Cantarell.
www.bloomberg.com...

Saudi Arabia has declared ( without much publicly disclosed data in support i admit) that they in fact have a trillion barrels of PROVEN oil reserves remaining in that country and since they used the word proven they will eventually have to suffer the consequences of claiming it as fact if it's not validated later. There are other massive oil fields in the world but since oil is VERY cheap to extract in the region ( those few large fields have carried a large share of world production because similarly large fields were deeper or not of the same quality.

So who all here still thinks that the speculators are dumping money into the oil commidity unfounded?

/me raises hand.

They speculators are speculating on something. That something is the fact that oil production is declining.

Speculation is about profit and given sufficient capital you do not in fact need to motivate your 'bet' by anything other than massive investment. This is the obvious downside of unrestrained speculation that you have shown no interest in either understanding or admitting to. Various speculators have admitted this much and even a US senate commission admitted that even back in 2006 a large percentage of the price were not related to demand and supply of physical oil stocks.

Should we really expect the prices of oil to drop when Saudi Arabia says they'll add an extra 200,000 barrels a day to the market?

Yes we should but since the capitol forces in question can just continue to bet against a declining oil price would you rather believe what the MSM says or that actions ( them putting some of their money where the MSM isn't always) speaks louder than words? Why can so many agencies legitimately admit that there is no shortage of oil on world markets and that oil stocks are fast rising in most countries? Does that speak to a physical shortage or does it speak to 'fears' that oil prices might keep rising for whatever reason or non reason? If i had that much money to invest i would ALSO bet against oil as it's clear that whoever is keeping this shell game going has the capitol to do so.

Not when oil production is down even more in other areas. Their increase is a net loss when you look at the world market.

This is just not true according to the premier organizations who are commonly admitted to be knowledgeable on this matter. If you can supply me with even one link to premier ( i know it's subjective but we can discuss that as well ) agency claiming that there are physical oil shortages on the world market i would look at it and then start to wonder how physical inventories of oil seems to be growing in all the developed countries that can afford to lay out the cash in the fear that oil prises might rise even further.

Pemex is the proud owner of the world's largest nitrogen plant. What do they do with all that nitrogen? For the last 10 years they have been injecting it into the Cantrell field to keep the pressure up.

In an interview on the oil news website www.oilcast.com in November 2005, a PEMEX employee spoke anonymously of the company's inability to grow production, stating that the company and country is at Hubbert's Peak. The person interviewed believed export levels could not be recovered once peak had passed, as the size of current fields that have been discovered or are coming online represent a fraction of the size of the oilfields going into terminal decline.

Annual production has dropped each year since 2004. [1] Furthermore, it has been reported the 2005-2006 daily oil production was down by approximately 500,000 barrels a day (a large proportion of the country's 4.5 million barrels) on the previous year.

PEMEX averaged 3.71 MMBPD in 2006. [2] PEMEX has never produced 4 MMBPD or higher for a yearly average. [3]

en.wikipedia.org...

And some more background information
en.wikipedia.org...
www.energybulletin.net...

As you can see their estimations were on target ( and i presume the exercise of nitrogen injection thus profitable) and things proceeded according to plan. They have already started to shift nitrogen injection to other fields in the region and if they did not the decline in the Cantarell fell could be slowed substantially but , i presume, not so much so that the application of nitrogen in other higher pressure fields would not yield greater returns on investment. That at least seems to be their claim as to why they are allowing Cantarell to decline at current rates. Interestingly this massive concentration of oil were discovered in 1976; not exactly good evidence that major finds are no being found any more.

All this does is speed up the recovery process and expedite the depletion rate.

But since it's imminantly profitable what are you crying about?

Pssst! Saudi Arabia is pumping over 7,000,000 barrels of sea water into it's fields.

Any guesses as to where the next oil shock story is going to come from?

No i don't but why you would believe such stories is far more interesting than your capacity to say exactly what the peak freaks ( investment bankers ; doh) have been claiming all this time. No one is denying that some fields are declining and especially not when some of these fields have been producing oil for almost a hundred years! The oil industry is very well aware of decline rates and how to best stimulate oil formations to keep up profitable production volumes and the decline of major well developed fields are a positively exciting time for smaller companies to move in and develop smaller reserves now that world production is becoming more fractured and widespread. At the current price regimes the worlds recoverable oil supplies are many times higher than they are at the 10-30 dollar range ( presuming constant dollar which is hard to do these days) and this alone may be incentive enough eventually result in oil prices once again receding to the ten dollar range as they did back in 1998.

It's only a matter of time. Very little time till they see decline rates like Mexico is having. Expect to pay $10 a gallon for gasoline then.

Doom and gloom, without much substance in terms of evidence, is all you got and while that is certainly enough to drive speculative financial markets into overdrive , to say nothing of the few hundred million more people it drives to starvation, it does not today, or have ever in past, had anything to do with how much oil there is in the Earths crust.

Stellar

Edit for spelling

[edit on 11-7-2008 by StellarX]

reply to post by StellarX

You don't think that a 540,000 daily drop is significiant? Even if you put their production costs at $75 a barrel (high end) it's costing them $27,000,000 in revenue a day if they can sell it at $125 a barrel. Don't you think that's enough incentive to look for more oil, or are they happy watching their profits dwindle away at a rate of 34% a year? If it's cheaper to have a 34% net net loss every year than to find new oil, then new oil must be really hard to find. You're just proving my point for me.

Take you're other scenario that it's cheaper to sell less oil for more. Let's take their peak in 2003 of about 3 million barrels a day. Oil was at about $30 a barrel which would give them a revenue of $90,000,000 a day. Currently they're selling 2.05 mil a day at $140 which puts them at $287,000,000. So in that regard you're correct. But if they production continues to slide as it currently is then next year they'll only make $179 million a day, then $115 million the year after that. Of course that's unless the prices continues to rise as quickly as their decline.

Either way, eventually they'll cease to have any oil to export and it won't matter what the price is. They can't make money if they don't have any oil to sell. Of course you're assuming that the price will stay high. What if it drops to $40 a barrel? They'll be running out of oil with half the revenue that they currently have. The fact is that it's better for them to explore and find oil now with higher prices. The fact that they can't replace what they're producing says that the oil isn't there. They're currently making more money now than they ever did so what's the hold-up?

You're stating that it's cheaper to just sit on dwindling profits like an old man counting the years till death. As a business plan that's guranteed failure.

Nobuo Tanaka, Executive Director of the International Energy Agency (IEA) said today in Madrid ...that market fundamentals were the main underlying factor behind high oil prices. “OPEC production is at record highs and non-OPEC producers are working at full throttle, but stocks show no unusual build. These factors demonstrate that it is mainly fundamentals pushing up the price,"

www.iea.org...

Even if everyone was stockpiling oil (which they're not) it's not a sustainable plan. Eventually you'll fill every drum, bucket, and thimble with oil and will have no where else to put it. If you bought it at $140 and saved it you would lose your shirt and the farm when you ran out of storage room and had to let the oil actually hit the market. What would you do then? The market would then be flooded with oil which would lower the prices ensuring that you loose money? You can't hold on to the oil forever.

To refute your claim that oil production is not in decline, continue reading what Mr. Tanaka, the head of the IEA, states at the same press release.

Project delays averaging 12 months, coupled with global average decline of 5.2% - up from 4% last year – are the factors behind these revisions. Over 3.5 mb/d of new production will be needed each year just to hold global production steady. “Our findings highlight again the need for sustained, and indeed, increased investment both upstream and downstream -- to assure that the market is adequately supplied,” stated Mr. Tanaka.

He states quite clearly that the world needs to start 3.5 mb/d of new production every year just to keep the supply flat. So even if high prices are keeping demand down, we still have an issue with declining fields like the Cantarell for example. The U.S. has peaked and is declining since the 1970s. The U.K.s North Sea field has peaked and is in decline. Mexico has peaked, Russia has peaked (Look it up) and yes even Saudi Arabia appears to have peaked.

“Khurais and [offshore field] Manifa are the last two giants in Saudi Arabia,” says Sadad al-Husseini, a former Aramco vice president for oil exploration. “Sure, we will discover dozens of other smaller fields, but after these, we are chasing after smaller and smaller fish.”

costs for adding new oil production have quadrupled in recent years, from $4,000 for each new barrel per day of capacity to about $16,000 for each additional barrel.

blogs.wsj.com...

The fact is, the big fields are in decline, and the new fields are much smaller and harder to find and produce. Personally I would love to see gas go back to being under .80 cents a gallon. Remember this scene from the original movie Die Hard? Those were the days but I just don't see the market going that way.

(Not for dial-up)



[edit on 11-7-2008 by dbates]