Oil Production: Post-Peak Mexico

Includes: EWW, USO
by: Gregor Macdonald

Each year brings fresh updates to the body of peak oil research but I thought the recent An Explanation of Oil Peaking, R.W. Bentley, University of Reading 2009 was particularly good reading. Bentley does such a good job of explaining in direct terms a simple model for peak oil, without excluding any of the attendant complexity. (This would be a very good introduction for someone new to the subject).

I especially liked his articulation of how the total production arc for, say a country or a region, is a sequence composed of the largest fields eventually giving way to many smaller fields. That description made me think of the post-peak production profile of the United States, with its long-life extension at levels well below the 1971 peak. And, it also brought to mind Mexico.

The chart you see here (click to enlarge) includes the latest updated production, provided Friday by PEMEX. Total crude oil for the month of December comes in at 2.590 mbpd. This is a slight uptick to November’s 2.553 mbpd. Of course, the real story in the chart is that Mexico can never, and will never, get back to its peak year of 2004. The fact that the country’s oil minister(s) has been claiming it would, over the past five years, is actually kind of sad. And if you read Bentley’s paper you’ll understand more fully the reasons why.

Now that Mexico has lost its largest oilfield, Cantarell, which did a fast crash over 3-4 years and is the central thrust behind the above chart it’s now likely that Mexico’s crude oil production will tail off at a gentler decline rate. If Cantarell became inoperable for some reason then a new, fast leg down in supply would of course unfold. But, barring such an occurrence my guess now would be that much of the acute phase of the decline is over. Or, about to be over.

As Mexico moves into the chronic phase of its decline you will hear about new technologies, new discoveries, and increased production from some existing fields. Perhaps Mexico will even change its constitution, and allow western exploration companies to enter with their engineers and high-tech equipment. No doubt the Mexican government will claim, just like poorly written journalism here in the States often claims, that these developments have a chance to meaningfully lift production. Again, the data shows that’s simply not the case at all. For the explanation, read Bentley.

chart: by www.gregor.us using data from EIA Washington.