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Mexico's Oil Output Cools
WSJ ^ | January 27, 2007; | DAVID LUHNOW

Posted on 01/26/2007 8:58:57 PM PST by MinorityRepublican

MEXICO CITY -- Daily output at Mexico's biggest oil field tumbled by half a million barrels last year, according to figures released Friday by the Mexican government. The ongoing decline at the Cantarell field could pressure prices on the global oil market, complicate U.S. efforts to diversify its oil imports away from the Middle East, and threaten Mexico's financial stability.

The virtual collapse at Cantarell -- the world's second-biggest oil field in terms of output at the start of last year -- is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos, or Pemex. Cantarell's daily output fell to 1.5 million barrels in December compared to 1.99 million barrels in January, according to figures from the Mexican Energy Ministry.

Mexico made up for some of the field's decline. Mexico's overall oil output fell to just below three million barrels a day in December, down from almost 3.4 million barrels at the start of the year. It marked Mexico's lowest rate of oil output since 2000.

Mexico's troubles at Cantarell mirror the larger problems in the global oil market. Many of the world's biggest fields are old and face decline, which can be sharp and sudden. Like other big producers, Mexico is struggling to make up the difference because new big fields are in harder-to-reach places like the deep waters of the Gulf of Mexico.

The field's decline is expected to continue, if not worsen, this year, according to most estimates. That will subtract valuable oil from the world market, which is under pressure from rising demand by growing economies like China and India. It also means less oil headed to the U.S. from Mexico, which has long relied on Mexico as one of its top-three oil suppliers.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Mexico; News/Current Events
KEYWORDS: energy; mexico; oil

1 posted on 01/26/2007 8:59:00 PM PST by MinorityRepublican
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To: MinorityRepublican

Geez, what happened to all the fields the abiogenic oil twits were claiming were magically refilling?


2 posted on 01/26/2007 9:04:05 PM PST by Strategerist
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To: MinorityRepublican
Lets do something really wild and crazy just this one time,OK? Why don`t we drill for new oil in the USA? Realize that`s pretty radical, but, it would be fun to tell them to go to that permanent warm place.
3 posted on 01/26/2007 9:08:14 PM PST by neverhillorat (IF THE RATS WIN, WE ALL LOSE)
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To: Strategerist

Don't overlook rate of pumping vs rate of refilling.


4 posted on 01/26/2007 9:14:02 PM PST by gas0linealley
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To: neverhillorat
I agree. But we had our best chance under President Bush, an oil man.

The next President is going to be either a Democrat or a RINO, and the oil situation will probably be worse than it is today. (Especially since prices have been going down the past couple of months, but eventually they'll go back up once again)

5 posted on 01/26/2007 9:17:20 PM PST by MinorityRepublican (Everyone that doesn't like what America and President Bush has done for Iraq can all go to HELL)
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To: MinorityRepublican

more illegals coming north


6 posted on 01/26/2007 9:24:54 PM PST by ckilmer
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To: ckilmer

Oh well, not much we can do about it now. We might as well adapt.


7 posted on 01/26/2007 9:27:54 PM PST by MinorityRepublican (Everyone that doesn't like what America and President Bush has done for Iraq can all go to HELL)
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To: MinorityRepublican

Just heard Glenn Beck comment that the decline in oil prices came after a meeting Cheney had with the Saudi`s to increase production, therefore reducing prices which would really hurt Hugo and the Iranians. Don`t know if it`s true, but I like it. As Ollie said a while back, it`s kinda of a neat idea.


8 posted on 01/26/2007 9:37:19 PM PST by neverhillorat (IF THE RATS WIN, WE ALL LOSE)
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To: gas0linealley
Don't overlook rate of pumping vs rate of refilling.

Yes, typical rate of withdraw, 60 years per field. Typical rate of filling, 60 million years.

9 posted on 01/26/2007 10:04:54 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

"Typical rate of filling, 60 million years."

Prove it.


10 posted on 01/26/2007 10:07:29 PM PST by gas0linealley
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To: neverhillorat
Just heard Glenn Beck comment that the decline in oil prices came after a meeting Cheney had with the Saudi`s to increase production

Except that Saudi Arabia has cut production since November and has pledged to cut more starting in February.

OPEC produced 28.37 MMBPD in Nov and 28.26 in Dec. The end of last year they were producing 29.63 MMBPD. Saudi Arabia produced 8.75 MMBPD in Nov and 8.71 in Dec. 4th quarter 2005 they produced 9.43 MMBPD.

OPEC Monthly Oil Market Report, Jan 2006

11 posted on 01/26/2007 10:07:43 PM PST by thackney (life is fragile, handle with prayer)
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To: Strategerist

I can't read the full story. Is the falloff because they are running out of oil, or is it because they aren't maintaining the field?


12 posted on 01/26/2007 10:09:07 PM PST by PAR35
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To: gas0linealley

A century worth of oil drilling and petroleum reservoir data from the entire world proves it rather well.

But if you really have faith in the myth of abiotic oil, may I suggest reading:

No Free Lunch, Part 1:
A Critique of Thomas Gold's Claims for Abiotic Oil
by Jean Laherrere
http://72.14.253.104/search?q=cache:OHh4XIRawBsJ:www.fromthewilderness.com/free/ww3/102104_no_free_pt1.shtml+%22No+Free+Lunch,+Part+1:+A+Critique+of+Thomas+Gold%27s+Claims+for+Abiotic+Oil%22&hl=en&gl=us&ct=clnk&cd=1

No Free Lunch, Part 2:
If abiotic oil exists, where is it?
by Dale Allen Pfeiffer
http://72.14.253.104/search?q=cache:WKHDLUyZmgcJ:www.fromthewilderness.com/free/ww3/011205_no_free_pt2.shtml+%22No+Free+Lunch,+Part+2:+If+Abiotic+Oil+Exists,+Where+Is+It%3F%22&hl=en&gl=us&ct=clnk&cd=1


13 posted on 01/26/2007 10:17:10 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney
Do the Saudi` always accurately report production? In your opinion, why are oil prices down?
14 posted on 01/26/2007 10:34:05 PM PST by neverhillorat (IF THE RATS WIN, WE ALL LOSE)
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To: neverhillorat
One thing I'm guessing is that a number of hedge funds are dumping their positions on crude oil in the past few months. Does the name George Soros mean anything to you?
15 posted on 01/26/2007 11:31:34 PM PST by RayChuang88
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To: neverhillorat; thackney
Oil has fallen rapidly from its peak for the very same reason that it rose TO its peak; the mkt has not been trading on stated supply/demand figures for years (specifically, since approx Oct 2002).

The mkt participants are and have been watching the worldwide excess-capacity figure, and, for 4+ years, this has been an almost perfect contrary indicator as to where the POC is headed. If ex-cap goes up, POC falls, and vice versa.

Katrina did not send WTI to $70+, not at all. A combination of circumstances reduced the ex-cap figure to 0.6 MMBbl/day in **January 2006**, and prices duly went crazy from then until April. As Mr. Stengel used to say: ''Ya could look it up.''

Now, with US Gulf production essentially fully restored, and with OPEC **cutting** some amount of production, the ex-cap figure has been rising steadily for about 9 months. Gee, what a shock that the price has been falling.

I make no brief whatever that this situation will continue, particularly with the mismanagement of Cantarell and possibly other PEMEX production areas.

However, what HAS happended with POC has happened for the reason stated above. What WILL happen? The ball's in the air; name your favourite result. If ex-cap stays at this level, POC is fairly priced. If it continues upward and there are no immediate (say, in 6 months) exogenous events, which I think likely, POC will fall; I consider $50/bbl to be a ''line in the (haha) sand'', but, if breached, we're looking at $42/bbl, basis WTI, by roughly May.

You pays your money, you takes your choice.

16 posted on 01/26/2007 11:35:50 PM PST by SAJ (debunking myths about markets and prices on FR since 2001)
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To: SAJ

Slick analysis you have there. Now I need to figure out how to try to profit from these insights. Thanks for pointing out what is behind the curtain.


17 posted on 01/27/2007 1:29:06 AM PST by Draco
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To: neverhillorat
Do the Saudi` always accurately report production?

Oil is probably the most documented and tracked product in the world. Nobody trust anybody and verifications are done continuously. The buyers measure again what they receive that was measured first by the seller with both measurements by proven and calibrated meter inspected by third parties.

In your opinion, why are oil prices down?

Because the supply, most particular the margin capacity of supply, is up.

But it is not Saudi Arabi who is dumping oil on the market.

18 posted on 01/27/2007 7:46:45 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Who then is dumping the excessive supply?


19 posted on 01/27/2007 9:23:00 AM PST by neverhillorat (IF THE RATS WIN, WE ALL LOSE)
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To: neverhillorat
Who then is dumping the excessive supply?

I don't agree that there is any "dumping" and that supply is excessive. Compared to history, this still a relatively high prices, just not sky high. I see supply, and the surplus margin of supply, beginning to return to normal. In my opinion, it is returning to normal because the sky high prices infused the industry with the capital needed to invest in exploration and production to bring those values back to normal.

If you want to, go back to post #11 and read that OPEC report. It has detail and comparison of the World's oil market, supply and demand, with comparison to previous years. It is one of the most up-to-date free oil reports available. Expected world growth in demand is also down. Total demand is up, but at a much more stable growth rate than the spikes being predicted 9 months ago.

20 posted on 01/27/2007 9:38:07 AM PST by thackney (life is fragile, handle with prayer)
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To: neverhillorat
why are oil prices down?

Down? Crude futures were up last week.

21 posted on 01/27/2007 9:40:42 AM PST by RightWhale (Repeal the law of the excluded middle)
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To: MinorityRepublican

Good. We haven't a good Peak Oil thread for several days.


22 posted on 01/27/2007 9:41:39 AM PST by RightWhale (Repeal the law of the excluded middle)
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To: PAR35

Oil fields play out. Prudhoe was pumping 2 million barrels a day and was supposed to be dry by now, but technology and fresh drilling has kept flow up around 400,000 barrels a day.


23 posted on 01/27/2007 9:44:37 AM PST by RightWhale (Repeal the law of the excluded middle)
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To: thackney

Are you trying to tell us that dirty rotten big oil invests some of it`s blood money profits back into their business?


24 posted on 01/27/2007 9:50:36 AM PST by neverhillorat (IF THE RATS WIN, WE ALL LOSE)
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To: neverhillorat

That is why their profit margins stay around 10% when the oil prices have tripled. The money is pouring back into the industry. Which is why that job market and equipment sales have been booming for the last couple of years.


25 posted on 01/27/2007 10:08:23 AM PST by thackney (life is fragile, handle with prayer)
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To: neverhillorat

The government (Federal and State) are the ones profiting from this the most, not the evil oil companies.


26 posted on 01/27/2007 11:30:06 AM PST by MinorityRepublican (Everyone that doesn't like what America and President Bush has done for Iraq can all go to HELL)
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