Comments on: Peak Oil Update

By: Dan

Dan — Thu, 27 Aug 2009 14:41:28 +0000

The U.S. is going to have to wean itself quickly from Mexican oil, which is a problem because Mexico is a large supplier. It’s unfortunate that Mexico can’t get its act together, because from what I’ve read, Cantarell should still have huge supplies of viable oil. The problem isn’t that the oil is disappearing; the problem is incompetence and lack of interest in finding new supplies within the field. As Saudi Arabia has demonstrated, it’s possible to keep a large field going for 60 or more years, with production not flagging, if the proper technology is applied. My hope is that someday, Mexico will get its act together. But the U.S. had better not count on it.

By: Roy Lofquist

Roy Lofquist — Wed, 26 Aug 2009 17:31:34 +0000

Historically we have always had about 25 years of proven reserves. Exploration is very expensive. The oil companies and state actors spend just enough on exploration to find reserves that meet their own projected needs for the next 25 years – the time it takes to fully develop those reserves.

By: Mike C.

Mike C. — Wed, 26 Aug 2009 10:41:48 +0000

That’s pretty much all correct. Pemex is in just about the worst shape of all nationals that have significant reserves/production, because Mexico has a constitutional restriction against non-government investment in the oil industry. Not even Mexican corporations can take a working interest in petroleum development, much less foreign ones. And there is no chance that that constitutional provision can be removed or modified any time in the foreseeable future. Efforts by Pemex to entice participation by commercial companies on a TSA basis (with no share in production) have fallen flat, unsurprisingly. Basically, they’re screwed.

By: Bob Smith

Bob Smith — Wed, 26 Aug 2009 07:36:08 +0000

Is there a non-{European,US} state oil company that didn’t get its start by stealing its assets from a Western oil company? ARAMCO got its start that way, as I recall.

By: Rick C

Rick C — Wed, 26 Aug 2009 04:19:35 +0000

“And, when politicians in Mexico are faced with a choice between making capital available for long-term investment in the fields or dropping it into yet another silly government program or transfer payment scheme, they do the latter.”

Just wait until a refinery has a failure similar to the dam failure in Russia last week.

By: Bart Hall (Kansas, USA)

Bart Hall (Kansas, USA) — Tue, 25 Aug 2009 19:03:00 +0000

The Mexican problem is far bigger than we believe. The Alberta oil patch paid for my M.Sc. in geology, so this is not unfamiliar territory. Consider this:

40% of the Mexican federal budget is provided by revenues from Pemex.

A huge portion of the Mexican federal budget is applied to purchase social peace, yet even so Calderon won his presidency but narrowly — and Obrero brought tens of thousands into the streets in an attempt to overturn the election results. There’s another election coming in 2012, and it probably will not be pretty.