View Full Version : Mexican Company Predicts End of Oil
The title used is the title of the article.
We all know oil will not "run out" and there will not be an "end of oil". Rather, there will be a depletion curve that is shaped according to several variables. Cantarell's decline does show evidence of being steep.
There are several possible inferences. First, Mexico is a main exporter of crude oil to the U.S; they also supply Mexico's domestic needs. As the decline continues, and assuming they choose to fill their domestic demand, exports may be reduced at a high rate. There is speculation that exports might cease in as little as 5 years.
Second, PEMEX revenue supplies about 36% of the Mexican government's budget. A big decline could result in a budget squeeze - perhaps even a budget crises - for that government.
Such a decline could exacerbate the illegal immigration issue with the U.S.; additionally, a decline in exports by a reliable trading partner could have economic impact on the U.S.
I've attached a chart of oil's recent price action on the exchange; the short-term trend is interesting - though I hasten to add that trends get broken all the time.
------------Article----------------------------------------------------------------
Mexico, Jul 27 (Prensa Latina) Petroleos Mexicanos (PEMEX) announced that oil reserves may run out in seven years.
"Supplies of this economically exploitable resource are running out," informed a report sent by the state owned company to the United States stock market.
Until December 31, 2005 the report says proven reserves were about 8.978 billion barrels, while yearly production was 1.322 billion tons. If this rhythm continues oil will run out in the time stipulated..
El Universal newspaper reports that experts of the PFC Energy Advisory company based in Washington pointed out that investments for PEMEX exploration is also running out of time.
Even if heavy investments were made now, new oil fields would take from six to eight years to be ready and, consequently, Mexico may have to import oil to satisfy the internal market, it warned.
The newspaper quotes Carlos Ramirez, PEMEX spokesman as saying that if necessary investments were made, this would provide another 2.9 more years to what is foreseen with the proven developed reserves.
The director of the state owned company, Jesus Reyes, insisted that these are difficult moments due to a reduction of production in Cantareli, the main oil field in the country.
LINK (http://www.plenglish.com/article.asp?ID=%7BF1F8B8FE-DA99-4717-8FBD-2B3C4F90FBA3%7D%29&language=EN)
incommin
07-27-2007, 14:14
Is this another "chicken little" story? Do we (the oil companies) know where all the oil is and where it isn't ? If "oil" was running out soon, wouldn't the oil companies be spending much more in alternate energy sources?????
When light crude does run out, wouldn't a solution be to bury the gas engine and just build diesel motors that will run on just about anything????
Jim
The Reaper
07-27-2007, 14:50
This is what happens when you chase out the foreign experts and investors- no one looks for more oil in the hard to find places.
No return on investment or shaky business futures equals no new investment or exploration.
There is plenty of oil there, they just can't find it or get it out any more.
This is a lesson I hope Chavez enjoys soon, since they deliver mostly a lower grade sludge type oil.
TR
Incommin-->"Is this another "chicken little" story? "
Well, Sir, the title is a bit over-the-top. I think the important issues are the
economic and political impact of more expensive and (perhaps) less available
liquid fuels.
Incommin-->"Do we (the oil companies) know where all the oil is and where it isn't ? "
A lot of the world has been heavily explored, but we surely don't know
where all of it is. A recent discovery, the "Jack" well in the Gulf of
Mexico is an example - it's deep, the discovery may be large, it
will take years to develop, and producing the oil will be expensive. There
is a developing consensus that the easy-to-find cheap-to-produce oil
has pretty much all been discovered.
Incommin-->"If "oil" was running out soon, wouldn't the oil companies be spending much more in alternate energy sources?????"
They're investing in tar sands and oil shale efforts; on a national level,
coal liquefaction, corn ethanol, and cellulosic ethanol are being pursued.
The key problem is that we're structured for cheap fuels, and alternatives
aren't shaping up to be cheap.
Incommin-->"When light crude does run out, wouldn't a solution be to bury the gas engine and just build diesel motors that will run on just about anything????"
It's interesting to note the increasing spread between the cost of heavy
sour and light sweet crude - so more use of diesel might provide some
cost benefits for a time. The problem is, when the cost crunch hits
consumers, they have to either get more efficient, cut usage, or shift
their spending patterns. Getting more efficient can involve a lot of
strategies, but tends to require investment. Cutting usage is quick
and easy, but one person's conservation is another person's loss of
business. Shifting spending will, likewise, have broader implications.
If you'd like to read a really good analysis, the U.S. Army Corps of
Engineers came out with a report. Here's a LINK (http://stinet.dtic.mil/cgi-bin/GetTRDoc?AD=A440265&Location=U2&doc=GetTRDoc.pdf)
2018commo
07-27-2007, 17:18
Perhaps this is just an over simplification, but what if we offered Mexico statehood?
We then find the oil, build refineries, create plenty of jobs and end the migration north.
:munchin
No they will then want to play like PR.
Get all the benefits and none of the responsibilities.
And then they will complain about the other states.:confused:
Bet this gets some comments!!
Every one south of mexico will still to come over.
The Reaper
07-27-2007, 17:45
Perhaps this is just an over simplification, but what if we offered Mexico statehood?
We then find the oil, build refineries, create plenty of jobs and end the migration north.
:munchin
SF BHT nailed it.
And inherit a lot of impoverished and undereducated people dependent on social programs.
Add 20 million to the welfare rolls overnight. Bankrupt Social Security and Medicare in the next ten years.
That is like getting married for the sex.:rolleyes:
They would not accept this statehood offer, anyway. They are proud of their heritage.
Why not drill for oil here, where we already know it is, but people don't want to do that (yet)?
TR
2018commo
07-27-2007, 19:39
"And inherit a lot of impoverished and undereducated people dependent on social programs. "
And the reconquista is not already taking us there?
Add 20 million to the welfare rolls overnight. Bankrupt Social Security and Medicare in the next ten years.
It is bankrupt now! You and I won’t see a bit of it and expect to see our pensions nationalized to pay for the boomers who failed to save or invest squat.
That is like getting married for the sex.:rolleyes:
LOL!!! Hey I was 18...
They would not accept this statehood offer, anyway. They are proud of their heritage.
Cobra III, would be a whole lot easier than trying to keep open or re-open the Straights of Hormuz.
Why not drill for oil here, where we already know it is, but people don't want to do that (yet)?
This is by far the best option, but with a hurdle of empowered eco-nuts and nimbys which is comparable to the 20 million impoverished above.
TR[/QUOTE]
It may interest you that the counsel on foreign relations has produced a report advocating a plan for economic and security cooperation between the U.S., Canada, and Mexico. I think SF_BHT and TR are exactly right in their conclusions about the end result.
An small excerpt from a 70 page document:
WHAT WE SHOULD DO BY 2010
• Lay the groundwork for the freer flow of people withinNorth
America. The three governments should commit themselves to
the long-term goal of dramatically diminishing the need for the
current intensity of the governments’ physical control of cross-border
traffic, travel, and trade within North America. A long-term goal
for a North American border action plan should be joint screening
of travelers from third countries at their first point of entry into North
America and the elimination of most controls over the temporary
movement of these travelers within North America.
The CFR doesn't have any power, but it does have influence. So even though Mexico is unlikely to be a state or a Puerto Rican style entity, we may well see some integration of the 3 nations. Policy groups tend to do the groundwork that results in legislaiton decades later...
Should anyone care to peruse the entire document, here's a LINK (http://www.cfr.org/content/publications/attachments/NorthAmerica_TF_final.pdf)
The Reaper
07-27-2007, 21:40
"And inherit a lot of impoverished and undereducated people dependent on social programs. "
And the reconquista is not already taking us there?
Add 20 million to the welfare rolls overnight. Bankrupt Social Security and Medicare in the next ten years.
It is bankrupt now! You and I won’t see a bit of it and expect to see our pensions nationalized to pay for the boomers who failed to save or invest squat.
That is like getting married for the sex.:rolleyes:
LOL!!! Hey I was 18...
They would not accept this statehood offer, anyway. They are proud of their heritage.
Cobra III, would be a whole lot easier than trying to keep open or re-open the Straights of Hormuz.
Why not drill for oil here, where we already know it is, but people don't want to do that (yet)?
This is by far the best option, but with a hurdle of empowered eco-nuts and nimbys which is comparable to the 20 million impoverished above.
Reconquista is not taking us there with our blessing. There is a difference.
Social Security is not bankrupt now, and is projected to be sound for quite a while yet, WITH THE CURRENT BALANCE OF PAYEES TO RECIPIENTS.
If there were oil on my property, I would be drilling in my yard right now. At $77 per barrel, I am fine with the inconvenience. For a few million more $ per year, you can build a refinery on my family farm, too.
TR
Let me open up a can of worms....
The three gov't cooperation is already being pushed forward as the "North American Union." Read, "poverty and socialism dispersed acrost a wider area."
Crude Oil, The Renewable Resource.
I'd like to throw this out there. There were/are some scientists making the case that crude oil could not have come from "fossils."
But is instead
(and I am dramatically oversimplifying this with my caveman skills)
a by product of plate tectonics, that is when one land mass or plate plate crosses under another along the fault lines, and all that molten mishmash happens deep below the earth, hot lava etc., that crude is a by product of that.
Argument goes that if you take a pile of leaves, grass, pig guts, and it decomposes, the pile takes gets smaller, dead stuff shrinks. So if you were to take every living thing that ever was on the earth, and decompose it, you could never equal the amount of crude oil that is. But then conventional scientists will tell you that somehow, all of the plankton was trapped under the earth and that is what crude oil came from.
Problem is they havnt exactly figured out how the plankton (for lack of the proper term) got trapped deep under ground. Another isssue is that they havnt been able to produce a carbon based fuel from a rock.
It is a fact that capped oil wells, that were pumped dry, have refilled again. Scientists argue that this could be from ground water moving around and pushing oil to the surface.
Clearly, my brain isn't the one that should be looking into this. I just want to point out that they do not KNOW how crude oil came to be, that it is only a theory.
The Reaper
07-29-2007, 12:42
Another isssue is that they havnt been able to produce a carbon based fuel from a rock.
I agree that the organic matter is not a good explanation for billions of barrels of oil, but it is an organic product.
OTOH, last time I checked, coal was a carbon based rock that is a fuel.
TR
I'd like to throw this out there. There were/are some scientists making the case that crude oil could not have come from "fossils."
It’s also called the abiotic oil theory.
As you point out, it’s an alternative to the existing scientific consensus; however, even if it is true, it doesn’t solve the problem.
Existing U.S. society depends on abundant, cheap, liquid fuels. The food we eat, the goods we buy, the jobs and entertainments we go to require transportation – and, in the U.S., as matters stand, that means liquid fuels. I suspect modern armies require abundant liquid fuels for their various operations. Let’s look at some numbers:
U.S. Net Petroleum Imports: 12,549,000 barrels/day
U.S. Petroleum Consumption: 20,802,000 barrels/day
(Source: EIA (http://www.eia.doe.gov/neic/quickfacts/quickoil.html))
With abiotic oil, the flow into abandoned wells is quite small. The trickle might matter in a millennium, but it won’t help us fuel our cars tomorrow. Alternatively, if we drill for it, it’s going to be deep. We don’t have the technology to accomplish this at present – not to the depths the theory suggests. If the theory is true, perhaps we could find a solution, but it is likely to produce expensive oil. That will have an impact of some sort on the overall economy.
One must ask what will happen if global oil production is poised for a decline; there are quite a number of people who expect sharp increases in the price. Look at the escalation in food prices. This is a result of using corn ethanol to reduce imports. If people shift their spending to fuel, whether gasoline or diesel, they will spend less on other options. So, for example, they might eat out less. But that affects the owner and employees of the restaurant, doesn’t it?
It’s interesting to note the potential geopolitical impact, too. For example:
“LONDON (Reuters) - OPEC's oil and gas export revenue surged 22 percent to a record $649 billion in 2006 as crude prices hit an all-time high and the exporter group pumped close to full tilt, an OPEC report showed on Tuesday.
In the world's biggest oil exporter Saudi Arabia income from petroleum exports, including crude oil, condensates and natural gas liquids, hit $194 billion last year, a rise of 20 percent, OPEC said in its Annual Statistical Bulletin.”
Source: (Reuters (http://africa.reuters.com/business/news/usnBAN152427.html))
That’s a lot of cash going from the U.S. and other western governments into regions that are not, in every case, trustworthy friends. So long as demand goes up while global production remains static (which it is), the price goes up. But if production declines, the upward pressure on prices could be significant.
The massive demand – with the U.S. alone needing 20 million barrels per day – are why abiotic oil, like tar sands, corn ethanol, and shale oil are unlikely to prevent some sort of supply crunch. And that will make for some interesting discussions. Interesting times too, I suspect.
I would guess, that the oil supply would be rationed so that defense would be at the top or the pyramid until such time as you could make powered flight without a petroleum product.
Nuclear power could provide enough electricity to power land based (for the masses) rapid transportation, it would create a great deal of jobs to build a new infrastructure to replace airports and interstates.
Urban design or planning would have to change, to consider life without automobiles.
People will make due. Kids gotta eat, Mama's gotta have a roof over her head. We might make less money, but heck parents might spend more time with kids too, which has an effect on crime and other social ills. Walking would do most of our American peers a whole lotta good.
But.... We are a long way from that, as soon as people have to change their way of life, as soon as business is dramatically affected, we will drill in all the *sacred* places, build new refineries, and get all the godddam oil we can.