Mexico's Cantarell Field Reserves Declining
Mexico's Cantarell offshore oil field, the second largest in the world behind Saudi Arabia's Ghawar, is rapidly declining in productivity and could have implications for Mexico's state-owned oil monopoly and the United States.
Cantarell is producing 7 percent less than it was at the beginning of the year and 15 percent less than when it peaked in late 2004 at just over 2.1 million barrels per day. State-owned Pemex projected last year that Cantarell would produce 1.9 million bpd in 2006 and 1.4 million bpd in 2008, but it has also projected its overall output to increase this year to 3.4 million bpd, up from 3.3 million last year. Leaked internal reports put the worst-case scenario at 520,000 bpd by the end of 2008, or a 71 percent drop from May 2006 levels.
Mexico is the No. 2 petroleum supplier to the United States, behind Canada, so a precipitous decline in Pemex's output could exacerbate tight supplies and high global prices. Analysts said they did not expect Pemex to be able to make up the loss in productivity by exploiting other sources. Mexico's overall crude production fell last month for the third month in a row.
"Unfortunately, the era of low-hanging fruit ... has really run its course," said Simmons & Co. International energy investment banker William Herbert. He said the odds of finding another Cantarell-sized field anywhere in the world were "slim and none."
"Once Cantarell rolls, conventional wisdom has it that it would roll hard and that the declines would be steep," he said. "It looks like that may be what we're seeing" (Marla Dickerson, Los Angeles Times, July 24).
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