As the chart above indicates, Mexico is not only a large source of the United State's imported oil, it's importance as a source has come on fast. It happens that this chart, which ends in 2002, is not quite accurate. Canada has supplanted Saudia Arabia as the number one supplier to the US, with Mexico right behind(if Jerome was here, you'd get prettier charts), but one thing this chart shows well is that thirty years ago, only a tiny percentage of our oil came across our southern border. Now it's our second largest source and the fifth largest producer of oil in the world. That change has helped influence US foreign policy, and had a huge impact on Mexican politics.
Among Mexican oil fields, the largest by far is Cantrell. The single field accounts for 60% of Mexico's oil production.
It's been known for at least the last five years that Cantrell is on its way down. However, it was expected to continue high production levels for a decade or more. Now it looks like the field is going down much faster than expected.
Production at Cantarell, the world's second-largest oil complex, in the shallow gulf waters off the shore of Mexico's southern Campeche state, averaged just over 1.8 million barrels a day in May, according to the most recent government figures. That's a 7% drop from the first of the year and the lowest monthly output since July 2005, when Hurricane Emily forced the evacuation of thousands of oil workers from the region.
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Exceeded in size only by Saudi Arabia's leviathan Ghawar field, Cantarell is a prolific giant that is past its prime. Monthly production peaked in late 2004 at just over 2.1 million barrels a day and has fallen more than 15% since then. Experts agree it has nowhere to go but down.
For Mexico, the rapid loss of Cantrell looms as an economic disaster. Oil revenues have helped the nation to greater growth over the last decade (and propped up Fox's corporation friendly government). If the revenues from Cantrell drop quickly, Mexico could once again find itself facing enormous debt.
"Cantarell is going to fall a lot, and quickly," said independent consultant Guillermo Cruz Dominguez Vargas, a former executive with Mexico's state-owned oil monopoly, Petroleos Mexicanos, known as Pemex. "I can't imagine the strain on this society if there is nothing to replace it."
Mexico's not the only place that will face strain. The fall of Cantrell will tighten another notch in oil's already snug supply-side belt. With rising demand and supply from its friendly southern neighbor falling, the US will find itself competing ever more heavily for oil that's increasingly sourced in the Middle East. The US gets more oil from the Cantrell complex alone than it now gets from Iraq. That will change if Cantrell falls.
It would also be bad news for the United States, for which Mexico is the No. 2 petroleum supplier, behind Canada. And it could exacerbate tight global supplies that have kept oil at record prices.
The demise of Cantrell is symptomatic of giant oil fields everywhere. The large, easily reached fields are all approaching the end of their productive live -- including Saudi Arabia's Ghawar. New fields now are smaller, tougher to reach, and less productive. In a very real sense, oil exploration has become a game of picking up crumbs that earlier generations didn't even think worth considering.
The world's "elephantine" fields have already been bagged, forcing companies to hunt in ever-more-remote areas for smaller amounts of oil to feed burgeoning demand, according to Houston energy analyst William Herbert.
"Unfortunately, the era of low-hanging fruit ... has really run its course," said Herbert, co-head of research at Simmons & Co. International, a Houston-based energy investment bank. He put the odds of finding another field the size of Cantarell in Mexico or anywhere else at "slim and none."
Is it any wonder that Pemex is refusing interviews?
Jerome has illustrated in many of his diaries that oil prices are being driven by a rising demand curve and a flat supply situation. Despite all the talk of new fields coming on line, the truth is that those fields have had a harder and harder time matching the production of the previous generation of fields. This sudden fall in a major field presents just another reason why oil prices are going to continue to move in one direction.
Now that I hope to have you stirred to the proper level of Jeromian concern over this issue, I'd like to point out you to this particular diary. Maybe it was timing, maybe it was title, but this diary was one of Jerome's least-viewed works. And that's too bad, because this dairy provides terrific insight into Jerome, why he's interested in the energy policy of a country an ocean removed from his home, and what he hopes to accomplish.
Besides that, just how cool is it to see a fellow Kossack being written up in Le Monde?
As a Polytechnique alumni, he works on investment projects in a big French bank in Paris. As an expert, he contributes to the energy section of DailyKos, the most popular political blog in the US. A star writer amongst the Democrats.
They've never heard of Polytechnique, but they know "Jerome a Paris". That's the name Jérôme Guillet, from the Polytechnique class of 89, uses on the most popular political blog in the US, DailyKos, which has between 500,000 and a million readers each day.
If you're French-capable (or trying to become French-capable), you can try the
original article.
The diary linked above provides a translation, which includes mentions of Jerome, along with some other kos favorites and events at YearlyKos.
In the corridors of the conference, Jerome has his fans, like nyceve, aka Eve Gittelson, from New York. She writes on social protection. "I've suggested to make him an honorary US citizen", she says. With his friendly attitude and his square face, the polytechnicien reminds us of Al Gore. "I am part of the - between quotes - technocratic elite", he admits. And as a good technocrat, he defends the State. "On healthcare, energy, regulation of corporations, we need to manage the externalities that the markets are unable to control, such as pollution or climate change".
Go. Read. And when Jerome gets back -- tanned and rested, we hope -- give him a big welcome.
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