Wall Street Journal- World's Second Largest Oil Field Is Dying

[Jcrowley]

This article is a big deal. It's by David Luhnow, ([e-mail]), and is another article in the WSJ's exceptional series on the decline of Cantarell.

http://users2.wsj.com/lmda/do/checkLogin?mg=evo-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB117570687954959825.html

Mexico Tries to Save A Big, Fading Oil Field

AKAL C OIL PLATFORM, Gulf of Mexico -- In March 1971, a Mexican fisherman named Rudesindo Cantarell took a few geologists from state-run oil company Petróleos Mexicanos to this spot, where he had seen oil slicks. Mr. Cantarell didn't know it, but he had stumbled across one of the largest offshore oil fields ever found.

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This might be the best article in WSJ's Cantarell series yet. The author extends the discussion of Cantarell to the status of the worlds super giant fields, quoting Simmons at one point:

The demise of Cantarell highlights a global issue: Nearly a quarter of the world's daily oil output of 85 million barrels is pumped from the biggest 20 fields, according to estimates from Wood Mackenzie, a Scotland-based oil consulting firm. And many of those fields, discovered decades ago, could soon follow in Cantarell's footsteps.

It's widely believed that the world's biggest oil fields have already been found. In the decades leading up to the 1970s, the world discovered eight big fields that produced between 500,000 to one million barrels a day, according to Matthew Simmons, a veteran oil industry banker. During the 1970s and 1980s, only two were found. Since then, only one -- the Kashagan field in Kazakhstan -- has the potential to easily top the 500,000 barrel-a-day mark.

Two decades ago, about a dozen fields produced more than a million barrels a day. Now there are only four, one of which is Cantarell. The future of two others, discovered more than 50 years ago, remains in question. Some analysts speculate Saudi Arabia's Ghawar, the biggest field by far, could begin a gradual decline within a decade or so. Another, Kuwait's Burgan, is showing signs of maturity. In November of 2005, Kuwait Oil Co. lowered its estimate of the field's sustainable production level to 1.7 million barrels a day from 1.9 million a day.

Replacing big gushers is difficult. Industrialized countries, which tapped out their big fields years earlier, haven't been able to maintain output despite finding large numbers of smaller fields and investing heavily in technology. Alaska production, hurt by declines at the giant Prudhoe Bay field, dropped from 2 million barrels a day in 1988 to a current rate of about 900,000 a day.

"The world faces a situation where we have production from smaller and smaller fields trying to keep up with declines from the big fields like Cantarell," says Mike Rodgers, a partner at industry consulting firm PFC Energy in Houston. "You're on a treadmill trying to keep up, and you get to a point where you can't make any more forward progress."

http://www.theoildrum.com/node/2438#comment-176485

Cantarell, The Second Largest Oil Field in the World Is Dying

Copyright 2004 G.R. Morton This can be freely distributed so long as no changes are made and no charges are made.
http://home.entouch.net/dmd/cantarell.htm


The second largest producing field in the world is the Cantarell complex in Mexico. It lies 85 kim from Ciudad del Carmen. The field was discovered in 1976 and put on production in 1979. This is one of the geologically interesting oil fields because the producing formation was created when the Chicxulub meteor impacted the earth...

Originally the field had 35 billion barrels of oil in place. Now, in place oil is not reserves. They expect to get around 50% of that oil out of the ground to market. The field reached an early peak in production of 1.1 million barrels per day in April of 1981 from 40 oil wells. By 1994 the production was down to 890,000 barrels of oil per day. At that time, cumulative production was 4.8 billion barrels. In 1995 it was producing 1 million barrels per day and the Mexican government decided to invest in that field to raise the production level. They built 26 new platforms, drilled lots of new wells and built the largest nitrogen extraction facility capable of injecting a billion cubic feet of nitrogen per day to maintain reservoir pressure. Doing this raised the oil production rate in 2001 to 2.2 million barrels per day. Today the field produces 2.1 million barrels.

<snip>

A couple of weeks ago I ran into this from the oil industry rags I read. It is a chilling thought since this is the 2nd biggest producer of oil on earth. Ghawar produces 4.5 million bbl/day, Cantarell, 2.2 million bbl/day, Da Qing and Burgun around 1 million per day.

"Supergiant Cantarell continues to be the mainstay of Mexican oil production, with 2.1 MMb/d of output in 2003 up from 1.9 MMb/d in 2002. However, Cantarell is expected to decline rapidly over the next few years, falling as far as 1 MM b/d by 2008. This has given particular urgency to Pemex's efforts to develop other fields and move into deepwater." For now, Pemex's best alternative project is the heavy-oil complex known as Ku-Maloob-Zaap, in Campeche Bay close to Cantarell. Output from this complex was 288,000 b/d in 2003 and is expected to rise to about 800,000 b/d by the end of the decade." David Shields, "Pemex Ready to Drill in Deepwater Perdido Area," Offshore, June 2004, p. 38

Even the largest fields we find offshore in the deepwater today only produce about 250,000 bbl/day. It will take about 4 of them to replace this decline in Cantarell.

And even the heavy oil field they mention won't replace the loss of Cantarell by the end of the decade. And one must remember that all oil fields which are producing today, are in the process of declining.

The implications of this upcoming decline are tremendous to the world. This field produces half of what Ghawar does and it won't be doing that much longer. The effect on the energy supply will be felt and there is no way for that not to happen. On Aug. 3, 2004, the OPEC president stated that OPEC has no more spare capacity. They are pumping all out and can't satisfy the demand for oil. If fields like Cantarell begin declining, the problem of supplying the world with oil will only get worse.

http://home.entouch.net/dmd/cantarell.htm

[FogerRox]

1. Yup

[magellan]

2. It's all going to hell in a handbasket

And don't expect the US government to do anything about it (even if they could) or so much as breathe a whisper of it. Bush** gives no credence to things he doesn't want known.

What the hell does he care? He and his cronies have got everything they need to survive the coming oil crisis and subsequent worldwide catastrophe quite comfortably thanks to American taxpayers -- otherwise known in BushWorld as SUCKERS.

[Maven]

3. .

"Some analysts speculate Saudi Arabia's Ghawar, the biggest field by far, could begin a gradual decline within a decade or so."

Am I wrong in thinking this is tremendously optimistic?

EDIT: Another commenter at The Oil Drum addressed this. It looks like this statement is inconsistent even with the WSJ's own graphs.

[Jcrowley]

4. Ghawar is Fading

Ghawar Is Dead!
The Wide-Spread Use of Advanced Extraction Techniques are Killing the Mother of All Oil Fields
by Matthew S. Miller

“How could we drink up the sea? Who gave us the sponge to wipe away the entire horizon?
What were we doing when we unchained this earth from its sun?”
- Friedrich Nietzsche, The Gay Science- 1882

“My father rode a camel. I drive a car. My son flies a plane. His son will ride a camel.”
- Anonymous Saudi Sheik – 1982

“Ghawar, Ghawar she gave and gave; They sucked her dry like mankind’s slave;
The Sheiks told us that big oil lie; And all those people had to die.”
- Lyrical History - 2082

I’ve watched in shock and awe in recent days, shaking my head and wringing my hands. Yet another unremarkable narrative of celebrity intrigue entered the echo chamber of the mainstream media system and its 24/7-positive-feedback-amplification-loop to emerge as biggest news event - no, the earth-shaking cultural event of the year. This time it is…Anna Nicole is dead!

<snip>

It was also announced recently, without the same media feeding frenzy, that another queen of mass-culture is dead too. Few of us even know her name. Rather than being the personification of the contemporary zeitgeist, she is one of the cornerstones of what Marx called global capitalism’s base. She was an integral part of the concrete material conditions that make our peculiar form of social organization possible. Her name is Ghawar, and she is the mother-of-all oil fields. She was once a veritable sea of light sweet crude 174 miles long and 12 miles wide, under the sands of the eastern province of the Kingdom of Saudi Arabia (KSA), and now she is dead.

http://www.commondreams.org/views07/0307-33.htm

Ghawar is Fading

G.R. Morton

There are four oil fields in the world which produce over one million barrels per day. Ghawar, which produces 4.5 million barrels per day, Cantarell in Mexico, which produces nearly 2 million barrels per day, Burgan in Kuwait which produces 1 million barrels per day and Da Qing in China which produces 1 million barrels per day. Ghawar is, therefore, extremely important to the world's economy and well being. Today the world produces 82.5 million barrels per day which means that Ghawar produces 5.5 percent of the world's daily production. Should it decline, there would be major problems. As Ghawar goes, so goes Saudi Arabia.

The field was brought on line in 1951. By 1981 it was producing 5.7 million barrels per day. Its production was restricted during the 1980s but by 1996 with the addition of two other areas in the southern area of Ghawar brought on production, Hawiyah and Haradh, the production went back up above 5 million per day. In 2001 it was producing around 4.5 million barrels per day. There have been 3400 wells drilled into this reservoir.

I have noted elsewhere that the data I am being told by engineers who have actually worked on Ghawar, that this decade will see it's peak. (Morton, 2004 PSCF in press). Others have noted how the percentage of water brought up with the oil has been growing on Ghawar. There are published reports that Ghawar has from 30-55% water cut. This means that about half the fluids brought up the well are water. Today the decline rate is 8%. Thousands of barrels per day of production must be added each year.

"The big risk in Saudi Arabia is that Ghawar's rate of decline increases to an alarming point," said Ali Morteza Samsam Bakhtiari, a senior official with the National Iranian Oil Company. "That will set bells ringing all over the oil world because Ghawar underpins Saudi output and Saudi undergirds worldwide production." Unfortunately for the world, few know the actual state of Ghawar. Cumulative production from the field is 55 billion barrels. In 1975 Exxon, Mobil, Chevron and Texaco estimated that the ultimate recovery from the field would be 60 billion barrels. Without a doubt, new technologies have moved EURs from that which was possible in the mid 1970s. But the Saudis claim that the field can recover another 125 billion barrels. For someone like me who has spent a lifetime in the oil industry trebling the recovery factor is a fantasy we all wish we could do. But no one has ever figured out how. Thus, I doubt very much their claims, especially in light of the maps shown below.

http://solutions.synearth.net/2004/08/23?print-friendly=true

[Maven]

6. TY

Of course the WSJ can't acknowledge the full extent of the catastrophe we're literally driving into.

[diamidue]

8. No one in power wants to admit how desperately the USA

needs Middle Eastern oil - and how long we are going to be in Iraq.

I found this editorial interesting (and frightening):

".. and unless our access to oil continues from the Middle East, the Anglo-American status as lone superpower and owner of the world’s reserve currency could go up in hyperinflationary smoke. Because of the importance of oil in terms of military dominance, I fully agree with Jim Dines, who suggests that in a few short years all the major oilfields of the world are likely to be in the hands of the militaries of various governments. What we are seeing in Iran and the geopolitical games being played among China, Russia, and Iran on the one hand and the U.S. and western Europe on the other is just the beginning of what is likely to become increasingly hostile and hot areas of military conflict."

http://www.321energy.com/editorials/taylor/taylor040307.html

[Psephos]

11. The desperation will be even more intense in Asian countries

They are becoming the world's manufactories.

Because of its shift to service and information economies, US future needs can be addressed more easily with nuclear and alternative energy than the needs of China, India, and other Asian industrial countries.

Everyone will feel the pain, though. Everyone.

Peace.

[Leopolds Ghost]

15. An information economy is based on second-tier profits from manufacturing off-shore

Just as the British free-trade economy of the past 500 years was based on first-tier profits manufacturing using raw materials recovered off-shore and resold to the colonies.

It is a massive "company town" system. A pyramid of workers profiting off each others goods. The actual money involved has fictitious value, as proven by the fact that economist regard it as having infinite recursive multiplier effect -- the notion that every dollar pumped thru the economy makes 1 million people a fraction of a dollar richer. Items of value, for which they pay with those dollars, are not fungible or multipliable.

[Nikki Stone1]

5. I can't get the WSJ article

It would be nice to see a few paragraphs if you could arrange it.

[Jcrowley]

7. Here ya' go

"In March 1971, a Mexican fisherman named Rudesindo Cantarell took a few geologists from state-run oil company Petroleos Mexicanos to this spot, where he had seen oil slicks. Mr. Cantarell didn't know it, but he had stumbled across one of the largest offshore oil fields ever found.

A few decades and 12 billion barrels of oil later, the field that bears Mr. Cantarell's name is dying, and Pemex, as the state-owned company is known, is struggling to stave off the field's demise. From January 2006 though February 2007, Cantarell lost a staggering one-fifth of its production, with daily output falling to 1.6 million barrels from two million.

The oil industry was stunned. Cantarell, which currently produces one of every 50 barrels of oil on the world market, is fading so fast analysts believe Mexico may become an oil importer in eight years. That would batter Mexico's economy, which depends on oil exports to fund 40% of its government spending."

Here's a good resource:
www.theoildrum.com

[Psephos]

9. Good post. That's an informative, well-written article. n/t

[Jcrowley]

10. Kick for info

[Bozita]

12. Yesterday, Thom Hartmann said we'll be facing a failed state on our southern border.

Oil production and export provide 40% of the government's revenue today. As the oil flow decreases, demand will increase making Mexico an oil IMPORTER.

Scary stuff!

[lovuian]

13. Changing times

Things that we could have done
but will have to do
Mass Transportation will be a must

imagine no car payments and no insurance
no filling up at the station

oops Insurance agencies gone
Auto makers gone
Gas stations gone

a vision for tomorrow

[chaska]

14. k&r

[pigpickle]

16. K&R