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March 26, 2006

Peak Mexico

By: Silvio

Great news came from Mexico last week! From RIGZONE:

Mexican President Vicente Fox announced the discovery of a potentially world-class oil discovery in the deep waters about 60 miles off the coast of Veracruz.
...
This new field, Deep Coatzacoalcos, has been estimated to hold as much as 10 billion barrels of crude oil. As such, this new discovery could help to reinvigorate the Mexican oil industry, which is facing the inevitable decline of its main oil producer, the Cantarell oilfield, which accounts for almost 60% of the country's daily output of 3.3 million barrels.

Wow, this is great! We were all worried about the "inevitable" (oh, so decline IS inevitable, damn!) of the Great Cantarell - the second (after Ghawar) oil field in the world - and we just discovered a new giant one! (ok, it's just a bit more than half of the 18 billion barrels of Cantarell, but still...)

Let's keep on reading:

In addition to the investments planned for Chicontepec (US$37.5 billion over the next 20 years), Pemex CEO Luis Ramirez Corzo stated that the company needs to invest US$20 billion annually for the next 20 years in order to increase production and reduce dependence on imported natural gas. Over the last 5 years of President Fox's administration, Pemex has invested an average of about US$9.5 billion per year. So, the required investment levels represent more than a 100% increase over recent levels.

Hey! Where will this money be coming from? And where did all that cheap oil go?!?

You see, one thing that people who don't (want to) believe in Peak Oil repeat quite often is: "Can't you see that there is so much oil left under the ground, you apocalyptic idiot?" And that is for sure true (well, I don't know about the "apocalyptic idiot" part...), as we are probably sitting on billions and billions and trillions of barrels of oil.

The huge problem, thou, is that this oil is getting more and more expensive to extract - and at one point the "energy" (remember that money is just another aspect of energy) we will get from the oil we drill will be less than the one we used to extract it. And this is what Peak Oil means: the end of "cheap" oil, NOT the end of oil.

Hey, President Fox, did you just say that Mexico finished its cheap oil?

Posted by Silvio at March 26, 2006 1:42 PM Category: Peak Oil