Gregor: "You Peaked, Babe"
Mexican oil production is now declining at a rate of 9.2% per year. That’s a decline rate very close to the IEA Paris’ “scary rate” of 9.7%, which is how much global oil production would fall without any investment.
The problem in Mexico is with their largest field, Cantarell. Equally, it doesn’t help that the national oil company is constitutionally mandated to be part of the government, and that the entire country lives off of these revenues (after they’ve passed through the hands of the politicians). With oil production in decline for both geological and political reasons, it’s not surprising a growing number of observers have become worried about Mexican political stability.
Pity the role of the Mexican Energy Secretary, whose job it is to maintain the facade that Mexican oil production can rise once again, thus protecting the status quo and the Mexican way of life. This month, Georgina Kessel said that Mexico will develop new oil fields to boost output to 3 million barrels a day by 2015. But that is highly unlikely.
The history of oil production in all regions, states and countries is clear: once your largest field has peaked, you have peaked. And no amount of small discoveries can make up the difference. You can cobble together hundreds of these, but it’s just too hard to overcome the loss of the largest field. Best estimates suggest Cantarell peaked in 2004. Well, that’s just about the same year overal Mexican production peaked, above 3.8 Mb/day.
There’s nothing Ms Kessel can do to change that. Now that annual production has fallen to 2.80 Mb/day, I just want to say: You peaked, babe.
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