by Kevin McKern
February 21, 2006

65 million years ago the Chicxulub meteor crashed into the sea near the Yucatan Peninsula, ending the reign of the Dinosaurs and the lives of most of the species then living on earth. The fossil types change so radically that the impact marks the end of that period of earth history called the Cretaceous and the start of the Tertiary, the so called K/T boundary.

The impact left a hole in the earth 100 miles in diameter and a mile deep but so capped by limestone and buried in sediments in the meantime as to be invisible in modern times. It was only after finding a global iridium spike at the K/T boundary, the "smoking gun" of an extraterrestrial impact, that geologists finally traced the outline of the buried Chicxulub crater in PERMEX (the Mexican Oil Company) seismographic data. Ironically, the crater was only found because a section of its sand and limestone cap had trapped 35 billion barrels of oil and become Cantarell, one of the world's greatest oil fields.

Discovered in 1976, it was quickly producing a million barrels a day from less than fifty wells, but as the years passed and the gas pressure dropped, PEMEX kept production up by injecting 1.2 billion cubic feet of nitrogen into the field daily. This is what keeps current Cantarell production at 2 million barrels a day and Mexico's total exports at 1.82 million barrels.(1)

Last year, the decline started, 2005 production was 5% lower than in 2004.

Last week the top secret PEMEX Cantarell Depletion study was leaked and apparently it reports that there is only 825 feet between the gas cap over the oil and the water that is pushing into Cantarell from the bottom and closing at between 250 and 360 feet per year. Cantarell's production will drop from 2 million b/d to 875 thousand barrels a day by the end of 2007 and halve again by mid 2009.

The loss of 1.5 million barrels a day of production capacity within three years will be very difficult to overcome because exports will be seriously reduced or perhaps even eliminated forever.

High depletion rates are not unknown. Production at Oman's Yibil field peaked in 1997 at 225-250 thousand barrels a day and then declined to 88-95 thousand barrels a day in three years. Part of that decline was attributed to the introduction of horizontal and multi-lateral drilling into the field that increased the percentage of water being brought to the surface with the oil to a greater extent then anticipated.

Increasingly the concern is expressed that advanced technology may not increase the quantity of oil you can recover from a field so much as get a slightly smaller amount out much faster. In the meantime, oil production from Cantarell bears close watching. An unusually fast decline will be yet another indicator that peak oil is near at hand.

The Oil Depletion Analysis Centre in London reports that 68 oil-recovery mega projects with announced start-up dates through 2010 will add 12.5 million b/d of crude supply by the turn of the decade, but, according to Chris Skrebowski, a board member.(2) "This new production would almost certainly not be sufficient to offset diminishing supplies from existing sources and still meet growing global demand."

If demand increased by 2% year, available supplies would fall short of the total projected to be needed in 2010 by more than 2 million b/d" roughly equivalent to losing all of Kuwait's current daily production," ODAC said.

Other analysts see this estimate as optimistic.

IHS Energy, consultants in Epsom, UK, reports that 85% of all the oil ever discovered is now in production and that only half of the total produced last year was replaced by new field discoveries.(3)

Oil consumption has now exceeded new discoveries every year since the early 1980s and oil discoveries have been declining steadily for the past 40 years. With most producers operating flat out to meet runaway demand increases this year, the world's immediately available spare production capacity has disappeared.

2) Oil & Gas Journal, Tulsa: Nov 22, 2004. Vol. 102, Iss. 44; pg. 28
3) Petroleum Economist, London: Mar 2005. pg. 1