Supply Chain News Bites - Only from SCDigest

-April 11, 2007


Transportation News: Does Rapid Decline in Mexican Oil Field Prove Peak Oil Theories?


Mexico's Cantarell oil field, the world's second largest producer, is beginning to dry up


SCDigest Editorial Staff


We’ve covered stories in the past around “Peak Oil” theories and the potential impact on energy, transportation and other supply chain costs if such predictions are accurate (See Supply Chain Management and the End of Oil, Is Saudi Arabia Running Out of Oil? Giant Oil Find in Gulf of Mexico Offers Promise that There is Lot More Oil Out There).

Now, reports that production from the giant Cantarell oil field in Mexico, the world’s second largest by output, is falling dramatically, almost perfectly in line with what Peak Oil theorist would predict.

In the past year, the Cantarell field has seen its daily production rates drop by 20 percent, an incredibly rapid decline. It is now producing about 1.6 million barrels per day, down from two million a year ago.

The Wall Street Journal recently noted the challenge faced by world oil production: “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.”

Pemex, Mexico’s national oil company, is applying some new technology to the field, and hopes to stem the slide in barrels per day as a result. Even so, it says production from Cantarell will decline to 600,000 barrels per day by 2013.

Our take: expect oil prices to remain very strong.

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