Now that's some deflation...

[GRG55]

Lukester will want to know how much the money supply has to increase to offset this... ;)

Pemex to Miss 2008 Oil Target, Mexico's Kessel Says

By Thomas Black and Andres R. Martinez
May 28 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, will miss its annual production target of 3.1 million barrels a day as output falls faster than expected at its largest oil field, said Mexican Energy Minister Georgina Kessel...

...The company is trying to boost output at other fields to make up for plunging results at Cantarell, the largest offshore oil field in the world. Production at Cantarell fell 33 percent to 1.07 million barrels in April from 1.59 million barrels a year ago...
http://www.bloomberg.com/apps/news?p...d=ao7To3pIP2qk

And right on cue, as we have come to expect whenever these sorts of bad news announcements are necessary, they are immediately followed by "good news" announcements (a behaviour, just to be clear, that is by no means unique to Mexico):

Pemex Discovers Crude Oil in Deep-Water Well Tamil

By Thomas Black and Andres R. Martinez
May 29 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, discovered oil in a deep-water well that is the lightest crude found to date in Gulf of Mexico waters more than 500 meters (1,650 feet) deep.

The project, dubbed Tamil, is the seventh exploratory well Pemex has drilled in deep water. It produced crude with a grade of 18 on the American Petroleum Institute's scale for measuring the viscosity of oil, Guillermo Perez Cruz, director of Pemex's deep-water unit, told reporters today.

The grade is heavier than the company's Maya crude and lighter than extremely heavy oil Pemex discovered at is first deep-water well, Nab, which had crude as thick as grade 8 on the petroleum institute's scale, Perez Cruz said. Lighter crude is easier and less costly to refine into gasoline and other fuels. Further testing in coming weeks should reveal the pressure and amount of potential oil from the well, Perez Cruz said...

...Pemex is counting on producing 500,000 barrels of oil per day from deep-water fields by 2021 to help make up for the decline at Cantarell, the world's largest offshore oil field.

Of the seven wells it has drilled in deep water since 2004, most have either contained natural gas or have been dry. The company plans to drill at least 19 wells in waters deeper than 800 meters during the next four years to seek new fields to slow a four-year decline in output...
http://www.bloomberg.com/apps/news?p...d=aCz08vCVUiC4

And...

Pemex to Add Reserves From Drilling at Chicontepec

By Thomas Black and Andres R. Martinez
May 30 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, may add between 200,000 and 300,000 barrels of proved oil reserves for each well drilled at its onshore Chicontepec field, helping stem declining crude stocks.

Pemex plans to drill 500 wells this year at Chicontepec, which would allow the company to add as much as 150 million barrels to proved reserves, said Vinicio Suro, managing director of planning and evaluation at Pemex's exploration and production unit, during a conference in Monterrey.

``There's going to be a small jump,'' Suro said of incorporating reserves at Chicontepec. ``It's going be little by little. There's not going to be a change overnight.'' ...

...Mexico's reserves have declined almost every year for more than two decades because Pemex has pumped more oil than it has discovered since production began in 1979 at Cantarell, the world's largest offshore oil field...

...Next year, Pemex plans to drill as many as 1,000 wells at Chicontepec, which requires sophisticated horizontal drilling techniques because it consists of the small pockets of oil and is located in densely populated rural areas...
http://www.bloomberg.com/apps/news?p...d=azhYrsC2YVkk

Perfect example of "Peak Cheap Oil". While the easy, cheap, good stuff depletes it's replaced with heavier crude, or much more expensive to develop lower grade reservoirs.

Example of the former, Tamil is reported as 18 API crude. Anything less than 20 API is considered heavy & anything less than 10 API is considered bitumen by the Society of Petroleum Engineers. The US DoE EIA considers anything less than 25.7 API as heavy (Mexico's Maya grade is about 22 API).

Example of the latter, Chicontepec is a huge onshore oil field (covers more than 1200 sq miles) with potentially 70 billion barrels of light oil (about 31 API) in place ( :eek: ). The catch is the reservoir is tight (extremely low permeability) and in a populated area. Groppe Long (Henry Groppe's Houston based firm) estimates it may take as many as 16,000 wells to recover something like 11 billion of those barrels from Chicontepec ( :eek: :eek: )

Yes Virginia, there is a Santa Claus. But he can't bring us what we really wish for now...

[Starving Steve]

Re: Now that's some deflation...

The good news is that Pemex is planning to add up to 150 million barrels of new oil reserves at Chicontepec this year. The bad news is that the world consumes more than that amount of oil in just TWO DAYS.

Unless that I am missing something here, and if the situation in Mexico is typical of what is going on throughout the world, this is a serious oil crisis because the world's oil consumption numbers and its oil production numbers just don't reckon.

This is why I get upset when the eco-frauds suggest solar roofs as a solution.... Not that solar roofs are going to hurt anything, but they are not a real solution to this crisis. The hard facts have to be understood.

The solution is: conservation, austerity, natural gas, nuclear power, electric cars, ethanol made from sugar cane, and synthetic oil made from coal. (And yes, tidal power could be part of the solution, too.)

[GRG55]

Re: Now that's some deflation...

The solution is: conservation, austerity...

One of the questions, I think, is whether this is voluntary or imposed.

2 years ago I told the Chairman of my firm [a senior member of one of the Arab Gulf ruling families] that within a few years there would be involuntary petrol rationing starting in the US and UK and spreading to other parts of the developed world [unless Aramco pulled off a miracle]. He simply couldn't believe it possible.

Al Gore's film, An Inconvenient Truth, was just starting to do the rounds, and in my usual cynical reaction to these sorts of things I suggested to him that governments might seize on climate change as a "good thing" as one means to sell gasoline rationing to the public.

I still think it's going to play out something like that. Now he does too.

[algerwetmore]

Re: Now that's some deflation...

Since many Americans, many who are card-carrying neo-cons, think we are indeed entitled to as much energy as we want- why not extend carbon credits to individuals or families.
I am sure many high-end corporate types would gladly trade a few bags of groceries for some credits to buy a plane ticket.

[ocelotl]

Re: Now that's some deflation...

Lukester will want to know how much the money supply has to increase to offset this... ;)

Pemex to Miss 2008 Oil Target, Mexico's Kessel Says

By Thomas Black and Andres R. Martinez
May 28 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, will miss its annual production target of 3.1 million barrels a day as output falls faster than expected at its largest oil field, said Mexican Energy Minister Georgina Kessel...

...The company is trying to boost output at other fields to make up for plunging results at Cantarell, the largest offshore oil field in the world. Production at Cantarell fell 33 percent to 1.07 million barrels in April from 1.59 million barrels a year ago...
http://www.bloomberg.com/apps/news?p...d=ao7To3pIP2qk

And right on cue, as we have come to expect whenever these sorts of bad news announcements are necessary, they are immediately followed by "good news" announcements (a behaviour, just to be clear, that is by no means unique to Mexico):

Pemex Discovers Crude Oil in Deep-Water Well Tamil

By Thomas Black and Andres R. Martinez
May 29 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, discovered oil in a deep-water well that is the lightest crude found to date in Gulf of Mexico waters more than 500 meters (1,650 feet) deep.

The project, dubbed Tamil, is the seventh exploratory well Pemex has drilled in deep water. It produced crude with a grade of 18 on the American Petroleum Institute's scale for measuring the viscosity of oil, Guillermo Perez Cruz, director of Pemex's deep-water unit, told reporters today.

The grade is heavier than the company's Maya crude and lighter than extremely heavy oil Pemex discovered at is first deep-water well, Nab, which had crude as thick as grade 8 on the petroleum institute's scale, Perez Cruz said. Lighter crude is easier and less costly to refine into gasoline and other fuels. Further testing in coming weeks should reveal the pressure and amount of potential oil from the well, Perez Cruz said...

...Pemex is counting on producing 500,000 barrels of oil per day from deep-water fields by 2021 to help make up for the decline at Cantarell, the world's largest offshore oil field.

Of the seven wells it has drilled in deep water since 2004, most have either contained natural gas or have been dry. The company plans to drill at least 19 wells in waters deeper than 800 meters during the next four years to seek new fields to slow a four-year decline in output...
http://www.bloomberg.com/apps/news?p...d=aCz08vCVUiC4

And...

Pemex to Add Reserves From Drilling at Chicontepec

By Thomas Black and Andres R. Martinez
May 30 (Bloomberg) -- Petroleos Mexicanos, the state-owned oil company, may add between 200,000 and 300,000 barrels of proved oil reserves for each well drilled at its onshore Chicontepec field, helping stem declining crude stocks.

Pemex plans to drill 500 wells this year at Chicontepec, which would allow the company to add as much as 150 million barrels to proved reserves, said Vinicio Suro, managing director of planning and evaluation at Pemex's exploration and production unit, during a conference in Monterrey.

``There's going to be a small jump,'' Suro said of incorporating reserves at Chicontepec. ``It's going be little by little. There's not going to be a change overnight.'' ...

...Mexico's reserves have declined almost every year for more than two decades because Pemex has pumped more oil than it has discovered since production began in 1979 at Cantarell, the world's largest offshore oil field...

...Next year, Pemex plans to drill as many as 1,000 wells at Chicontepec, which requires sophisticated horizontal drilling techniques because it consists of the small pockets of oil and is located in densely populated rural areas...
http://www.bloomberg.com/apps/news?p...d=azhYrsC2YVkk

Perfect example of "Peak Cheap Oil". While the easy, cheap, good stuff depletes it's replaced with heavier crude, or much more expensive to develop lower grade reservoirs.

Example of the former, Tamil is reported as 18 API crude. Anything less than 20 API is considered heavy & anything less than 10 API is considered bitumen by the Society of Petroleum Engineers. The US DoE EIA considers anything less than 25.7 API as heavy (Mexico's Maya grade is about 22 API).

Example of the latter, Chicontepec is a huge onshore oil field (covers more than 1200 sq miles) with potentially 70 billion barrels of light oil (about 31 API) in place ( :eek: ). The catch is the reservoir is tight (extremely low permeability) and in a populated area. Groppe Long (Henry Groppe's Houston based firm) estimates it may take as many as 16,000 wells to recover something like 11 billion of those barrels from Chicontepec ( :eek: :eek: )

Yes Virginia, there is a Santa Claus. But he can't bring us what we really wish for now...

And yet there are the discourses whether PEMEX should keep giving 60% income to Mexican Governemnt, or try to modernize... This is all very frightening. I've grown more frightened every day since the last 11.30 USD/MXN peak quotation in August, and with the ever increasing price difference in Gas on Mexico compared to US, subsidies in imported food and grains... That's why I've taken any opportunity to get silver below MXN 210 per ounce... I've been waiting a return to the 80's in both price increases and currency depreciation since late 2004... As this all has been overseen by many, we in the extended family are getting very nervious preparing for the end of Pemex net exporting... :eek::eek::eek::eek::eek:

[Starving Steve]

Re: Now that's some deflation...

One of the questions, I think, is whether this is voluntary or imposed.

2 years ago I told the Chairman of my firm [a senior member of one of the Arab Gulf ruling families] that within a few years there would be involuntary petrol rationing starting in the US and UK and spreading to other parts of the developed world [unless Aramco pulled off a miracle]. He simply couldn't believe it possible.

Al Gore's film, An Inconvenient Truth, was just starting to do the rounds, and in my usual cynical reaction to these sorts of things I suggested to him that governments might seize on climate change as a "good thing" as one means to sell gasoline rationing to the public.

I still think it's going to play out something like that. Now he does too.

Yes, I had a similar thought; i.e, your thought was that the hysteria and rubbish about so-called global warming might alarm the world to such an extent that they might approve of gasoline rationing schemes by governments. These schemes would be a positive outcome from the public hysteria started by Al Bore.

And my similar thought was that the Joe Six-pack public around the world might get so alarmed by the global warming hysteria that they would support major efforts by governments to build atomic power plants. This would be a positive outcome from Al Bore's non-science and rubbish.

Here in the U.S, my hope is that Obama might have the common sense and good judgement to make atomic power the cornerstone of his administration's energy plan, assuming that he wins the election in November. Anyway, we soon shall see how this plays out.

[GRG55]

Re: Now that's some deflation...

And yet there are the discourses whether PEMEX should keep giving 60% income to Mexican Governemnt, or try to modernize... This is all very frightening. I've grown more frightened every day since the last 11.30 USD/MXN peak quotation in August, and with the ever increasing price difference in Gas on Mexico compared to US, subsidies in imported food and grains... That's why I've taken any opportunity to get silver below MXN 210 per ounce... I've been waiting a return to the 80's in both price increases and currency depreciation since late 2004... As this all has been overseen by many, we in the extended family are getting very nervious preparing for the end of Pemex net exporting... :eek::eek::eek::eek::eek:

Just for info, today Goldman Sachs advised a currency pair trade...short Canadian $ and long Mexico Peso.

[ocelotl]

Re: Now that's some deflation...

Just for info, today Goldman Sachs advised a currency pair trade...short Canadian $ and long Mexico Peso.

And just 4 days later, mexican peso went, according to Banxico daily Fix, from 10.3417 to 10.2992, and back to 10.3582, thanks to the request by Felipe Calderon to reduce rates, even when the idea was immediately dismissed by Banxico and Finance people. Maybe today's speak from Gurría supporting Calderon was what forced today's 7.3 mexican cents up on the USD rate change.

Just yesterday I was checking that my portfolio seemed to go nowhere since last march, rounding an average 2.0% gain in MXN so far into the year, but the almost 8.0 % it has gained in USD since dec 31st seemed like a bit too much too soon. I see a correction in the next week, a more extended prognosys is still out of my reach, but will see how things develop here in the old Anahuac. On mondays inflation report publication we'll see how it all is evolving and where the trend is going.

I was going getting ready to dump my Euros, but today it all gave me a bit more room to wait. My stop call still is at 17.10, but will check it to see where I have to move it.

[phirang]

Re: Now that's some deflation...

Where the hell is CNBC when you need them... come on PPT, get it up! :rolleyes:

[ocelotl]

Re: Now that's some deflation...

Quote:
Originally Posted by GRG55
Just for info, today Goldman Sachs advised a currency pair trade...short Canadian $ and long Mexico Peso.


And just 4 days later, mexican peso went, according to Banxico daily Fix, from 10.3417 to 10.2992, and back to 10.3582, thanks to the request by Felipe Calderon to reduce rates, even when the idea was immediately dismissed by Banxico and Finance people. Maybe today's speak from Gurría supporting Calderon was what forced today's 7.3 mexican cents up on the USD rate change.

Just yesterday I was checking that my portfolio seemed to go nowhere since last march, rounding an average 2.0% gain in MXN so far into the year, but the almost 8.0 % it has gained in USD since dec 31st seemed like a bit too much too soon. I see a correction in the next week, a more extended prognosys is still out of my reach, but will see how things develop here in the old Anahuac. On mondays inflation report publication we'll see how it all is evolving and where the trend is going.

I was going getting ready to dump my Euros, but today it all gave me a bit more room to wait. My stop call still is at 17.10, but will check it to see where I have to move it.

Another week has passed, for day traders, gut-feeling traders and in general, people with low attention span...



MXN looked like going nowhere in USD, thus making some unpatient people angry...

Point is that the exports are the front edge in this situation. All that Tijuana, Mexicali, Nogales and Ciudad Juarez Plasma screen plants, the car assembly plants: Ford in Hermosillo and Cuautitlan, Nissan in Cuernavaca and Aguascalientes, Chevrolet in Silao, Chrysler in León... And in the meantime, there is not a resolution to reduce the bureaucratization burden on mexican oil... I'm mostly worried about the point when the gas subsidy erases oil export income... If nothing happens, is a matter of three or four years.

Even when the higher interest rate difference, the controlled debt level and a closer to reality (but not totally there) CPI index, still the burden of the increasing subsidies in gas and imported grains may present a bomb waiting to explode, as it happened in the 70's.

Ex president Zedillo told that the Bank of Mexico should not reduce interest rates, and that Calderón should not get into the currency debasing race that is common in many parts of the world, since it is worse to let inflation run rampant for a long period than truly facing base issues and holding up during their correction. Yet we are nearing 5% annual published CPI inflation, bank created money is increasing as if there is no tomorrow.

Weren't for this site information and wisdom, I would have the opinion that we are in uncharted territory, that murky waters lie ahead.

What will happen? This trimester set of CB meetings in EU, GB, US, Can, and even here in MX can give a path, but markets will give the last word...

We all here are in similar boats... Ones got sooner but it seems that worldwide the path is similar.

[Shakespear]

Re: Now that's some deflation...

GRG

"He simply couldn't believe it possible."

Because he does not live in the REAL WORLD !!! I mentioned PO to my management in 2003 after stumbling on dieoff.org and was told that was nuts and a solution would be found.

Today though they are taking this situation into their long range planing.

[GRG55]

Re: Now that's some deflation...

GRG

"He simply couldn't believe it possible."

Because he does not live in the REAL WORLD !!! I mentioned PO to my management in 2003 after stumbling on dieoff.org and was told that was nuts and a solution would be found.

Today though they are taking this situation into their long range planing.

I believe you are in Eastern Europe? Poland?

Given the long and precarious history of Poland and Russia (my father-in-law was born and raised in Poland and fought against both the Germans and Russians in WWII) I can imagine that dependence on Russia for primary energy supply is not acceptable, no matter what the rest of Europe may delude themselves into doing.

[phirang]

Re: Now that's some deflation...

I believe you are in Eastern Europe? Poland?

Given the long and precarious history of Poland and Russia (my father-in-law was born and raised in Poland and fought against both the Germans and Russians in WWII) I can imagine that dependence on Russia for primary energy supply is not acceptable, no matter what the rest of Europe may delude themselves into doing.

hence the mandate for 20% RPS, solar, etc...

[metalman]

Re: Now that's some deflation...

I believe you are in Eastern Europe? Poland?

Given the long and precarious history of Poland and Russia (my father-in-law was born and raised in Poland and fought against both the Germans and Russians in WWII) I can imagine that dependence on Russia for primary energy supply is not acceptable, no matter what the rest of Europe may delude themselves into doing.

why? what's the big deal... buying oil and gas from the mafia? :eek::rolleyes:

[Guest]

Re: Now that's some deflation...

Given the long and precarious history of Poland and Russia ... I can imagine that dependence on Russia for primary energy supply is not acceptable.

Nice, friendly GAZPROM, cuddly teddy bear GAZPROM. Cute little GAZPROM teddy-bear. Here little GAZPROM, c'mere. Come and get a nice tickly under the chin GAZPROM ... nice little scratch behind the ears? Come over here for a nice tummy-scratch GAZPROM. Isn't he just the cutest teddy bear, keeping all those European homes toasty warm in the winter? :rolleyes: