America's energy doomsday clock could be inching closer to midnight with the news that Mexico's primary oilfield may be ready to crater. If these dire predictions turn out to be correct, such a development could deal a body blow to the United States' desperately needed oil supplies.
With 2006 demand calling for 22 million daily barrels, domestic U.S. supply is down to less than 8 million barrels a day. Of the average daily imports exceeding 12 million barrels, Mexico has been counted on to deliver 20 percent of that amount. In fact, additional offshore discoveries in the Gulf of Mexico were expected to add to that total. However, due to the excessive depth of these reserves, and the prohibitive cost of extraction, Mexico is not capable of pursuing that option at this time.
Compounding this problem, energy experts now believe that the Cantarell Oil complex, which had reached 2.1 million barrels a day two years ago, is now in sharp decline. It could be as low as 520,000 barrels a day by the end of 2008, with further downturns after that.
This unexpected shrinking of the world's second-largest oil complex, which has made up the lion's share of Mexico's production of 2.5 million barrels, jeopardizes about 90 percent of Mexico's exports, most of which are headed for the U.S. Only America's northern neighbor, Canada, which is expanding its oil sands capacity, may be left to make up this shortfall.
Ghawar complex
However, a similar crisis could be developing at the world's largest oilfield, Saudi Arabia's huge Ghawar complex, the only one in the world eclipsing the size of Mexico's Cantarell. Like Mexico's giant offshore development, Ghawar is also starting to be plagued by the incursion of seawater. Despite vehement denials by Saudi officials, some reputable analysts have indicated that three of Saudi Arabia's five major sources of 9 million daily barrels of oil production could also be on the wane.
The 266 billion barrels that the Saudis have claimed as their part of the world's 1.2 trillion barrel reserves have never been verified by independent geologists.
With oil supplies currently tight and demand on the upsurge worldwide, such a combination of implosion in the world's two largest oilfields could prove to be catastrophic for the U.S., since Saudi Arabia supplies five percent of America's imports.
Other energy chickens may also be coming home to roost in America. International oil acquisition policy which has depended on the world's multi-nationals to assuage the increasing demand/supply imbalance is proving increasingly inadequate. The much-touted national Strategic Petroleum Reserve holds barely enough oil to cover a one-month supply in case of a national emergency.
Emerging economies
While America's national energy stewards have been asleep at the switch, China, India, Southeast Asia and other major emerging global economies have locked in long-term contracts all over the world. In addition to assuring that these supplies of oil and natural gas are directed to such nations for the length of their contracts, these reserves will no longer be available to the United States in times of crisis.
While barely dodging the bullet of a left-wing populist taking power in Mexico, America has to contend with Venezuelan Hugo Chavez, who is only too happy to divert oil production to China. The ongoing strife in Nigeria, which supplies the U.S. with much of its light sweet crude, may also jeopardize ongoing imports.
source: http://www.thedesertsun.com/apps/pbcs.dll/article?Date=20060806&Category=COLUMNS03&ArtNo=608060309&SectionCat=business&Template=printart 9aug2006
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