Gulf of Mexico Oil Production still down 22%.

[naterprius]

If you take a look at the MMS, you can see that Oil production is sill down 22% since the 'canes. I wonder if they'll just quietly readjust the "Full Production" number like they did after Ivan.

http://www.mms.gov/ooc/press/2006/press0419.htm

To elaborate, before Hurricane Ivan, Gulf of Mexico oil production was around 1.7 million barrels per day. After several months, the "100%" mark was quietly reset to 1.5 million barrels per day. Now, the daily output is about 1.15 million barrels per day and showing few signs of going back to 1.5 million. I wonder if the "100%" mark will be reset to 1.15 million?

Then, of course, comes hurricane season 2006, and after several months of repairs, peak production will stall out at 900,000...

This is very, very scary.

For those of you who tell me that it will all come back online eventually, I ask you, why was the "100%" mark reset after Ivan?

Nate

[Mystery Squid]

Didn't I read somewhere that Mexico has the (or one of the, I forget which) biggest singular oil field in the world that recently "peaked" and is on the way down? Heard some noise about that somewhere within the last few months...

[Tempus]

As far as I know there are still 3 refineries off-line because of the Hurricanes.

Port facilities also aren't back up to speed.

We'll have to see what production is after all the infrastructure is repaired.

[naterprius]

The main problem is that platforms cost a few billion dollars each, are difficult to repair in the field, and to be replaced, need a few years lead time.

Oil companies must calculate the price of repairing/ replacing a platform vs. the price of the oil that is expected to come out of that oil field. If a field has peaked, the cost to replace the platform cannot be justified, even at $75/ barrel. Basically, if a particular platform cost $500 million to build in 1978, and the field it pumps off of peaked in 1997, then the new platform, priced at $3000 million, is not worth building to pull off the last remaining drops of oil.

Oil Rigs are a different story. They are small and mobile. Note that after each hurricane, the Rigs are always repaired quickly, but the platforms are not.

What's really scary is that hurricanes hit the gulf every year, but the infrastructure can take more than a year to repair, so the next hurricane may hit the same area before repairs from the previous hurricane have been completed.

There is a website, www.rigzone.com, that has incredible detail about the state of drilling in the gulf (and other areas). It also has spectacular articles about geology and search for new oil. There was a great article on the Tar Sands in Canada. Basically, electricity is subsidizing the oil. It's almost a thermodynamic loss, but it's a dollar gain. They are building a nuclear power plant in order to generate electricity to process tar sands into oil. It would be much more efficient just to charge some batteries on board of my Prius than to go through the conversion steps.

Nate

[tripp]

indeed, it makes very little sense to me. At least they're using Nuclear Power instead of coal in the oil sands. I hope that's the case.

One would think that there would be a market correction because of the stupid inefficiencies. PHEVs may well be the disruptive technology needed to effect change. It's a matter of political and consumer will. There seem to be several major fields peaking early. Kuwait's largest field (and the second largest field in the world) supposedly peaked at the end of last year... 15 years ahead of schedule. I hadn't heard about the Mexican field. I think that the Saudi's have the single largest field. I believe the Mexican field is actually many small ones that are very close together but geologically seperate.

I wonder how much is politcally motivated propoganizing in the case of the fields. Are short term profits what's motivating this or are the fields really peaking? In the long term these announcements are counter-productive to the oil producers. Sustained high oil prices will drive economies away from its use. That seems to be where we're headed. It will be interesting to see how fast markets and consumers adapt to these changes. What really needs to happen is for gov't to provide some substantive guidance to consumers and industry. They need to create an economic environment were alts can compete and displace fossil fuel competition while at the same time educated the public about the true costs (of which there are many) of oil dependence.

I'm really surprised that more of this didn't happen during the Cold War, frankly. Perhaps the planners then expected any real confrontation with the Soviets to go nuclear pretty fast and therefore didn't worry about pointing out the vulnerabilties of our economy.