Last year, I wrote about the likely peaking and production decline of some of the world's largest oil fields. The best example remains the once-giant Mexican Cantarell field. The following graph of production from Cantarell is simply stunning. Production from this one field has fallen one million barrels per day in just the last few years.
Much has been made lately of some recent exploration successes offshore Brazil and in the Gulf of Mexico. Many are claiming that these successes prove that the threat of Peak Oil is false. When it comes to the Peak Oil theory, however, the key point to remember is that it refers to easily recoverable oil. Higher oil prices will be necessary to support the very costly exploration and development efforts necessary in the deepwater and (eventually) Arctic frontier plays. The future production decline from the world's aging major oilfields will need to be replaced, and the most likely source will be much higher-cost less-traditional sources.
Disclosure: Aspera Financial, LLC is long a number of energy-related stocks and natural gas.
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