Wednesday, July 16, 2008

Is this how the Oceans will recover?

Picture: AP
Picture does not accompany the original article in the Financial Times

Japanese fishermen strike over fuel prices

By Michiyo Nakamoto in Tokyo
Published: July 14 2008 16:47 Last updated: July 14 2008 17:23

My Comment

'Revenge of Gaia' (Lovelock's book by that name) at the Japs for all the overfishing, especially the whales? Industrial scale trawler fishing will suffer setbacks. All for the good maybe, as altered oceans get a breather?

FT Article below

Japan’s fishing industry will hold its first ever nationwide strike on Tuesday in protest against the recent surge in energy costs, adding to the pressure that falling fish populations and pollution are already inflicting on sushi shops and the Japan­ese dinner table.

The strike, which would affect virtually the entire industry of about 200,000 fishing boats in Japanese waters and overseas, aims to underline the plight of the fishermen and put pressure on the government to help them deal with the recent spike in energy prices.

“Many fishermen are being faced with bankruptcy. We are asking the government to deal with a situation in which fishermen cannot afford to go out and fish,” a representative of Zengyoren, the federation of fisheries co-operatives, said on Monday.

The cost of heavy oil used in fishing boats has tripled in the past five years to Y115,000 ($1,080, €680, £542) per kilolitre and is expected to continue rising, the Zengyoren says.

If it hits Y130,000 per kilolitre, between 30 and 40 per cent of businesses will close shop and 50,000 to 60,000 people will lose their jobs, the federation calculates.

“I paid Y90,000 for three days’ worth of fuel and my catch will probably bring in about Y100,000, so if I pay my two employees 30 per cent of that, I am already in the red,” says Suezaburo Tsuruoka, a fisherman in Chiba. Unless financial help is extended, Mr Tsuruoka believes, “half [of small fishing businesses] will quit”.

“We want the government to bear part of the cost of fuel,” he says. My Comment How many folks are how many govts going to bail out. Freddie, Fannie now Fisher?

The government has budgeted Y10.2bn to help fishermen lower their energy costs by increasing efficiency and other measures but says it would be difficult to provide direct energy subsidies to the fishery industry alone.

“Buses, taxis and trucks also face higher energy costs so [helping only fishermen] might not win public support,” says a ministry of agriculture, forestry and fisheries official. My comment There you go!!!

However, the problem for fishermen is that fish prices are set through auctions, making it difficult to tack on higher costs. The average price of fish has fallen from about Y240 per kilo in 1990 to Y178 per kilo last year, according to the Zengyoren.

The strike, which will be for one day, is not expected to have a serious impact immediately on fish supplies at markets and restaurants.

“Storage technology has greatly improved: we have frozen fish, and fish already in tanks,” so supplies will not be unduly depleted, says a representative of Tsukiji, the world’s largest fish market, in Tokyo.

However, if high energy prices were to continue and Japanese fishermen forced out of business, imports would increase and Japan’s self-sufficiency in fish and marine food products would fall from 57 per cent to as low as 30 per cent, Zeng­yoren warns.

South Korea recalled its ambassador to Japan on Monday after Tokyo said it would reaffirm its claim to a group of islands controlled by Seoul in school teaching guides, Reuters reports from Tokyo. South Korea and Japan both lay claim to a group of desolate, rocky islets which Seoul calls Dokdo and Tokyo calls Takeshima. The area surrounding the islets has fertile fishing grounds. My Comment Peak Oil will change geopolitical equations

“Japan should not repeat its behaviour of promising a forward-looking relationship with Korea but then stirring up a dispute such as the Dokdo issue once in a while when the government changes,” South Korea’s presidential office said.
Copyright The Financial Times Limited 2008

Sunday, July 13, 2008

Cantarell Sees Steep Declines

Pemex Cantarell Output Drops 34% on Spending Limits (Update1)
By Andres R. Martinez

My comment
It really doesnt matter why it has dropped, the point is that it has dropped. Blaming spending limits etc is nothing but fooling ourselves that if we spend, we will find sufficient oil to get out of this predicament. That is simply not true. The peak of discoveries was way back in 1964; and lots of money and drilling has flowed below the bridge since then. Denial of reality takes on many forms and shapes. 34% is a huge drop, the Hirsch Report concluded that if output falls at 2% we need 20 years to mitigate the impact; and keep in mind Cantarell is the third largest field in the world. Enhanced Oil Recovery is nothing but using a bigger straw to suck out the juice, one only empties the glass faster.

This is how global oil extraction looks. A smoking jet fighter still maintaining its upward trajectory, seconds before it makes a dramatic change in course.

Start of Bloomberg Article

July 7 (Bloomberg) -- Crude output from Mexico's Cantarell, the world's third-largest oil field, is falling at the fastest pace in 12 years as investment limits keep state-owned Petroleos Mexicanos from fully exploiting deposits and finding new ones.

Production at the Gulf of Mexico development dropped 34 percent in May from a year earlier, the biggest decline since October 1995, according to data compiled by the government and Bloomberg. That was when Hurricane Roxanne's 131 miles-per-hour (114-knot) winds shut down offshore wells for a week.

Seven decades after Mexico banned foreign oil investment, President Felipe Calderon is pressing lawmakers to allow Pemex, as the state energy company is known, to hire outside producers to help find and pump petroleum. Cantarell's decline is costing Pemex $20 billion a year in sales at a time when oil prices have never been higher, and the company lacks the funding to find enough new deposits to keep reserves from dwindling.

``We are at the worst time right now of the decline,'' David Shields, an energy analyst and publisher of Mexican oil magazine Energia, said in a July 1 interview. ``They should have been developing the fields to be sustainable.''

Falling production is curbing exports to the U.S., which buys about 80 percent of the oil Mexico sells abroad. Sales to the U.S. declined to 1.07 million barrels a day in May, the lowest since November 1995.

Exports at Risk
Pemex, Latin America's biggest company by revenue, may need to cut exports this year to meet domestic demand as production falls, My comment this same phenomenon of other oil exporting countries curtailing exports once decline sets in is going to repeat elsewhere too. that means less available in the global importable oil pool Energy Minister Georgina Kessel said last month in an interview. The company reduced the amount of oil it supplies to Texas refineries operated by Royal Dutch Shell Plc and Valero Energy Corp., according to a June 30 regulatory filing.

Mexico nationalized its oil industry in 1938 and enacted a constitutional ban on foreign energy investment to protect the country's resources. Increasing royalties from Pemex, which Mexico relies on for 40 percent of government revenue, have left the company short of exploration and production funding.

Mexico's Congress is in the final month of debate on Calderon's proposal to give Pemex more freedom to hire companies to explore, produce, refine and transport oil. Foreign producers still wouldn't own the oil. Hiring them under service contracts would free Pemex to invest more in other projects.

Pemex is seeking $20 billion in exploration and production funding for next year, up from its 2008 budget of $15 billion. Output at the three-decades-old Cantarell fell 25 percent in 2007, exceeding company projections for a 15 percent drop.

Spending Needs
``Spending on exploration is a relatively low number, compared to other areas of the world,'' Jed Bailey, managing director of Latin American research at Cambridge Energy Research Associates, said in a July 1 interview from Boston.

Irving, Texas-based Exxon Mobil Corp., the world's largest oil company, plans more than $25 billion in capital spending this year. Chevron Corp., the No. 2 U.S. oil company, budgeted almost $23 billion.

Pemex's funding request is too low to meet a goal of boosting oil production back above 3 million barrels a day, Kessel said in the interview. The company needs about $30 billion a year to hit that target, she said. Total crude output in May was 2.8 million barrels a day, down 10 percent from a year earlier, led by Cantarell's plunge.

Pemex spokesman Carlos Ramirez didn't return calls seeking comment.

Reserves Fall
The company replaced 50 percent of the oil it extracted in 2007. At current production rates, Pemex's oil reserves would run out in 9.2 years if it added no new deposits.

Pemex has been unable to take full advantage of record oil prices. Crude-oil futures traded in New York climbed to a record above $145 a barrel this month, the highest since trading began in 1983.

Cantarell's output dropped by more than 540,000 barrels a day in May from a year earlier as the deposit lost pressure, making it more difficult and expensive to extract crude. Pemex has been injecting nitrogen for more than 10 years to stimulate production. My comment Enhanced Oil Recovery / EOR involves water injection (Ghawar Field, S. Arabia) nitrogen injection, horizontal drilling etc. What this does is steepens the slope of the declining part of the Bell Curve. Screwed if we dont do EOR, doubly screwed if we do. But, the way humans or most species operate is to bother about the now. Risk taking behaviour it has been demonstrated, increases when one is hungry for example. So, if we are hungry for energy, we will take more risks to get what we can NOW, think about tomorrow later. Isnt that what the Easter Islander who cut the last standing palm tree did? He, it could well have been a she :) , wanted the palm tree then, think about tomorrow later.

Living at risk is
jumping off the cliff and building your
wings on the way down. ~Ray

The development peaked at 65 percent of the company's 3.3 million barrels of daily crude output in 2003. In May, it fell to 37 percent of total production.

The world's largest oil field is Ghawar in Saudi Arabia, followed by Burgan in Kuwait and Cantarell.

To contact the reporter on this story: Andres R. Martinez in Mexico City at