More evidence that Rafael Correa knows nothing about petroleum geology. Here's what Matt Simon's has to say about increasing production:

" The faster you extract oil from a reservoir, the faster you dissipate the reservoir pressure. Once you get below a certain level of pressure, you have to get oil out using an artificial lift or water injection, and some oil will be trapped in the reservoir.

Overproduction leads to production collapse. The Brent field in the North Sea for instance, came on line in 1976 and peaked at 500,000 bpd in the early 1980s. I think that field now produces around 50,000 bpd. Take the Yibal field in Oman. Shell was so convinced that modern technology was a production miracle that it increased the production facilities at Yibal by 30 percent. And just as that happened, the field peaked at 225,000 bpd in 1997, and it is down to around 40,000 bpd. When I talk about production collapse, I’m not talking about a drop of 5 or 10 percent."

source: http://www.foreignpolicy.com/story/cms.php?story_id=3233

***

About two years ago (how time flies!) I wrote on the ARU board how Ecuador was going to have to find a new source of revenue to offset declining oil production. I reckoned that if they put all their efforts into rapid development of a mining industry that they could achieve that goal in about five years. Well, look at them now. Still no mining of any significance, and the predicted production declines have begun. So, with no offsetting income their only option to maintain revenue is to force oil production increases, which will lead to premature decline and eventual collapse. I give it about five or six years.

There was a small window of opportunity there, and they totally blew it. I'm sure others in the oil and mining industries recognize this as well, hence the lack of investment. After all, who wants to invest in a nation with no ability to make rational economic decisions?

ebear