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The dark and stormy Friday night entry
Posted by Heading Out on June 11, 2005 - 12:33pm
Well it's a Friday night, and that means it's time to slip out bad news . Well actually it is not that bad, but it is going to be a little technical, and I am not sure how easy it is going to be to explain. But here goes.
I am, as you may recall, reading Twilight in the Desert by Matt Simmons. He and I agree on a lot of things, and in some instances I am perhaps stronger in my concerns than he. But I just gone through pages 60 to 90 and I have a couple of comments about two things – the first is the damage to the oil producing formations that he writes about in Chapter 3, and then the secrecy about production in the Saudi oilfields that he is concerned about in Chapter 4.
His concern is with Aramco overproducing the current fields, and thereby leaving a lot of oil in place that might otherwise be recovered if the process was carried out more slowly. We are going to have to visit the sandwich shop again to have me try and explain his concern and why I think they may have got around it. The analogy is perhaps a little weaker, but let's try it anyway.
You go into the shop where you have always had good service, and there are two lines to the counter. At the head of the line other than yours is one of those people who have no consciousness about other people's time and needs. She is chatting away to the single waitress behind the counter and, despite your attempt to get through, she monopolizes the staff person, and then to make matters worse, stands so that only the friends of hers in the line behind her can them come up to the counter and be waited on while you fume in a line that isn't moving anywhere. And so, after a while, with no progress, you leave promising yourself never to go back.
This is a little like the condition down underground in the oilwell. In order to push the oil from the rock into the oil well the Saudi's have pumped water into the rock under the oil and it pushes the oil up and towards the well (see this picture ). If it is done slowly then the water:oil surface moves up relatively evenly and most of the oil gets moved up and captured. But there are channels through the rock that the water can move up through fairly easily and faster than the oil, and if allowed to happen the water flow up through this line can monopolize the well (waitress) and block any more oil from getting there.
That all I agree with, and even with a single horizontal well, rather than the older vertical ones, once the water gets into the well bore then production is very largely going to be over. But it appears that Aramco engineers have seen a way around this, and this is the maximum reservoir contact well (see the picture above which is taken from the Saudi response to the CSIS in 2004 ) . What they have done is to run a whole lot of small lateral holes off from the main horizontal well. This penetrates more of the fractures that the oil is found in, and thus gives a higher production. But it has a couple of other advantages. To go back to our sandwich shop analogy, it is a somewhat like opening a number of different cash registers and waitress stations. Now instead of getting frustrated by a blockage on one cash register, you have a number of ways to get served. The other thing that they have done in the latest wells is to put valves into these wells. This is a little like having a policeman in the shop that stops folk crossing from one register to another so that just because water has blocked one passage it can be isolated, and you can still get served. As a result the new wells they are now putting in will be less susceptible to early water penetration, and will likely allow a greater oil recovery from the rock.
That being said, the problem with more efficient extraction methods is that they also accelerate the oil removal and that means that the down slope of the curve after production has peaked becomes much steeper. A confirmation of that comes, unfortunately, from the UK where the decline in production from the North Sea is now reported, at Powerswitch as having climbed to 17% over the last year, which is an accelerating decline, and is a hint that the oil production problem will be on us much earlier than we might have hoped.
Um! In regard to secrecy, I guess my immediate answer is here and here . The world has moved into the internet era, and while it is not yet possible to get daily production runs from individual fields, one can also find out, from tanker discussions , for example, that supply from Saudi Arabia has declined more than could normally be anticipated.
This may or may not be a better source than more official channels, since there now appears to be a debate as to whether Venezuela produced 2.7 mbd last month as the EIA report, or whether as the IEA would have it, the production has dropped to around 2.1 mbd – which is a big drop, if true.
Ah! I have also been reminded that I have been remiss in not noting that though I sometimes bewail that we are still a voice shouting in the wilderness, largely unheard, that this is not consistently true. For reasons of academic anonymity our two children have acquired the pseudonyms of the Advocate and the Engineer. Well the Advocate has been sufficiently convinced that both the Advocate and the Bishop have just purchased hybrid cars. Which is a very encouraging little sign to us all that we should not get discouraged, but need to continue talking about the problem. It is not as though it is going to go away. (I will chat about this some more after they have some experience driving them).
I am, as you may recall, reading Twilight in the Desert by Matt Simmons. He and I agree on a lot of things, and in some instances I am perhaps stronger in my concerns than he. But I just gone through pages 60 to 90 and I have a couple of comments about two things – the first is the damage to the oil producing formations that he writes about in Chapter 3, and then the secrecy about production in the Saudi oilfields that he is concerned about in Chapter 4.
His concern is with Aramco overproducing the current fields, and thereby leaving a lot of oil in place that might otherwise be recovered if the process was carried out more slowly. We are going to have to visit the sandwich shop again to have me try and explain his concern and why I think they may have got around it. The analogy is perhaps a little weaker, but let's try it anyway.
You go into the shop where you have always had good service, and there are two lines to the counter. At the head of the line other than yours is one of those people who have no consciousness about other people's time and needs. She is chatting away to the single waitress behind the counter and, despite your attempt to get through, she monopolizes the staff person, and then to make matters worse, stands so that only the friends of hers in the line behind her can them come up to the counter and be waited on while you fume in a line that isn't moving anywhere. And so, after a while, with no progress, you leave promising yourself never to go back.
This is a little like the condition down underground in the oilwell. In order to push the oil from the rock into the oil well the Saudi's have pumped water into the rock under the oil and it pushes the oil up and towards the well (see this picture ). If it is done slowly then the water:oil surface moves up relatively evenly and most of the oil gets moved up and captured. But there are channels through the rock that the water can move up through fairly easily and faster than the oil, and if allowed to happen the water flow up through this line can monopolize the well (waitress) and block any more oil from getting there.
That all I agree with, and even with a single horizontal well, rather than the older vertical ones, once the water gets into the well bore then production is very largely going to be over. But it appears that Aramco engineers have seen a way around this, and this is the maximum reservoir contact well (see the picture above which is taken from the Saudi response to the CSIS in 2004 ) . What they have done is to run a whole lot of small lateral holes off from the main horizontal well. This penetrates more of the fractures that the oil is found in, and thus gives a higher production. But it has a couple of other advantages. To go back to our sandwich shop analogy, it is a somewhat like opening a number of different cash registers and waitress stations. Now instead of getting frustrated by a blockage on one cash register, you have a number of ways to get served. The other thing that they have done in the latest wells is to put valves into these wells. This is a little like having a policeman in the shop that stops folk crossing from one register to another so that just because water has blocked one passage it can be isolated, and you can still get served. As a result the new wells they are now putting in will be less susceptible to early water penetration, and will likely allow a greater oil recovery from the rock.
That being said, the problem with more efficient extraction methods is that they also accelerate the oil removal and that means that the down slope of the curve after production has peaked becomes much steeper. A confirmation of that comes, unfortunately, from the UK where the decline in production from the North Sea is now reported, at Powerswitch as having climbed to 17% over the last year, which is an accelerating decline, and is a hint that the oil production problem will be on us much earlier than we might have hoped.
Um! In regard to secrecy, I guess my immediate answer is here and here . The world has moved into the internet era, and while it is not yet possible to get daily production runs from individual fields, one can also find out, from tanker discussions , for example, that supply from Saudi Arabia has declined more than could normally be anticipated.
This may or may not be a better source than more official channels, since there now appears to be a debate as to whether Venezuela produced 2.7 mbd last month as the EIA report, or whether as the IEA would have it, the production has dropped to around 2.1 mbd – which is a big drop, if true.
Ah! I have also been reminded that I have been remiss in not noting that though I sometimes bewail that we are still a voice shouting in the wilderness, largely unheard, that this is not consistently true. For reasons of academic anonymity our two children have acquired the pseudonyms of the Advocate and the Engineer. Well the Advocate has been sufficiently convinced that both the Advocate and the Bishop have just purchased hybrid cars. Which is a very encouraging little sign to us all that we should not get discouraged, but need to continue talking about the problem. It is not as though it is going to go away. (I will chat about this some more after they have some experience driving them).
“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place we are entering a period of consequences…”
—Winston Churchill, November 1936
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I just have to comment on the car thing ;)
I do not think a great enough proportion of people will be able to afford these nice hybrid cars. If you take hard look at the economy and the number of people making less than 25,000- 30,000 a year you see that most people are strapped as it is.
If you really think about it they would have to basically hand out these hybrid cars to 50-80 million people.
Money is going to get tighter and tighter as prices increase making it even harder for those below average 30k to even think about buying a new car.
I was making 24k and was strapped to the gills just buying a used car for 5500. unless we find some miracle to raise wages $7 an hour across the board I dont see many people going out and buying these new cars.
Then we take the Idea that hand me downs ( used cars will happen ) whos going to trade in their nice used car that gets 50+ Miles to the gallon when prices of gas are over $3?? and they a strapped paying for it? no one.
Whos going to buy one of these used hybrids when the market will keep the price to high for us below average people??
I dont know if the people up there making a good living realize this yet or not but there are alot more of us closer to the bottom who are basically living pay check to pay check. we will never see a hybrid car in todays economy.
I for one had to let my used car go back because the insurance and payment was killing me slowly month after month and this car got 32 miles a gallon! I drove on average 120-150 miles a day just to make $14 an hour. To work out in the hot sun for 10 hours or so a day is not something I am going back too. I simply have gotten tired of building the bridges, buildings, warehouses, etc for rich folks while I got paid barely enough to get by.
Now I am unemployed and will basically be getting what ever car I can buy for 500-1000 and I doubt this car will have great MPG.
Theres alot more to this than slapping a few hybrid cars on the market. There needs to be a living wage for regular hard working folks to be able to buy one of these. I dont see that happening anytime soon.
If you folks are right about peak oil (and you may well be), there's a way to make yourself into millionaires from your understanding of the situation. I explain how in my article at http://www.econbrowser.com/archives/2005/06/oil_futures_and.html
hehe :) you and I know it costs per trade to buy and to sell.
It takes lots of up front cash to get this system started and I dont have 10-20 years to play around with the market. When your living paycheck to paycheck you need to eat first.
The market is a suckers game for the poor and they pay more taxes than the rich from their profits. If you dont believe me look it up ;)
Anyhow for those of you who have loads of up front cash you can make money at this game if you have the time to play it.
I wonder what the price-distribution of cars sold in America is right now? My gut feel is that more than half of them sell for more than the base model prius/civic-h/insight.
Then, there are the current best-of-class MPG cars for small money (civic, echo, scion). Huge opportunity there, because those are also the least expensive cars available.
Finally, what would make even better and cheaper "conventional" cars? In my opinion it will take a re-emphasis on light weight and economy. Think cars designed by Dick Rutan.
The thing is, those flyweight composite cars won't be pollitically possible until most people think the moster SUVs are off the road, and that the danger of a missmatched collision is past.
My Dream car:
Body:
http://www.caterham.co.uk/
Engine:
http://www.edmunds.com/reviews/roadtests/spin/46526/article.html
Status:
Totally illegal
Tee, hee. We're famous.
I just noticed that the G8 finance ministers communique on economy is out, and very oil-price centered:
http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=8...
the whole sandwich thing really needs to end. Can we find another metaphor?
Here is the Saudi side of the story.
http://www.saudiaramco.com/sa/webServer/general/Summary_Fifty_Year_Crude...
They can't shift from 10M b/d to 12M b/d until 2016. So you can't expect more oil from there. They are careful to say that they would never exceed 15M b/d. I am presuming that 12 M b/d is the maximum they can get while using current best of breed practices. While they mention 15M b/d, no slide shows the expected time line. This means that to get to 15M b/d some new production enhancing technology has to come along.
Folks -- the Saudi's are saying (without literally saying) that peak oil is here! Venezuela is in decline. North Sea is in decline. Saudi's can't get to 12M b/d till 2016. So where is the replacement oil going to come from?
More on the Saudi story here
http://www.saudi-us-relations.org/energy/saudi-energy-saleri.html
BTW, white on black commenting sucks!
Thanks Rajiv - I had the pdf but had lost the comments that went with them, which are quite interesting.
I am basing my argument on the information from page 28 of the following Saudi presentation.
http://www.saudiaramco.com/sa/webServer/general/Summary_Fifty_Year_Crude...
all right, all right Rajiv. Is this any better? I was just trying to change it up a bit. :)
Much better!!
Though white on black may work for some older readers -- provided the type font size is large. See
http://www.optvissci.com/pt/re/ovs/abstract.00006324-200311000-00011.htm;jsessionid=CskvKpsEpBI2E5sp0MwU1Gmrt1ay0JG4ff04xOdbX7WIECIlclkz!-2128958162!-949856032!9001!-1
Prof Goose,
on the above topic, you may find this useful
http://www.techdis.ac.uk/seven/papers/colour-contrast5.html
I like the dark blue on white (and the black on white links) - much easier on my eyes anyway...
Oil drum, why don't you ask Matt Simmons why maximum reservoir contact extraction won't make a difference to his views on Saudi Arabia?
Mark -
it only speeds extraction, which steepens the depletion curve. All that would do is make things worse a little later. And there is a rig capacity issue in Saudi also.