And how is Saudi Arabia getting on? (or more evidence of a deteriorating situation...)
Posted by Heading Out on January 3, 2007 - 12:21pm
When I wrote about some of the stories that are likely to be discussed over the next year, one of those that I mentioned is the delay before we see further increases in production from KSA. In the piece I quoted from the Arab News about the latest projections of Aramco production increases over the next two years. While there has not been much change in the total projected production over the last eighteen months, there have been some, as the Kingdom has moved toward a goal of 130 rigs operating there by May of this year. Over the time we have posted here, we have quite often revisited the planned production increases from the Kingdom, and so I thought it worth having a quick look to see how things are going.
Note that in a June 2005 postthethe Center for Strategic and International Studies (CSIS) was quoted as suggesting the following for current and projected Saudi oil output by field.
Current plans to reach a 12.5 mbd goal call for the following production numbers (according to Cordesman and the CSIS)
Abqaiq - 400,000 bd
Ghawar - 5,500,000 bd
Berri - 400,000 bd
Safaniya - 1,500,000 bd
Abu Sa'fah - 300,000 bd
Zuluf - 800,000 bd
Marjan - 450,000 bd
Haradh - 170,000 bd
Shaybah - 500,000 bd
Munifa - 1,000,000 bd
This gives the 11 mbd that they claim to be able to currently produce - though it includes Munifa, of which we have commented negatively earlier.
To bring this up to 12.5 mbd they plan an additional
Haradh - 300,000 bd
Khursaniyah 500,000 bd
Shaybah - 500,000 bd
Khurais - 1,100,000 bd
when you include an anticipated 800,000 bd loss due to old fields declining, the sum comes in just over the required number.
Now of these Aramco has already brought Haradh on line, ahead of schedule last March. In contrast Munifa is now (as I mentioned in the post) not going to be around until 2011 – so we need to scratch that from current availability.
Further if we look at the prediction in the Arab News we find that the list of fields where the production increase will come from has seen the addition of another field.
The Abu Hadriyah, Fadhili and Khursaniyah fields are being developed, with production of 500,000 bpd of Arabian Light crude oil, plus more than one billion standard cubic feet/day (scfd) of associated gas. This is forecast to come online in December next year.
Located deep in the Rub Al-Khali, or Empty Quarter, the Shaybah field has been delivering 500,000 bpd of Arab Extra Light crude oil since its start-up in 1998. Plans call for increasing production capacity to one million bpd, with the first increment of 250,000 bpd under implementation and slated to come onstream by the end of 2008.
Two other major field development projects on track to meet the maximum production capacity target are the Khurais and Nuayyim fields. The Khurais project, which will also include production from the Abu Jifan and Mazalij fields, is projected to produce 1.2 million bpd of Arab Light crude oil in 2009. The Nuayyim project, a central Arabian field, is slated to add 100,000 bpd of Arabian Super Light crude oil by 2008.
The three-field development that is scheduled to come on line at the end of this year has not changed. Abu Hadriyah is not in itself new (the following picture of a Saudi team drilling there was taken in 1960 ).
Further when the CERA list on which it appears was reviewed here in Sept 05, Interloafer quoted Matt Simmons in expressing some cynicism about Aramco ability to sustain the higher levels of production projected for these fields. Peter Jackson, of CERA, disagrees (pdf file) The project currently appears to be on schedule.
Now it should be born in mind that the Saudi Strategic Energy Initiative is to have enough spare capacity to be able, by June of this year, to replace Iran’s production, should there be a problem. And, for this reason, it is perhaps a little presumptive to assume that they are currently producing at a maximum level. However, it should be noted that this also assumes that the three-field increased production will be on line by that time. As noted above, it now appears that it will be later in the year before this happens.
Musing about these numbers, what struck me was that we are now seeing increments in production coming from multiple fields rather than just further development of a single one. After the first new increment for Shaybah comes on line, work for which is now underway, (but which may now be only 200,000 bd by April of 2008, with another 300,000 bd being added by 2010) the next development, Khurais, is also going to be a three-field project . It will also include the Abu Jifan and Mazalij fields, and will need injection of an additional 4.5 mbd of treated water into those fields to achieve that production level.
And to achieve the target production Aramco has added another field, Nuayyim, which is anticipated to produce 100,000 bd by February 2009. This schedule has been accelerated over earlier projections.
The President of Aramco talked about the challenges in meeting these goals at a recent SPE meeting and said, among other things
Let me begin by first looking at hydrocarbon resources from the perspective of new petroleum technologies. In fact, I think that viewing high-potential hydrocarbon resource opportunities around the world as “technology targets” is a very useful approach, and yields four major, distinct areas of activities or strategies for the future. These are:
• First, expanding the size of the oil-in-place pie by finding new oil fields;
• Second, increasing ultimate recovery from both the existing and yet-to-be discovered fields;
• Third, giving special attention to areas which are hard to explore and produce, thereby reducing costs and making uneconomic plays feasible, and finally;
• Exploiting the potential of unconventional oil resources.
From which he went on to say
at last summer’s OPEC Seminar I challenged explorationists around the world to find no less than eight trillion barrels of oil-in-place—the higher end of the current range of estimates. That should allow us to add roughly a trillion barrels of total proven oil reserves in the form of new discoveries: a massive target to which technological enhancements could be applied in order to achieve even higher recoveries. I would like to renew that challenge tonight through the SPE, and to urge exploration specialists and technology developers to draw upon their skills, knowledge and experience to meet that challenge.
In regard to point two he said the following:
Just think: increasing recovery by just one percent could add about 80 billion barrels of oil to global reserves—equivalent to nearly a quarter-century’s worth of Saudi Aramco’s current production. Once again, I look at past trends in recovery rates and the ingenuity of scientists, engineers and professionals like you, and I see no reason why we can’t increase the global average recovery rate to 50 percent in the next several decades. Frankly, I’m still not happy about leaving that other 50 percent to Mother Earth, but even hitting the halfway mark will allow us to add another trillion barrels to the world’s reserves base. I must add however that as Saudi Aramco, our target for recovery will be aimed at much higher recovery rates, in the range of 70 percent, and that is the grand challenge you will be engaged in for decades to come. There is no more efficient way to grow future reserves than to go after the resources we already know exist, and by identifying, developing and implementing technologies which will minimize the amount of these already discovered resources left behind.
In that regard I agree with his point, though do not see the investment being made that will meet his challenge.
For those that have those answers, I was initially led to write the post by an e-mail we received from Pilgrim, who suggested that we look to see what sort of folks Aramco were looking to hire. Their web site led me to the remarks I have quoted above. As with any company that is producing at the level, and with the challenges that Aramco face, the ageing of their workforce (which was recognized in the speech) and the loss of company knowledge that it will entail, gives them a challenge in turn that they might find it very hard to meet.
And how is Saudi Arabia getting on? (or more evidence of a deteriorating situation...)
PDF version
179 comments
And how is Saudi Arabia getting on? (or more evidence of a deteriorating situation...)
PDF version
179 comments
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
Happy New Year!
Consider this a reminder to positively rate this articles (using the icons under the tags in the story title) at reddit, digg, and del.icio.us if you are so inclined. (email me at the eds box if you have questions about this)
Also, don't forget to submit this to your favorite link farms, such as metafilter, stumbleupon, slashdot, fark, boingboing, furl, or any of the others. This is exactly the kind of post that needs eyes in the MSM and by others in the blogosphere. Let's make sure they see it.
I addressed the Ghawar Field over in the open thread, but IMO it is highly misleading for the Saudis to be talking about increased recovery factors in many of these fields because in a lot of cases, the oil left behind is largely immovable, after the oil/water contact rises.
For example, East Texas has a 99% water cut. Daqing has a 90% water cut. Prudhoe Bay has a 75% water cut. Cantarell is crashing, with up to a 40% annual decline rate ahead. As I noted over on the open thread, the best case for Ghawar is that it has a 35% water cut, after being redeveloped with horizontal wells.
After you redevelop with horizontal wells, and if you are still getting a one-third water cut in a rapidly thinning oil column, what else is left in the bag of tricks?
Convert to gas production.
WT, the only other possibilities I can think of-and they are unproven and possibly reckless to use on the worlds greatest oil field are some type of surficants to cut the immobile oil out of the reservoir rock or possibly microbiological enhancement, injecting bugs that will lower the viscosity of the crude.
But surely Allah isn't going to desert us now!
I wonder, if the source rock is some sort of carbonate, could you collapse the pores by flooding with some acid solution, maybe followed by a shock wave? The oil would be wrung out like water from a sponge.
The reservoir rock in Ghawar is a carbonate. A dose of acid serves to open up new paths for fluids [both water and oil] to the well bore. This is usually useful only when the permiability of the reservoir rock is low. If you only have the very top of the formation open either through a conventional completion, a horizontal bottle brush smart well, or whatever -- opening up the formation probably means opening it up vertically as well as horizontally. The result would in most instances be even more water.
In a test tube, you could disolve a chunk of the reservoir rock with acid, but you would also do bad things to the immobile contained hydrocarbons ... and even if the acid wouldn't digest the oil this approach would be completely uneconomic in a real world setting as the reservoir by volume is probably in excess of 85% rock; the contained water dilutes acid; a lot of the fluid you obtained would be water; and [if your theory actuall worked] "collapsed" pores would equate to zero permiablity / porosity in the vacinity of the well bore.
If you really wanted to try to improve the oil cut you could try a "polymer job", but that approach wouldn't get you a thousand barrel a day well water free well by any stretch of the imagination. BTW, my limited experience with polymer treatments has not been good, but they are in certain instances very useful in extending the economic life of a well.
As I also mentioned in the open thread, Ghawar has been running close to a 35% water cut since about 1999. So if in fact they are still at 35%, then that's a very good sign for them and indicates that no precipitous decline is in the works.
Which is exactly what Shell thought, as they were expanding their surface production facilities to handle an expected flood of new oil from the Yibal Field, when instead they got an unexpected flood of new water. Yibal, like Ghawar, was redeveloped with horizontal wells. Why? Because the vertical wells in both fields watered out.
Nope, nothing to worry about here. Go about your business. Go ahead and buy a new SUV to drive to and from your McMansion. I need still need to pay for this year's European vacation.
You make it sound like Shell invested millions of dollars in production capacity that never turn into fruition. This sure did not happen.
Shell's investments in the Yibal field did yield increase oil production, but as you pointed out, 90% water cut started showing up in some wells and Shell had to shelve any new investment to increase production capacity. They instead got stuck with ever higher production costs due to high levels of water.
The lesson here is that Shell's investment in enhanced recovery technology did not increase total ultimate recoverable oil, but instead speed up oil production for a short period before dropping. Yibal is a great example where new technology failed, but is not a good example of showing oil companies not meeting their short term projection as they sure did meet their short term capacity projections.
They aren't still at 35% water cut.. Its fallenby some 7-8% since 1997
"Leave No Resources Behind" Bush needs to jump on this quick before someone else takes it...
Hello HO,
Thxs for this keypost. My question is this phrase re-quoted below:
"...when you include an anticipated 800,000 bd loss due to old fields declining...."
Who gave this depletion amount? Is it accurate, or is it considered a lowball SWAG quantity? Did they explain how they derived this number?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob:
That has come from a number of sources, it is quoted in the September pdf on the Saudi Energy Initiative, for example. The concern that I have is that in that source they are projecting this as a total loss over several years, while other sources that give about the same number project it as an annual figure. The Saudi's spend about $2 billion a year in trying to offset depletion in their existing fields, and this would suggest that if the annual figure is held to the 2-300,000 bd range that they are fairly successful at it. However to sustain that figure requires that they bring new wells on line, and that requires drilling rigs, and as they try to ramp up production the question becomes how many wells, at what production rates can they drill each year. If, for example, it is taking 300 wells to increase Khurais by 1.2 mbd that suggests they are getting 4,000 bd/well.
HO,
Thxs for the reply. If 800,000 is the annual figure--without discovering big, new virgin oilfields to exploit--that seems like an impossible depletion amount to overcome by infield workovers [no matter what the extraction tech level applied].
If this number is true-- can it be reverse-engineered, or more accurately, reverse calculated back into a HL graph to show what reserves can be expected to be extracted at a meaningful production level? Khebab & WT?
I am predicting a long term net decline rate of about 4% per year for KSA, perhaps more sharply at first if Ghawar is crashing.
Hi WT/Jeffrey,
And an export decline rate of...?
The decline in net exports from 12/05 to 12/06 will be, IMO, at least 13%, perhaps as high as 15% (in one year).
westexas,
In regards to declining exports brought about by rising internal consumption, what are your thoughts on the possible chaotic influences brought about by those decreasing exports and actual geological peak? That is, as exports decline and more is consumed internally, the producing nation generates less revenue such that its citizens are less wealthy, thereby softening demand. Past peak, those nations are going to want to keep their citizens happy, thereby given them first rights to the oil and perhaps causing a rapid drop in exports - again less revenue generated by the producing nation and softening internal demand. This drop in wealth may also push those producing nations into modes of internal conservation to protect their exports, and bring their revenue back. Do you see these scenarios as a valid reasons why declining net exports may not wind up particularly dramatic?
Substrate,
I cannot speak for Westexas, but I do see one huge questionable premise in your question:
Just because the quantity of oil that an oil-exporting country exports is declining does NOT mean that the revenue from these exports declines.
For example, exports decline thirty percent in volume while oil prices double: Result, declining volume of oil exports combined with great increase in export revenue.
Because oil is highly price inelastic (especially in the short run) such a scenario of declining volumes with increasing revenues is highly plausible.
And there is another problem with Substrate's reasoning. Lost revenue from exports due to rising internal consumption does not necessarily mean less wealth. It depends on how the oil is used.
I don't hold out much hope that many, or any, of the principal exporters of oil will find productive domestic employment for the source of work they currently export in massive quantities, but it remains possible that they will do so.
I've noticed that the EIA has made three different forecasts for SA Productive Capacity (PC) according to three prices scenarios (data here):
The high price scenario is actually forecasting a much lower productive capacity. I don't know the exact reason but it's probably lower demand.
Just because the quantity of oil that an oil-exporting country exports is declining does NOT mean that the revenue from these exports declines.
shhhhh!!...you weren't supposed to notice that. If the price of oil got high enough though, it'd probably dampen/destruct the economies in the importing countries bringing the price back down again. Also inflation throughout the world might render the new money less valuable.
Bob, it is found here:
http://www.eia.doe.gov/emeu/cabs/saudi.html
He makes it clear that this is an annual decline rate. The 8 percent is simply the midway point between 5 and 12, or very near so.
Ron Patterson
Thxs Ron,
Sure hate to read how the oilfields all seem to deplete at such high rates unless we go nuts with workovers, new tech, and infield drilling for the pockets left behind in an effort to stem the inevitable extraction decrease. The 'Red Queen' has got to be getting severely winded trying to keep up with this pace.
It all seems to be pointing to a 'geologic' Hubbert Global Downslope that will be pretty steep, unless demand can somehow be decreased for decades: so as to lessen supply extraction and lengthen [fatten] the postPeak tail.
Perhaps the only way this demand destruction can be accomplished is for the 'Boomers', the world over, to willingly fall upon the 'Peakoil Grenade', thereby changing the world demographic to a much younger skew. This will increase the survival odds for the future kids as it will take them time to want to increase FF's extraction to the maximum again.
Full disclosure: I am a tail-end Boomer at 51 years, but I have no idea how to conceive and implement a global plan along these thoughts. Generally, the older a person gets: the more reluctant they are to accepting massive change and writing off their lifelong investments in property, cultural values, lifestyle mode, etc, etc. My Mom would quickly die from 'culture shock' if I had to forcibly relocate her from the Asphalt Wonderland to some other location in an effort to protect her from TSHTF.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
The fact that KSA is talking about recovery factors at all should be a alarming signal since these only become a issue after primary recovery operations are completed. Considering political factors long term recovery operations in KSA are not that important.
I'm certain that with KSA's resources they can manage 4-5 mbd for a long time.
But this is a vibrant oil producing nation far from peak ?
So starting into 2007 we have no clear proof that KSA has not peaked and we see projects that show that they are now basically fully exploiting all of their resources to maintain current production rates.
The question I have is does KSA have any more known fields which are not planned to be brought into production ?
One of the issues that came up over the past year in discussions on the size of reserves is the adjustment of recovery factors. For example IHS, which owns CERA, has projected increasing recovery factors for Saudi fields that generate an increase in their reserves, without the need to do any additional discovery work. The question then arises as to what technology they are projecting that will allow the increased recovery factors, and that cupboard is a bit bare, and not getting a whole lot of research funding support that I can see at the moment. Which begs the question as to the accuracy of the assumptions . . .
My point is who cares ?
These are URR increases that effect the tail end of production. Today they are important in places like the US which is or better was producing while overall world production was increasing.
For countries like KSA URR increases like this are irrelevant. If the oil is produced in the future which is doubtful the chances of the "Kingdom" being the producer are slim to none.
Once countries such as KSA/Russia are obviously in decline you can assume that above ground factors will have a large effect on how much of the remaining oil is produced. We cannot predict what will happen in the ME or Russia say five years after world oil has peaked but I think its a safe bet that what ever happens it won't be good and certainly won't allow the oil to be produced at a optimum rate.
The fact that the Kingdom touts these irrelevant issues is disturbing.
Why are they even talking about advanced recovery ???
The EIA now shows that the Saudis have "voluntarily" cut their production by 800,000 bpd from their 2005 peak to October, 2006.
Just another reminder that the Saudi stock market crash coincided with the start of "voluntary" production cuts. Odd that the Venezuelan stock market (where they have long life unconventional oil reserves) is booming.
It is odd, con sidering that venezuela is also cutting, in spite of these unconventional reserves, and meanwhile reducing incentives to foreign countries to develop these reserves. Markets discount everything over 1 year out...
I think it worth noting, that new capacity and existing KSA capacity is mainly "Arab Light" which is difficult to refine (despite the name "Light") With refining capacity at 98%, new KSA production -- if it occurs -- will not impact gasoline supply very much.
See EIA for the process of refining Arab Light http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_m...
Refining capacity according to Apache Corporation: http://www.apachecorp.com/Explore/Explore_Features/200601/Topic_Report_I....
I think it takes about 4-5 years to upgrade as Marathon Oil started upgrading last year and expects to be complete by 2009 -- although I haven't analysed refinery capacity increases in detail http://www.marathon.com/content/includes/PF_News_Releases.asp?ReleaseID=...
Thanks for the comments. I was wondering where they were getting so much "light" oil.
Cheers, Dom
And I would add, KSA would really be shooting themselves in the foot if they increased production of Arab Light now -- the refineries can't handle it and it would make spreads even higher (huge) between heavy sour and light sweet.
memmel asks,
"The question I have is does KSA have any more known fields which are not planned to be brought into production ?"
That depends on what you mean by "brought into production".
The Khurais field, from which KSA not claims a possbile 1,100,000 bd (barrel per day) was actually "brought into production many years ago, (I think Matt Simmons gives it as the 1960's but I don't have my copy out to check) but at a very much smaller amount of production than 1.1 million per day, and then, either failed to produce or was laid aside (interestingly, about the time that oil prices collapsed in 1982, a whole slew of Saudi fields became "unable to deliver" or "unproductive"....and yet, that never makes anyone suspicious? amazing....
So yeah, I am sure that if oil prices continue to fall, we will hear an odd name of some field, and then it will prove "unable to deliver", and disappear from the press...to possibly return a decade or more later, when it is most needed....
Right now, the whole ballgame still seems to me to center around (a) can Ghawar hold (b) Can Khurais deliver what the Saudi's say it can (because if it can, it can replace the lost production from Cantarell in Mexico, and (c) Saudi offshore.
If we accept the argument that no one spends money drilling in the sea if they have easily found and extracted oil onshore, then we must accept that was true of Saudi Arabia, and that they are just now exploiting in a big way their offshore production possibilities (and yes, I know they have drilled offshore, but again, in that modest way, not really pushing it hard).
But of course the other side of that coin is that they are buying/renting offshore drilling facilities into the face of the highest prices ever for that type of machinery. Why? If the oil they wanted was still easily found and extracted onshore, why not wait until offshore equipment prices became a bit more sane? Could it be they really need the oil and need it bad, and it is not coming easily onshore?
It's anybody's guess, but at least we know the major factors to watch....and in the oil business the effort of finding information is more that finding a needle in a haystack....it can be considered a giant triumph just to find the haystack!
:-) Roger Conner known to you as ThatsItImout
Most of Saudi Arabia is still unexplored for oil reserves.
I am surprised with this PDF from the Saudi National Security Assesment Project. Is hosted at the Saudi-US Relation Information Service and it makes very clear points about what the saudis are doing:
Can we trust that? Is that the reason for the increasing rig count of KSA in spite of falling/levelling production? The geopolitical considerations seem to trump other considerations made public by saudi officials, like that the world demand is easing and that economic growth may slow so they embrace OPEC production counts. I am little puzzled with this coming out of the blue...
If this is true then it looks like KSA does the world a service, stretching out remaining oil supply for a few more years.
How noble of them to build spare capacity to promote stability.
In the 1980s they they used their spare capacity to 'reclaim market share' the bankrupting of developers of alternative energy and the collapse of the Soviet Union were just colateral damage.
Alan, in the 1980s then President Bush asked the Saudis to raise the ppb to help domestic producers in Texas.
If you think about it a bit.
Assume KSA cannot meet the production goals via increasing internal production. Another approach is to drop exports and watch the market to determine a level that will minimize the pain of disruptions.
Hey wait OPEC is doing this now :)
In light of this I'd suspect KSA has moved to plan B which is to decrease exports slowly to increase reserve production capacity to offset their inability to hit production targets based on expanding production.
If this is true expect exports to decrease steadily in 2007 to in a sense toughen the market in preparation for a Iran/Israel/US war in late 2007/2008.
So we can assume that current production drops represent a percentage of the
12 mbd not reached from new projects. If this is true then lets say that KSA drops down to near 7mbpd in exports. We know two things at that point. One KSA has peaked and two we are having a war.
The one external factor is the US is probably waiting till after the 2007 hurricane season winds down to ensure that local disruptions will not effect oil prices.
On a monetary side you would assume the US will use/abuse the position of the US dollar one last time to execute its Iranian strategy requiring KSA and friends to diversify currency reserves over the next year to protect some wealth. On the finical front a simultaneous campaign to force china to depeg from the dollar and crash the Chinese economy thus lowering demand makes sense. You in effect take care of two issues at once. Chinese/Asian currency pegs/US debt and Iran. My guess is that the EU is willing to become a new reserve currency only if the Asian currencies are unpegged and allowed to float in a real global market.
The big loser yet again in all this is the American middle class and the third world.
Of course Bush is running out of time so ...
I am always amazed how much "we" know about what is going to happen in the future. Someone around here must be giving crystal balls away. How comes I didn't get one?
:-)
More accurately, people are smoking the peak oil/dieoff doomer crack pipes.
Some of these wacky predictions rate right up there with Pat Robertson, who just recently announced that God told him about 'mass killings' that will take place near the end of 2007. More details here.
I guess hes a PO believer too ~_~
And if you don't think this site leans a tad towards the doomer-centric die off stance, kindly direct your attention to the Ad currently displayed by Blogads suggesting that you go and view Children of Men, a story about an apocalyptic world in which no more children are born. The irony of it all is that the same MSM you all decry has you pegged so perfectly things like this can happen. Ah well.
Shikata ga nai.
I'm sure a lot of people felt the same way you do in the 1920's.
And I assure with what I've been through in my personal life things can get very very bad. Most Americans have no clue how much crap can happen.
Once you have been through what I have its impossible to put on the rosy glasses again. If I'm a doomer its because I've been to hell.
Knowing what I know and watching idiots like you makes me sad for the human race. I don't want to see anyone go through what I've been through its not in any way shape or form good. Call me a doomer if you wish but I don't want to see any more senseless misery in my life if I can help it.
Hi Hothgar, IP, Memmel,
Hothgar, I took what memmel was saying to be qualified, perhaps because I've developed an appreciation for his thinking over time, even though he did not offer explicitly qualifying words as prelude to this particular post re: looking ahead.
In terms of the concept of attempting to think ahead on the subject of world energy flows, it's occurred to me there's kind of a brutal logic, which might provide a basis for assessing the problem. It goes as follows:
1) If the world supply of oil were to abruptly halt, say, tomorrow, and not resume...
2) The result would be total economic collapse.
3) Therefore, we can back up and start to ask questions along the lines of
--How much of a "less-than-complete-cessation" can the global economy tolerate?
--Over what time period?
--Beginning when?
--With what other kinds of factors being necessary? (Information, etc.)
4) --for what new patterns of provisioning? and living?
That's my logic-type thinking. In a sense, it's the approach Hirsch takes in the first report, in the sense of looking at what mitigation is necessary, without spelling out what happens if no mitigation occurs.
In terms of what matters, my take on it is we all have feelings and needs, (short form of philosophy outlined at www.cnvc.org). A need for safety, sustenance (food, etc.), understanding...wanting to protect, warn...maintain our respect and dignity... and all this also for our loved ones - if not for all humanity, as well. I'd like it if we'd try to stay away from labels ("doomer" and "idiot", too). There's a lot at stake here.
memmel, I can relate to the depth of your feeling. It occurs to me Hothgar may also feel strongly, perhaps expressed differently.
Funny thats basically exactly what I do. In about 100 years we will basically not be using oil in our economy so at that point we have some sort of stable neutral economy. By neutral I mean it environmentally neutral and energy neutral.
50 years back from this point we have a society that probably has the form of the one fifty years after with maybe some general oil usage. We can assume finally fusion power sources are available or really only 25 years away :)
25 year further back we have a society that may be in shambles or enlightened we have to assume at least some parts of the world maintain a highly technical society. Northern Europe Russia parts of the US and Canada Japan should survive or at least in part. Other countries such as South Africa could be surprise winners at this point. In any case the focus will be on investing in renewable and stable economies and methods. In some cases this may be a move back to a simple agricultural society once local wars have ceased. The assumption is that a reasonably stable society of technical islands and agricultural regions is reasonable. The mix is impossible to foresee a number of stable configurations would start to emerge. A major population crash during this period is possible.
moving forward 10 years or 15 years post peak we now arrive at a point that decisions made today will still be reverberating. We can party as long as possible and scramble to develop alternative technologies and economies at the last minute. Certainly this approach will lead to resources wars that may be nuclear hopefully limited. Biological warfare may be used.
In my opinion the only thing that would stop this sort of situation from occurring is a concerted effort to revitalize our economies based on something besides continuous growth. Peak is is not the problem its the effect of peak oil on our current economic model that the problem.
This leads of course to the near future which is at best less than a decade away from peak oil with most estimates. Any work started asap to address peak oil makes sense and is useful. But at the end of the day we have to tackle how we can change our economy if we don't then the inexorable depletion of oil and other resource will ensure continued crises regardless of local solutions.
The real problem we face is how to ensure that poverty is finally beaten this is what makes it so hard. The oil age solution was that capitalism with infinite resources and low birth rates in wealthy countries would eventually result in a American Dream style nirvana for the world. We know this is not possible or more correctly we will run out of resources esp oil long before we reach this nirvana for the world. And of course we have global warming to deal with.
Over the next few years more and more people will realize that the American Dream as implemented today will only be available to a few. The rest will loose. We can accept this and the consequences of the battle to be one of the few or we can realize that today problems peak oil, over population, global warming are simply reasons to seriously consider how to maintain a livable healthy planet. Remember the real problem is very hard we have to find a way for everyone to live healthy energy neutral lives. Which means we need to solve the poverty problem.
This boils down to two choices.
1.) A society of a few haves and a lot of have not's. Traditional approach but with a techno/nuclear/military support group. This would be larger than historically needed to support the super rich but its the same model. It does not require a lot of work during the peak period mainly its a matter of forming what are basically city states around stable energy sources. Coal Nuclear and in the case of oil rich regions remaining oil/ng supplies. I can't see our new big countries and unions lasting they don't seem stable.
They may survive in name but regions will be effectively cut off from central government support.
2.) Leverage education technology esp communication and renewable energy sources to create a information rich but low impact society that has a large healthy and knowledge rich community working to create a better life as it becomes more energy neutral. A real vigorous space program could represent a way to explore and settle the rest of our solar system. Advances in sustainable living and fusion power and renewables and better technology and medicine could focus our world without requiring consuming huge amounts of resources. This would mean for example real family planning without religious interference a major battle in itself. Hundreds of other problems of equal magnitude must be tackled and solved.
Approach 1 or the City State is well known and in fact has been the predominate way of life for most of human history and is still common.
We have not tried 2.
This of course brings up up today we can either start honestly discussing and working on a good society that will last for hundreds if not thousands of years or we can take the easy way out and stratify.
Peak now or peak in 5-10 years does not make a huge difference except its cheaper and easier too leverage our remaining oil supplies the moment we decide to try.
Most, if not all of the essence of your ideas and fears can be summed up in this one sentence of yours:
"Over the next few years more and more people will realize that the American Dream as implemented today will only be available to a few. The rest will loose."
You make this straight faced assumption that everyone who does not live in the US lives in hell. Everyone who had the pleasure to live elsewhere can tell you that that is simply laughable. The American dream is, among many other things, golf courses where idiots think they are having a great time by driving a little white ball accross the greens and strip malls which all look the same and which all sell the same crap. Neither, my friend, is a dream, both are boring as hell. Just like American television.
If I want to see great architecture, I have to go to London, if I want great bread, I go to France, if I want to buy a great car, I need to consult the Germans or the Japanese and if I want to see truly spiritual people, I need to go to Bali. And neither of these people consumes nearly as much energy as they average American. All of them (and especially the Balinese, if you are willing to observe) create greater amounts of joy of life and happiness (yes, even the Germans and the Japanese!).
The American dream of happiness from unlimited economic growth without any regard for side effects, my friend, sucks. The Europeans tried it and they are getting rid of it like hell, right now. So will everyone else. If I can make a suggestion: you should get rid of it, yourself. Instead, import some great French breads, some good archecture from England, car manufacturing skills from Japan and the spirits of the Balinese. And if you want to see what great public transportation and urban planning look like, I would suggest you look for advice from Singapore.
I go to Europe quite often. I think that they have indeed developed or better kept a much better way of living. England is a bit iffy it seems to be more Americanized than the rest of Europe. But overall I really like the response of Europe to expensive oil.
When you make generic statements its impossible to not have glaring exceptions. I will say that Europe only settled down to enjoy the finer things in life after a few hundred years of trying American style which we inherited for the Europe of the 17th century. So although I applaud the fact they have made the right decision they made it after exploring all other options. I don't mean to belittle the success of Europe in doing the right thing but I just wish to point out it was a tough lesson to learn.
"...but I just wish to point out it was a tough lesson to learn."
The reason why I disaggree with this statement is because I have been raised in a school system which always stressed finiteness of resources and the need for conservation of energy and nature. If they take you aside as a kid and demonstrate the consequences of industrial waste and nitrates on a lake, the intellectual lesson sticks. To discuss wind and solar energy in school in the 1980s was common place. To see statistics of the coming oil crisis in the magazines was not unusual. My childhood included looking at a lot of pie-charts and thermometer diagrams with numbers relating to deforestation, renewables, waste recycling, global warming and so forth. The tv gave us any number of images with burning gas flares, oil smeared birds and smoking chimneys. I have been in industrial smog so thick that we could drive only at 30mph on the autobahn.
Learning to be a true conservative is a tremendously emotional process. It can be done at any stage in life and at little cost, but it has to be a substantial emotional and intellectual process. What is missing in the US is the ability of many to have these emotional and intellectual processes. They are being put in front of a tv commercial as kids and the only indication many people seem to have about being dead is that the commercials have stopped. Just kidding... of course.
See, it is not hard to teach your kids to be real conservatives. Take them to a national park and point out to them all the garbage the visitors leave behind. Ask them if that stuff belongs there? Ask them what happens to the garbage they produce at home? Where does it go? Show them the city dump. Show them a foul smelling river or lake. Let them take a good nose full of sweet crude smell! That will cut their appetite for a while! Ask them if they think it is right to mess nature up like we do! Kids learn fast. Kids learn well. Kids learn easily.
No, memmel, it is not as hard a lesson as many Americans think. When I look at wind turbines, I see clean air. When I look at a solar panel, I see one gas flare extinguished. I do not see misery and unemployment but a bright future for all of mankind. I do not dream that all wars will end in my lifetime or that no more trees will be cut by profiteers. But I do dream that mankind will take the next little step to a brighter future on a long, long way that will lead us to our true selves. And maybe, along that way, we will inherit the stars. But hopefully only after we have learned to keep them clean.
Ohh one last thing California wines kick French wine butt :)
The only thing that can compete in Europe are the good Spanish and Italian wines which are hard to get.
I invite you to hang out in Sonoma with me one day wine slurping down the Russian river. The Sonoma wines are much better than the Napa junk.
A lot of South American wines are also way underrated and Aussie shiraz is the best.
France pfft, okay so they get a good year out of three and age the hell out of it big friggin deal I wont touch the crap unless its six years old at least.
I've had wines from Arkansas the blow French wines away. Another hidden gem.
A lot of the bottled French wine is not French. Grapes from La Mancha (Spain), the biggest producer of grape in Europe end up in French wine bottles (as well as in other famous spanish wines, like from La Rioja or Ribera del Duero). Wine making is an art, but also the work of good chemists, that use lots of smart methods to assure the wine is more less the same each year, even if grape itself comes from different places.
Ohh one last thing California wines kick French wine butt :)
Heartily agreed for all the low and medium priced ones but it is highly unlikely that you can afford those in the price range where the reverse is true.
"possibility of war with US"
conjures up in my mind the picture of Shrub Bush holding hands with the Saudi Prince
Scary
Just a quick thought. Is someone playing a long game?
KSA saying they will have sufficient oil to offset Iranian production obviously goes down well with worried markets and governments around the world.
However its something of a red rag to a bull as far as Iran is concerned. If they are to go forward on their plans to enrich uranium and thumb their noses at the US, then they need the threat of oil disruption to keep Bush at bay. With KSA telling the world "its OK, we've got it covered" they are put at a disadvantage. Thus Iran has to have plans to take out KSA production in the event of any attack on Iran, and take it out for several months.
However, (deep breath) such an attack on KSA gives them a great excuse to strike back at Iran and wipe the main Shia stronghold from the map. The US would love them to do so, and would support it militarily. The rest of the world would see it as justified defensive action, the Iraqi government would be happy, the Israelies would be happy - its virtually a clean sweep of smiling faces.
Maybe its just me, but when I see such obvious inflamatory statements I begin to wonder what's behind it. After all, saying they wanted to build up a bigger capacity to act as a swing producer would be equally good to world markets...
Hello garyp
I doubt any higher-ups in DC, Tehran, or anywhere else, really believe that KSA has enough spare capacity to remediate potential lost Iranian exports.
I suggest that the Arabs see themselves as targets of the axis of evil - Washington, London, Tel Aviv - and that the leaders of KSA are preparing an economic weapon, based on a projection of oil abundance, thus pushing off into the future their time as targets.
Heh, conspiracy theory. Ignore at your own peril.
I am sure the ‘Arabs’ - the Iranians are Persians, etc. - see themselves as targets of the axis of evil. KSA hunkering down and using what one has, wielding an economic weapon if one wants to call it that, sure. KSA however wishes, or needs (the royal family most likely can’t survive without US support) to maintain good relations with the US, which means pumping appropriately and making up shortfalls elsewhere, the good buddy swing producer, or some other expression like that, right on the ball and and in the right camp (!) Obviously, they expect an attack on Iran, or understand that they must pretend to take that intent seriously. They combine self-interest with long standing and necessary allegiances.
Noisette,
In regard to an impending attack on Iran: Back in April 2006 I said it was all twaddle and nonsense, and it is still all piffle. Nobody is going to attack Iran. The last person to attack Iran was Saddam Hussein, and I've heard that he is currently indisposed. Please explain to me, what is in it for ANYBODY to attack Iran?
I am not sure this would play out quite like this. Sunni are approx 15% of Islam, the rest being Shia. KSA has been supporting its Sunni brothers covertly (overt assistance would not go down well in Washington) to counterbalance assistance to Shias by Iran. The Iraqi "president" is Shia, that is why he is so welcome in Tehran. The point is that Iraq will be an even bigger problem if the US/Israel attack Iran.
If they do, expect the first shots fired by Iran to be at Abqaiq, Ras Tanura and the equivalent Iraqi, Kuwaiti and UAE facilities. These places are all just a short missile flight from Iran. Also expect strong efforts at the disruption of shipping in the Straits of Hormuz. 25% of world supply could be disrupted in an instant, some of it for months or years.
Much depends on the neocon agenda. Bolton said that it is worth it if its stops Iran becoming nuclear ("nucular" per GW Bush). The neocons know what is happening. They must have done their sums and know what the result will be. Sure the US will have detailed plans to disrupt the Iranians, but how successful will these plans be?
Not sure where you got your breakdown, but Sunnis far outnumber Shia worldwide.
Even in the Middle East, they Shia are the minority. Only in Iraq, Iran and Bahrain are they the majority. Maybe you were referring to the population breakdown in Iraq?
http://islamicweb.com/beliefs/cults/shia_population.htm
"I am not sure this would play out quite like this. Sunni are approx 15% of Islam, the rest being Shia. KSA has been supporting its Sunni brothers covertly (overt assistance would not go down well in Washington) to counterbalance assistance to Shias by Iran."
That's not quite right. Sunnis dominate the Muslim world at the rate of about 80% and the Al Saud have been very vocal in encouraging Sunni, Shia and Kurds to chill out and participate in the new government.
Does anyone really know, or even have a good guess about what is going on?
we have the following:
SA in apparent decline per this thread
World production flat since late '04
Yet: oil below $60
Is there that much demand destruction in the 3rd world? Is there some in the US, Europe?
Economy slowing..A LOT?
inventory drawdowns(kept secret or semi-secret from the markets, perhaps)?
THis is all really confusing.
US going into recession?
The housing market is continuing to crash.
"The housing market is continuing to crash."
No way! You mean the people who took out all those interest-only mortgages actually screwed themselves for life? Hard to believe... but what does that have to do with oil prices?
:-)
"You mean the people who took out all those interest-only mortgages actually screwed themselves for life?"
Interesting question: How is an "interest only mortgage" for a nice home in a nice neighborhood worse than paying some landlord rent for life on a dump in a slum? Think about it. Only recently have I seen such repeated attacks on the belief that the American people owning their own home is a good thing.
Roger Conner known to you as ThatsItImout
Living in Orange County California. I think I can answer this one :)
The problem is housing prices are completely disconnected from fundamentals.
Even something as simple as renting your house out instead of selling is practically impossible since rents are half what the mortgage is. This means moving to find a better or nicer job become a real nightmare.
In OC I think the house prices are close to 10x the average salary. For me for example if I wanted a house that was big enough for my family 3bedroom/2bath I could not afford it. Not even a condo which are close to 600k. These same places sold for 300k or less not even 5 years ago. Today I could afford a 1 bedroom apt. Which is of no use to a family. I can of course and do rent a very nice luxury town home for a fraction of the cost of owning.
The loans are not the issue its just that the prices are far beyond most incomes and far beyond any you could recoup via renting. Any situation that requires you to pay a significant bill either two mortgages leaves you close to foreclosure.
Basically its reached the point that any financial hiccup or drop in value of the property results in disaster.
Outside of bubble areas like Orange County I think whats happened is people have used these loans to buy far more house than they can reasonably afford.
Thus even if the price for homes has not increased greatly people bought too much house. In all the cases these loans were extended to people that had no business taking them out. The taxes/hoa fees etc alone on a 600k house are huge running around a 1000 a month in some cases.
Another group has used rising values to HELOC themselves into bankruptcy generally with exotic loans. These can be classified and simply stupid.
Another group in danger are the speculators some used the loans to buy many houses as pure investments but a lot of people but one or two second homes speculating that they would rise in value and this has put all their assets at risk agian they often use HELOC's and exotic loans to try and manage cash flows.
And of course declining or flat home values are resulting in a lot of people underwater on their homes owing more than its worth.
At the end of the day the last years of the boom have resulted in a lot of homeowner in very risky financial situations.
The problem is that people are not paying down the loan at all, when the interest rate goes up their payments increase, and they can owe more than the house is worth. Once they can't afford the mortgage they lose everything. With an apartment you can move out without carrying the debt. In this situation, the debt stays with you even if you leave. For some it works out, for others it is a disaster.
In addition to unseasonably warm temperatures in the furnace oil consuming part of North America, there is the following to consider:
http://www.truckline.com/NR/exeres/240082F3-7160-4162-92A5-C834A84E2401.htm
FOR IMMEDIATE RELEASE Contact: Tiffany Wlazlowski
Wednesday, Dec. 27, 2006 (703) 838-1717
ATA Truck Tonnage Index Plummeted 3.6 percent in November
ALEXANDRIA, Va.— The American Trucking Associations’ advanced seasonally adjusted for-hire Truck Tonnage Index plunged 3.6 percent in November after falling 1.9 percent in October.
On a seasonally adjusted basis, the tonnage index fell to 106.8 (2000=100) from 110.8 in October, which is the lowest level since late 2003. The index decreased 8.8 percent compared with a year earlier, marking the largest year-over-year decrease since December 2000. Year-to-date, the truck tonnage index was down 2.8 percent, compared with the same period in 2005. The not seasonally adjusted index decreased 9.5 percent from October to 106.5. (snip)
This decrease in trucking tonnage is in stark contrast to INCREASED railroad tonnage. The Assoc. Of American Railroads reported that US railroads are on course to set a record for number of intermodal (containers & trailers) traffic handled in 2006, besides a record number of carloads handled. Through 50 weeks in 2006 railroads handled over 11,800,000 units for a gain of 5.2% over 2005 and carloads were up 2.5% over 2005. Stats can be found here:
www.progressiverailroading.com/prdailynews.asp?id=9975 from Progressive Railroading online.
So the loss of the trucking industry appears to be railroads' gain, and less diesel fuel used for hauling freight. Amtrak's business is up slightly (but they only have about 1% of intercity market share now) and air travel is up around 5%. So my guess is all the fuel saved in hauling more freight by rail rather than trucks gets eaten up by more people traveling by commercial airlines.
Sorry Stats link above is incorrect. Should be:
www.progressiverailroading.com/prdailynews/news.asp?id-9975
Yes, the railroad ton-miles numbers are encouraging and I posted a link to an American Association of Railroads statement on this recently on another link.
But it is important to note that most railway freight is also handled by trucking companies at one end or the other or both of the railway trip, so most of it shows up in ATA tonnage numbers. I think what is being singled here is that the railways are gaining significant long-haul business from the trucking industry, even as overall freight tonnage is declining. It will be revealing to see ton-miles for trucking vs ton-miles for rail, when those numbers are eventually prepared.
In the end it means less demand for diesel. A very good thing.
I suspect that a lot of people are wondering the same thing.
In general it has to be demand destruction since a=b demand can never exceed production. But I think the whole world recognizes that we have bad numbers on demand and even the CIA probably has poor numbers on the supply side.
Think about it this way 1% of 85 is .85 mbd so assuming that the world oil supply is only known with say +/- 2mbd we have a lot of slop in the numbers.
Basically we lose track of the entire exports of Mexico at the world level.
One reason I think we won't know we are post peak until the official numbers drop by 4mbd.
My best guess is that production is actually under reported esp in OPEC countries. And we know in the US that plenty of room exists for conservation. I'm sure that worldwide a similar albeit smaller amount of conservation is possible. Conservation was probably instigated by this summers spikes but the effects last long after new more conserving behavior is implemented. So conservation or demand destruction is sticky on the downside. Also factors like decreasing use of oil fired electric generators in the third world either because of shortages or replacement with coal fired central sources has a big effect on worldwide oil usage but its difficult to get a good number on this. Maybe we can find out the volume of generators and parts shipped to the third world and work back.
In short a lot of the demand destruction recently is diffuse and still working in response to this summers price run up. In addition all indicators are that the US at least is entering a economic downturn.
In general what we consider peak oil effects probably won't occur until well after the peak say two years when oil supply and increasingly less elastic demand collide. Assuming peak was in 2005/2006 we are talking 2009-2010 before we start seeing serious problems. So your looking at about two years of flux in prices before a strong upward trend sets in. The root cause being high prices leads to conservation which leads to slight excess in the market until depletion sops up the oversupply. The key is that the bottom price trending up not the absolute pricing. The problem of course at least through next year the slop in numbers is about equal to depletion effects so we need to wait for two standard deviations before a clear upward trend in prices and downward trend in production becomes apparent. I'm guessing that it will be sometime in 2008 before we see clear signals. Texas took like 3 years after it peaked before the decline was obvious.
The problem is this seems to play into the plans of the NeoCons.
Hi memmel
"The problem is this seems to play into the plans of the NeoCons."
Seems likely indeed.
Along similar lines, is seems likely that the W regime is going to let the occupation stew into the next term:
"Why then does it insist on 'staying the course' at a casualty
rate of more than one thousand Americans per month? The answer
is breathtaking in its cynicism: so the retreat from Iraq
happens on the next President’s watch. That is why we still
fight..." see
http://www.lewrockwell.com/lind/lind110.html
So they sacrifice a presidential term to the Dems, and let them end the occupation as they must, and take the blame for the inevitable fallout, plus the blame for the (by then) undeniable manifestations of peak oil. A helpful corporate media will stampede public opinion as far right as possible, re-establishing the neo-cons at the helm.
Happy new year to all at TOD.
Best laid plans...
In the UK, there was a strong impression that the Conservatives (more right wing party) were planning to "let" Labour win the 1992 General Election, having done their best to trash the economy, and thus leave the next lot to clear up the mess.
Indeed, there was anecdotal evidence that a term out of office would be enough to cement them as the "party of government" for a generation. With a couple of months to go, they were trailing Labour by around 5% in the opinion polls (I even saw a bookmaker offer odds of 120-1 for "Conservatives to be largest single party, and 'Party Politics' to win the Grand National. A strange double, but there you go)
Except...
it didn't work out that way. Labour lost the 1992 election, and the Conservatives had to clean up their own mess. Labour then went on to win in 1997 and again in 2001.
So, the gamble from the NeoCons is not to end up winning the 2008 Presidential (which may still happen, if the Dems put their foot in it somehow). Intersting times.
The price effects of lags in supply and demand adjustment are well known
http://en.wikipedia.org/wiki/Cobweb_model
What we don't know are the exact shape of the curves (ie parameters) and missing variables such as fuel substitution.
I've seen this 'truism' trotted out a number of times. It simply is not so. One must realize that demand and supply occur upon a timeline where much production and storage takes place. You might consider this nitpicking, but I don't think it is. The formula is:
Demand (defined by consumption) = Production + Inventory
Inventory can be small or inventory can be large. A little thought will lead us to the realization that the entire complement of fossil fuel upon which we draw, is nature's inventory. This is the basis of the simple hypothesis of overshoot. Inventories are running down and we are accustomed to a rate of demand far in excess of the natural rate of production when it comes to energy.
Hi ET,
Thanks. For clarification (I'm here to learn!) - Does "inventory" as you initially use it above, mean inventory of already-produced goods?
So, in the case of oil, though, wouldn't it be kind of backwards? When you say "Inventories are running down" - do you mean, the inventory of what is in the ground and has yet to be produced? Or, do we need a third category - "raw materials"? And this is what you mean by "...nature's inventory?"
Then, when you talk about "...rate of demand being far in excess..." I wonder...it seems to me the "energy demand" is really a function of both qualitative developments (what kind energy-consuming entities - eg. machines, etc. - are made with the initial energy amount X?) and then some quantitative factors, (eg. how much energy do those consume? What new machines are produced by the original machines? etc.)
I guess I'd perhaps choose the word "established" rate of production, as opposed to "natural" rate of production. Or, do you have something else in mind when you use the word "natural"?
I think ET here was deliberately confusing the sustainable rate we can
pump oil out of the ground, with the rate that the oil is created in the
ground, over geological time. To be genuinely sustainable, we shouldn't
consume oil faster than it is created in the ground. I did a quick
ballpark calculation on this -
assume 2 Trillion barrels URR generated over 100 Million years (Ignoring
Abiotic oil of course!)
World population of 6 Billion, average life expectancy of 60 years.
=> sustainable production of about 1 cup of oil per person PER LIFETIME.
Cheers!
Hi Aniya,
I guess my post was a bit ambiguous. In conventional terms, inventory I suppose should refer only to product that is 'on the shelf' ready to be shipped to market. Even with this definition, inventory can be a quite large buffer between demand and production capacity. There has been a lot of discussion about the trend toward 'just-in-time' inventory practices in which inventory is kept at a bare minimum, since it can be expensive to maintain an inventory.
Looking at "nature's inventory" is obviously a much broader view. I was primarily thinking in terms used in Catton's book Overshoot. Fossil fuels have in a real sense been 'stored' for us by natural processes and our rate of energy consumption using these 'stored' resources far exceeds the daily energy flows (primarily solar input) available to us. At some point this 'natural inventory' will be exhausted and we will have to rely on only the relatively fixed flow of solar energy and nuclear (for those nuke fans).
..."we have a lot of slop in the numbers."
memmel, that might be the philosophy of the age!
RC known to you as ThatsItImout
SA in apparent decline per this thread
World production flat since late '04
Yet: oil below $60
It supports my argument that the Saudis purposely reduced rates to meet demand. Think about it. If that is indeed the case, then this explains the data nicely.
Mexico just crossed the 50% of Qt mark, and production started falling, primarily because of the decline and impending crash of the Cantarell Field. Cantarell is to Mexico as Ghawar is to Saudi Arabia.
Pemex has admitted that Cantarell is in permanent decline, with a worst case decline rate of up to 40% per year (based on a leaked internal report). Oddly enough, the Saudi stock market crashed just as Saudi Aramco announced the first of their "voluntary" cuts in production.
Ghawar and Cantarell are very high quality carbonate reservoirs, where the remaining oil is between expanding gas caps and rising water legs. After being redeveloped with horizontal wells, Ghawar still had (at best) a 35% water cut.
Journalist David Shields, who was written two books on Pemex, was on NPR last night. He thinks that the Cantarell decline is just now really hitting. He expects 2007 Mexican production to be down by at least 800,000 bpd from its 2006 level.
Back to Ghawar, if you are producing at least one-third water, after redeveloping with horizontal wells, from a rapidly thinning oil column, between a rising water leg and an expanding gas cap, what do you do?
What you do is watch the water cut increase and the oil production rate drop.
Will Mexico be ready when oil runs dry?
Augusta Dwyer, Globe and Mail (US)
Will Mexico be ready when oil runs dry?
Will the USofA be ready? we're talking a serious fence.
"we're talking a serious fence."
Wrong answer. Mexico has the two things the US needs most: sunlight to produce energy and poor people to produce goods cheaply. If the US had any sense, it would figure out sensible ways to use both to its and Mexico's advantage. Instead it has gotten bogged down into this paranoia that Mexico is about to invade. It won't. But it should be peacefully invited to participate in the solution of the economic problems of the whole North American continent. Now that would make sense... but then... sense is not something that is highly prized in the US.
On this I disagree I think most Americans recognize that a North American Union is going to happen. We need Mexico. They just don't want "immigrants" living near them this is just American racism.
On the same hand they have no problems with Mexicans making their food washing their cars and building their houses.
So what Americans want is some sort of guest worker solution that creates a second class citizen level. The trick is how to achieve that. Initially of course this level would be only for immigrants but don't be surprised to see it become a punishment for other Americans that don't play by the rules.
In a sense we had this same setup before during the 1800's and early 1900's and the country is headed back to the same have/have not society.
But this time we intend for the lower classes to never get the right to vote and access to welfare or other government aid.
Hi Memmel,
Thanks.
re: "Most Americans". My experience tells me that "most Americans", regardless of their views on immigration (legal or illegal), and regardless of what part of the country they live in - have no concept whatsoever of the role of oil imports to the US, and especially don't know Canada #1, Mexico #2 suppliers to US.
(Would this be the right way to say it?)
These facts, if known, might change the way the situation (US/Mexico relationship) is viewed and make other options seem more worthy of discussion.
Actually they do know more than you give them credit for. They are aware of "jobs" being exported to Mexico etc.
Also I guess I should clarify. The generic American is lead around by his local Mullah who gets his marching orders from higher up Mullahs. In the case of the US the mullah is a politician media or often a religious leader.
So you can group the sheep in a flock. In a sense you need only consider the intelligence of the shepherd not the flock. In America and in the ME the Mullahs are not stupid people and are quite aware of whats going on in the world. ( At least below the president in the case of the US :)
All the US Mullahs need to do is convince their flocks that they can offer a worker visa for guest workers and that these workers won't take our welfare benefits and all is merry. Sure the average American is short sited and quite stupid but they are not the ones doing the thinking. Don't mistake the IQ of the flock for the IQ of the shepherd.
I guess I should say most Americans that matter ...
Of course the right to vote is a irritant but it looks like this is solved by using electronic voting machines.
Hi M,
Well, I wasn't trying to talk about intelligence...just information. When I think about people I've spoken with personally, I have yet to come across anyone who already knew the role Mexico plays in supplying US oil. Despite relative sophistication (in many cases) re: world affairs in general. Or, citizenship for that matter (Mexico or US). Well...anyhow...
Oil from Mexico that is rare I did know know about it except from this forum. Canadian oil is better known and even Venezuela is better known.
Your right about that.
Also I think Mexicans in general don't understand the state of their oil industry and again I mean leader types.
Actually, this is the first time I hear the opinnion that Americans are open to a North American Union. Maybe I am picking up too much noise of the Minutemen-mentality kind? I will give you that many Americans are probably more open to Mexicans than most Europeans are to any foreigners. I just can't tell how far that goes in reality. The fence idea seems mighty popular these days.
I don't think the second class citizen legal trick will fly far. Mexicans are as much second class citizens as white trash or blacks if they don't make the income classification cut. Chinese are first class once they do. I guess we do agree that the great seperator in the US is money. And in that sense it seperates Mexico from the US more than any fence ever could.
KSA probably has also reduced production. The problem is this will simply hide the real decline rate for some time. Also if they were using storage to meet some demand they could easily show a steep decline when the tanks are dry.
The decision to defend 60 a barrel is the one that does not actually make a lot of sense 40-50 yes but 60 ? First they will have a hard time getting compliance out of other countries at that price forcing KSA to selflessly take on a larger part of the cut themselves.
Oh wait..
Jeffrey, I hope you are right. My portfolio dropped 20% last night while I slept, as the market seems to believe that oil is in oversupply. 2007 has been an interesting year already. A few more sessions like 3 Jan and I will be NanoHydro.
Go read up on all the stuff on prices at the peak production rate of a commodity they are very volatile.
This is one reason I believe we are at peak.
Considering that price volatility has a very negative impact on business plans the only sure bet I can think of is a North American NG producer with a lot of production coming on stream after 2010.
Share if you find one.
Micro,
Depletion marches on.
So far, there have been no examples of large producing regions violating the HL model, and Saudi Arabia is precisely following the predicted downslope. Based on the HL model, remaining Saudi conventional oil reserves could meet world demand for less than three years.
"It supports my argument that the Saudis purposely reduced rates to meet demand. Think about it. If that is indeed the case, then this explains the data nicely."
Their prod rates dropped off 1 mpd over a few month time period. Unless you believe that they have a 30% decline rate that only sometimes occurs, the only reason you conclude that rates drop was by voluntary forces.
We won't know until OPEC officially has the taps wide again. That will not happen until at least in the later part of 07, maybe much longer if recession sets in.
I predict that WT will continue to state that KSA is experiencing a decline no matter how well thought out and logical any plausible alternative is.
Hothgar, please check my data, arithmetic and assumptions here:
http://www.theoildrum.com/node/2138#comment-144274
and then be so kind as to tell me when EIA / IEA / CERA demand forecasts require KSA to produce higher than:
Optimistic 4% FIP decline rate:
2006 Productive capacity: 10.320 mbpd
2007 Productive capacity: 10.420 mbpd
2008 Productive capacity: 10.320 mbpd
2009 Productive capacity: 11.020 mbpd
2010 Productive capacity: 10.920 mbpd
2011 Productive capacity: 11.520 mbpd
Pessimistic 7% FIP decline rate:
2006 Productive capacity: 10.320 mbpd
2007 Productive capacity: 10.120 mbpd
2008 Productive capacity: 9.720 mbpd
2009 Productive capacity: 10.120 mbpd
2010 Productive capacity: 9.720 mbpd
2011 Productive capacity: 10.020 mbpd
Hi Agric, I can't speak for Hothgar - but I believe he may be referring to the fact that WestTexas considers the 8 and half that SA currently produces to be their productive capacity, and this 8.5 mpd per day will dwindle at a rate of 4% per year.
IMO, the numbers you put up in this and the other post below seem fairly reasonable to me. I think you may be overlooking some of current and future smaller fields/projects - but your analysis is much better than 99% of the other stuff that I've seen running C + C models against reserve numbers that they pull from decades old reserve estimates that obviously would no longer be accurate.
Thanks Austex. My guess is that infill drilling and small fields will do well to hold the overall KSA FIP decline rate to 4%. If Ghawar (which is about as developed as it can be from what I've read) is declining at 8% then that alone results in an overall KSA decline rate of 4%. If all other KSA FIP decline at a numerical average of 6% that would result in an overall KSA FIP decline rate of 7%.
Sometime, and that day is probably not far away, Ghawar will begin to decline significantly faster than 8%, my guess is that will be when KSA production drops below 10 mbpd, forever. That will be the real beginning of the end of our oil age, and so much more besides. I wish Freddy Hutter could convince me otherwise but he has failed so far :-(
The discussion generally discusses Ghawar as a single field. In fact the Saudi divide it into bits and Matt Simmons has commented on the various segments in his book. Some of the bits e.g. Ain Dar and Shedgum are much further along than others. The Saudi's gave 4.1% for Berri, 2.8% for Abqaiq; 1.8% for Zuluf and 1.5% for Safaniya. I posted on this on August 16th (An oilfield in Arabia) if anyone wants to go back and look.
Agric, your figures today are helpful, but your productive capacity is in error. Whereas u show 10.3-mbd at the end of 2006, Aramco have stated that their MSP is 11.2-mbd. That puts your revised total at 12.4-mbd compared to their claim of 12.6-mbd under the current regime of upgrades. Very close.
But again, we have today about 150 posts that are pure babble based on poor anecdotal tales and are disrespectful of Heading Out's efforts of the day.
90% of the posters still don't understand the role of a swing producer. 90% of the posters do not understand that KSA's present sustainable production is only 8.6-mbd and that their target for the next 45 years is raise this to 10-mbd by August 2009.
In short, 90% of the posts are ludicrous 'cuz they presuppose KSA production that has neither been announced nor planned.
http://www.theoildrum.com/story/2006/12/18/85510/573#comment-139408
Westexas claims are therefore garbage. Another stupid day wasted on baseless rumour and inuendo...
Let Westexas tell us at what rate KSA would have to produce in a coming month for him to withdraw his boast that KSA is post peak.
Hothgor, what is the "well thought out and logical any plausible alternative is[sic]" ?
Please provide your argument.
Seeing as how we pretty much know that KSA production is in fact down over 1 mbpd in the span of a few months, it stands to reason that there are at least two possibilities:
1. KSA really is declining at ~25-30% a year.
2. KSA really is voluntarily reducing their oil production to bring the market into balance.
If its 1, then the lower 48 was a unique region in the world and can not be accurately applied to global production or other regions as WT has stated time and again. In which case we are either screwed royally or there is tons more oil out there to find or produce from existing fields based simply on the law of averages.
If its 2, then WT is jumping the gun and irreparably damaging the PO community by constantly crying wolf without any hands on facts to back up his statements. He would then only be using 'guess work' based on production data that is CONSTANTLY being revised and by extension shows that the 'majors' (Kunstler, Deffeyes etc) are using grossly outdated reserve numbers and are simply out to screw you out of your money :P
You need a basic course in math Hothgor. Saudi is down 800,000 barrels per day in 13 months. That is 8.33 percent over that period of time. That is exactly the decline rate that the vice president of Aramco said they were declining, or very near it.
http://www.eia.doe.gov/emeu/cabs/saudi.html
Ron Patterson
Thanks for the math-straightening and link.
And thats exactly the decline rate that is taking place over more then just one year, as discussed earlier here yesterday. My!, numbers are fun to play with!
In order for your line of logic to be true, it would mean that KSA had no spare capacity at all at their peak, AND had no more resources to exploit. The odds of both being true are so close to zero its laughable to even be suggested it.
I didn't know I had such power.
What I do have is a mathematical model that has stood the test of time, and that accurately predicted the decline in exports by the top three exporters and the decline in Saudi production.
What you are arguing is for something that we have never seen in any large producing region--sustained, steady increases in production after crossing the 60% of Qt mark.
Finally, regarding my ELP recommendations, I have frequently said that if I am wrong, those who followed my advice would have a lower stress way of life, less debt and more money in the bank.
At least a portion of reductions since nov 1 are likely on account of agreed opec cuts. I have suggested to WT that he should not lean on sa reductions following nov 1 as evidence supporting his points, and certainly not reductions below the jan-oct decline line.
However, up until then, and specifically including the period during which oil reached 78/b, their output declined in spite of their number of rigs looking for oil up 3x over 2 years from ~18 end 04, a number which had been stable for years; rather obviously, either new well production has drpped over 3x or old field decline is accelerating fast, or some combination of both. And, rig count continues to climb, their stated plan is to at least double rig count again, or up over 6x. They are bidding over 500k/d for ocean rigs and signing 4-yr contracts... they are not thinking their problems are short term, or that there are a number of cheaper on shore fields that will solve their problems. They are clearly running as fast as they can, and spending billions on the way, in blind panic mode.
From end 04 thru oct they had often and loudly claimed price was too high... anybody thinking that the decline in output during this period was voluntary is simply refusing to accept the evidence. Many still take what they say at face value... either they lied when they said 'we have excess capacity but nobody wants our oil' or they lied when they said oil was too high. That they are liars is well established.
IMO their actions are exactly what one would expect to see when a producing region is on the downslope, never to recover former output. We've seen it all before, from the us to north sea, from indonesia to the north slope. Odd that in this case so many believe in endless and growing bounty... kind of like religion. Well, its a mystical place, remote, desolate, oceans of sand; you can see visions, maybe even whatever you want to see...
One good point WT makes is that the four super giants are crashing together... not so strange, really, they're all about my age... I'm feeling a little rheumatism here and there...
Yeah funny!!
"The good things always find an end, even oil in SA" could be the new maxim!
Robert, do you know the current progress of increases to US refining capacity -- either a link or a brief discussion? I checked Conoco Phillips (#2 refiner)-- and they plan to increase certain facilities by 2011 by 10-15% but have not checked Valaro (#1) or Exxon (#3) and Chevron (#4 US refiner).
This follows, if the US and Asia can't refine Arab Light grades why should KSA increase production?
Robert, do you know the current progress of increases to US refining capacity -- either a link or a brief discussion?
I am personally aware of several Exxon expansions. Don't know about Valero, but with margins where they are I think all refiners are rushing to expand refining capacity.
This follows, if the US and Asia can't refine Arab Light grades why should KSA increase production?
Exactly. I think their moves are completely consistent with the supply/demand picture.
Thanks!
Actually I've heard many times that various grades of oil from KSA are not that useful for refiners. I have to assume that some is.
Considering this I question KSA position as a swing producer if a large percentage of the production capacity they have cannot easily be refined.
In general it looks like the problem at least with KSA is a refinery utilization problem for a good percentage of the oil they produce.
This of course means that its important to understand the type of oil that they have cut production on spreads etc.
Unless they are cutting production of their most desirable grades I question their role as a swing producer.
Hi Robert and WT/Jeffrey,
May I try to summarize where the "unknowns" are in your arguments?
Halfin said: "As I also mentioned in the open thread, Ghawar has been running close to a 35% water cut since about 1999. So if in fact they are still at 35%, then that's a very good sign for them and indicates that no precipitous decline is in the works."
Questions:
1) Robert, do you (personally) have an explicit explanation for the presumed reduction in demand that the Saudi's are matching? Or, do you not see that factor as problematic?
1a) Robert, So, are you also saying that if the production decline was *not* "on purpose", then the price would be higher? (and climbing?) Do you have a feel for how much higher or anything?
b) Does Stuart's rig count chart enter in to it at all?
2) Jeffrey,Robert - upon what factors, known or unknown, does Robert's argument rest? Are there others I have missed?
3) somewhere below, memmel (? I think!) says the demand numbers are really not all that available and/or accurate. Does this enter into it? (If so, how?)
4) Do you both have the same criteria for what constitutes irrefutable evidence of confirmed SA (irreversible) decline? Such as, X number of mos/years falling production? ie., is this something you've discussed and agreed on? (I'll go back and look but I'd still like to ask now, if this is okay with you.)
5) Robert, if I recall correctly, the reason (you've offered) we need to be careful in discussing the possible implication of current KSA production is to maintain credibility - (not to call "peak now" too soon) - and accuracy (or care). And it seems to me both are crucial.
Do you have any other factors that, for you, would indicate "peak now" - other than the X number mos. of continuous decline? (which would really be "peak back then", it seems.)
I will try to get to this in a bit. I am covered up at the moment training my replacement. I will probably bump it up to the current Drumbeat so it doesn't get buried too deeply.
I will take a shot at these now, but I don’t have too much time.
1) Robert, do you (personally) have an explicit explanation for the presumed reduction in demand that the Saudi's are matching?
I think higher prices have reduced demand. I think Jeffrey and I agree that demand destruction has taken place. If demand drops, production has to drop as well or inventories fill up.
Robert, So, are you also saying that if the production decline was *not* "on purpose", then the price would be higher?
If demand had not dropped, and their production started declining, then prices would have definitely not fallen from their $75+ highs to the current level.
b) Does Stuart's rig count chart enter in to it at all?
KSA has stated that they intend to increase production. To do that, they will need more rigs. If demand stays flat, though, then I expect to see the rig count go back down.
2) Jeffrey,Robert - upon what factors, known or unknown, does Robert's argument rest? Are there others I have missed?
Time will tell, but the behavior of exports has been completely consistent with historical patterns going back many years. And the announced cuts from Saudi have in fact corresponded to either high inventories or falling prices as I demonstrated in my response to Jeffrey in our debate.
3) somewhere below, memmel (? I think!) says the demand numbers are really not all that available and/or accurate. Does this enter into it? (If so, how?)
It is very tough to get at demand numbers. Price is a proxy for demand, but price can also be influenced by geopolitical factors leading to a perception of scarcity or abundance. If you could track all oil production in the world, and all inventory levels, then you would know the demand for a given time period. But such information is not available.
Do you both have the same criteria for what constitutes irrefutable evidence of confirmed SA (irreversible) decline?
If prices start to go back up, and inventory levels are either normal or low, and Saudi does not start to step production back up, then this would be evidence in favor of a Saudi peak. If they do step production back up, I think it is evidence to the contrary, but I can envision several ad hoc explanations for how they were able to do this. Or, I can envision charges that they are lying about having increased their production. That’s one problem I have with this debate. When are the Saudis telling the truth? When they say something that you (not you personally) agree with. When are they lying? When they say something you disagree with. That seems to be the only criteria.
Robert, if I recall correctly, the reason (you've offered) we need to be careful in discussing the possible implication of current KSA production is to maintain credibility - (not to call "peak now" too soon) - and accuracy (or care). And it seems to me both are crucial.
Look at any story critical of peak oil. What is the first thing they do? Point to failed predictions, and say “Peak Oilers have a lousy track record.” We don’t have to speculate about this; this theme is consistent in stories attacking PO. So my position is that if one is going to go on the record stating “Peak is now”, you better have your ducks in a row. Given the situation we have here now, I think calling a Saudi peak is not warranted based on the evidence at hand.
Imagine for a moment that we actually have 7 years to prepare for peak. Now imagine that the Saudis start increasing production some time in the next 2 years. We will have provided the skeptics more ammunition to fire back at us, damaging our ability to convince people that the storm is indeed coming. I would really like to see the debate moved away from “Saudi has peaked”, to “Do we really want our energy security in the hands of the Saudis?” Framed this way, even if they haven’t peaked, and won’t for some time, it is still imperative for us to move away from our dependence on Saudi oil.
Do you have any other factors that, for you, would indicate "peak now" - other than the X number mos. of continuous decline? (which would really be "peak back then", it seems.)
Oil consumption tends to grow year after year. Lately, consumption has grown faster than new production has been brought online. With that, we have seen prices rise from $25 to $60/bbl. This is what I have called “Peak Lite.” In the case of an actual production peak, I think we will see much more intense pressure on pricing, and the Saudis fail to raise production in response.
I will add that another problem I have with the whole exports model is that it is essentially impossible to falsify. Look what happened last year. First quarter, imports fell (and as I showed in a graph, they fell with refinery utilization). This was used as evidence that the crisis was upon us. But a strange thing happened starting in May. Imports rose, and actually beat out the previous import records. Was this conceded as evidence against the export model? No. It was explained away as 1). The U.S. is not the world; and 2). We are outbidding others from the available exports. So, how do you falsify a model in which any import direction is taken as either evidence for the model, or placed in the category of “We can’t really base any conclusions on this information”?
A model that isn’t falsifiable isn’t really of any use. I see many, many parallels here with Creationism. The Creationists are big on information theory. They will say that biological information can’t increase, and that all mutations lead to a decrease of information, therefore proving that evolution can’t happen. But when you start to pin them down on this, you will find that they are using ad hoc definitions, and they will say that A to B is a decrease of information, and then turn around and say B to A is a decrease of information. OK, then how do you falsify the claim? As I always said then “Unless you are standing at the North Pole, two opposite directions can’t both be down.” You have to be able to say what would indicate “up”.
RR, if the Saudis are reducing their production voluntarily, then how do you explain the fact that the number of drilling rigs in KSA have tripled in the last 2 or 3 years? A tripling in number of drilling rigs coupled with declining production; doesn't that suggest they are past their geological peak?
Why would they need more drilling rigs if they were past peak? Their stated intentions are to increase production. In order to do that, they are going to need more drilling rigs. If demand stayed where it is right now, then I suspect you would start to see those drilling rigs going back down.
I believe the Saudis are being truthful in their stated intentions: They truly do want to increase production and think they can do so.
The issue is, given the questions raised by Matt Simmons in "Twilight in the Desert," whether in fact the Saudis will be able to raise sustained levels of output.
I don't know the answer. I suspect nobody (including the most knowledgeable Saudis) knows the answer.
The data are sketchy--and to interpret inclomplete data is a black art--at which both you and Westexas excel.
Past the peak, we don't stop finding oil. I am currently developing some small, but profitable, Texas oil fields--34 years after we peaked.
What we can't do is increase overall production--because we can't replace watering out large oil fields with small fields.
As I have frequently pointed out, the biggest drilling boom in Texas history occurred after we peaked, and we succeeded--we increased the number of producing wells by 14% from 1972 to 1982, while production fell by about 30%.
East Texas, like Ghawar, had two peaks, one in the Thirties, and the later one in 1972, along with the overall Texas peak. All of these big fields are watering out, just like East Texas, now with a 99% water cut.
The HUGE difference between East Texas and Ghawar is that East Texas only accounted for about 7% of overall Texas production in 1972, while Ghawar accounted for about half of Saudi production.
Those who are predicting rising Saudi production are predicting what we have never before seen--sustained increases in production, after crossing the 60% of Qt mark--all while the current production data explicitly support the HL model. The phrase "In Denial" comes to mind.
Those who are predicting rising Saudi production are predicting what we have never before seen--sustained increases in production, after crossing the 60% of Qt mark--all while the current production data explicitly support the HL model. The phrase "In Denial" comes to mind.
Of course this isn't true; it happened in the North Sea. This just leads to caveats like "Well, that intercept wasn't consistent with previous HL models."
Robert, this is flat out false.
North Sea (C+C) production peaked in 1999, after it crossed the 50% of Qt mark. It ended up the year at 52% depleted. The overall North Sea (C+C) is now about 70% depleted, down close to one-third from its peak production.
Show me an example of a large producing region (60 Gb or more) that has shown steady sustained production increases past the 60% of Qt mark. I am not aware of a single case history.
The UK had two distinctive peaks, as you know. The North Sea also had two peaks, although not as distinctive as the UK. This caused the URR to change, which is the funny thing about these HLs - they aren't written in stone. If you had done the HL in the UK in the mid 80's, you would have been way off.
If the Saudis aren't producing at capacity, the URR is underestimated. So when you say "60% of Qt mark", then you presume Qt is not changing, and we have seen cases where it has. The past few years of production in Saudi have all been above the slope of the line pointing at URR. Over time this shifts the URR to a higher value and changes Qt. This past year should go back under the line, but if they increase production again URR will shift and then suddenly they are no longer at Qt, because Qt has moved.
Robert,
The initial UK drop was largely due to the Pipe Alpha accident, and for the "Two HL" UK argument to be valid, you have to find an example of a region showing a long term P/Q intercept of 30%. The highest P/Q intercept I have seen is for the overall North Sea, about 14%. Since, insofar as I know, there are no examples of larger producing regions showing long term P/Q intercepts in the 30% range, there are not "Two UK HL Estimates." There is only one.
The overall North Sea has shown solid linear pattern since the early Nineties.
In any case, note that you are forced to resort to using a small, problem plagued sub-basin, the UK portion of the North Sea, to try to counter the HL argument, while the overall North Sea is perfectly fitting the HL model.
The "dogleg" in Saudi production is the same thing that we saw in Texas production, right before Texas peaked. The reason for using Texas as a model for Saudi Arabia is that Texas, like Saudi Arabia, produced for long periods of time at less than capacity.
This why Texas is to Saudi Arabia as the Lower 48 is to the world. As predicted by the HL and historical models, Saudi Arabia and the world started declining at the same stage of depletion that Texas and the Lower 48 started declining.
I repeat: I am not aware of any large (60 Gb or more URR) producing region showing a sustained production increase beyond the 60% of Qt mark. And as predicted, Saudi production is declining.
The initial UK drop was largely due to the Pipe Alpha accident, and for the "Two HL" UK argument to be valid, you have to find an example of a region showing a long term P/Q intercept of 30%. The highest P/Q intercept I have seen is for the overall North Sea, about 14%. Since, insofar as I know, there are no examples of larger producing regions showing long term P/Q intercepts in the 30% range, there are not "Two UK HL Estimates." There is only one.
The fact remains, had you done the HL of the North Sea in 1988, for instance, you would have come up with a vastly different URR. I did a bunch of plots today, and it is interesting how the HL changes over time. As far as the intercept goes, why do you think an intercept of 14% is valid? Since most come in under 10%, shouldn't this signal that the North Sea isn't behaving quite as one might expect?
It would be an interesting exercise to do a number of HLs, stopping at different time periods. What you are going to see is that the answer is highly dependent on where you stop. Even Saudi is very sensitive to exactly where you draw that line. If you draw it a little higher to account for the recent higher production, you could swing the URR by 10's of billions of barrels easily.
What higher production? SA has been declining all year.
Higher production on the HL. The last several points have all been above the line, which will tend to pull the slope up and point to higher URR. I haven't plugged in 2006 yet to see where it falls with respect to the line.
Robert,
The North Sea is exclusively offshore, in a hostile, high cost operating environment. Operators want to maximize production in the shortest time period. So it only makes sense that we would see a sharper decline rate, which is implied by the high P/Q intercept. You are correct that virtually all of the other large (predominantly) onshore regions have P/Q intercepts between 5% and 10%.
Since there are no examples that I am aware of regions with long term P/Q intercepts in the 30% range, doing a North Sea HL plot in 1988 was just too early. And the recent "dogleg" in Saudi production was just a ramp up in production before the peak, just like Texas.
In any case, the Lower 48, North Sea and now the world all showed lower C+C production after crossing the 50% of Qt mark. Must be just a coincidence.
I guess I should have dropped the following post here instead of in the other thread
http://www.theoildrum.com/node/2137#comment-144593
Interesting how the Texas and SA are so similar. So how many multi-billion barrel fields did have Texas have sitting undeveloped when peak hit?
TIA
They would need more drilling rigs to reverse or at least slow down the decline. This is exactly what happened in Texas post 1972.
I agree with this. The Saudis want to increase production, no doubt. The crux of the matter is that they are not able to. Isn't that the definition of "peak" ?
I agree with this. The Saudis want to increase production, no doubt. The crux of the matter is that they are not able to.
You are reading things into the data that can't be supported. They have stated that they are cutting production to meet demand. Prices have in fact fallen off quite a bit from their highs. If the cuts were involuntary, would prices be falling? If they are being truthful that their cuts are voluntary, then you can't say "they are not able to." We will see if they are able to as demand picks back up.
But as I have pointed out numerous times, their statements and actions are completely consistent with the behavior of the market, as well as what has been going on with inventory levels. When they first announced cuts, inventories were at all time historic highs. I can believe, then, that people weren't buying as much oil, hence the cuts were warranted in order to keep the price high (which they had gotten accustomed to, and saw that this price did not crush the world economy).
Considering the current state of our economy I don't agree with the statement that high prices did not crush our economy.
No one has proved the high prices did not have a big effect on our economy.
In fact if you look back at the time period the housing bubble bust and a slowing economy began during the time period of high prices. If anything high oil prices can readily be seen as the pin that pricked the housing bubble.
It is generally accepted that after 24 months, a $10/barrel change in oil prices causes a 0.5% change in Real GDP ... both ways.
When I read the phrase "it is generally accepted", I usually ask "By who? And where was that published with a detailed numerical analysis based on a broad data set?"
Fair?
If the stated fact was true, of course, and we could expect a $20/barrel rise of oil in the coming year, the GDP would be hit by 1%. Still not enough to make me nervous. I would expect the imports of oil to fall by several percent and investments in renewables to go through the roof. Not a bad thing. Not a bad thing, at all.
RR, we are back to my original argument. If the productions cuts are voluntary, why would they spend a lot of money to triple the number of drilling rigs? You know that they are outbidding everybody else and rigs are leaving the GOM to go to KSA. You can't have it both ways. You said they increased the number of drilling rigs because they wanted to increase production. Then you also said that the production is falling because they are cutting it voluntarily.
It is obvious that they are buying every drilling rig they can get their hands on because they want to increase production. But the production keeps falling anyway. Sort of like Texas in early seventies.
RR, we are back to my original argument. If the productions cuts are voluntary, why would they spend a lot of money to triple the number of drilling rigs?
Because they intend to increase production in the near future. That would imply a need for rigs, even if they are, today, cutting back on production. If demand doesn't pick back up, you will see their rig count go back down.
But Robert SA production was already falling even in the face of high prices.
Trouble in the World's Largest Oil Field-Ghawar
Add inventories to that and you will have the complete picture. What you will see is that inventories were chock full when they started cutting production, and prices fell after that.
So, lets add the stocks and have the 'complete' picture. See the link below, which shows US total ending stocks over the past 3 years (and, note that as of mid 06 eia was still showing oecd overall crude stocks at a ten-year low, and down one day's coverage from 05; the late summer bulge in US stocks, shown in the link, had yet to appear.)
http://www.energyeconomist.com/a6257783p/wpsr/graphs/WTESTUS1.gif
We can see from the posted chart that decline of SA output was well underway in 4q05, even tho it was not so apparent then. Meanwhile, from the link above, US total ending stocks, the bulge of which led to the price decline and which in turn caused opec to cut output in nov 06, did not begin until 6/06, and did not affect price, still surging towards a record, until 8/06. So, SA output continuously declined while a) rig count surged 2.5x, b) price surged far past sa stated preference, and c) while stocks remained either low (oecd) or within a narrow range of 1000Mb to 1025Mb (US, 5/05 to 6/06).
All indications are that decline of sa output was in spite of their best intentions, and $billions, to maintain output. Concluding anything else is an example of believing what you want to believe. This says nothing specific about what they will be able to do with 120 rigs, when they get there, or 240; nevertheless we have seen frantic attempts in other large producing regions that, while no doubt producing more than otherwise would have happened in the absence of heroic efforts, did not manage to arrest the decline, much less reverse it. And all of those looking for peak in 2010 or later are assuming that the current sa decline will, in fact be reversed.
And, very interesting post on our #1, russia... scooping up not produced bits from soviet collapse era, no investment, nationalizations, very difficult new regions far from pipelines, railroads or, indeed, roads of any kind... could follow sa lead down the slippery slope pretty soon.
You see that climb starting in Spring of 2006? That's when they first announced that they couldn't find buyers, and crude stocks were at record levels. The announced cuts continued during that rise in 2006. That chart supports my point. I documented this in my debate with Jeffrey.
An extensive response has been posted in today's Drumbeat.
The link is frightening, if true... might somebody have made this up? Does the green bit represent what is left of ghawar's sweet spot, and with column height down 90%? A few horizontals will drain this last bit pretty quickly... Over 50 years they blew thru over 20 ft/year, maybe six years will finish it off - wait, the remaining acreage looks down 75%...
And, sa is spending all this effort on reworkin old fields, some of which were abandoned... not a single new field under development in the kingdom... and some think the desert is floating on oil, they will hit gushers no matter where they drill.
How near a future do you mean? I don't think the two time scales - of having a vastly increased rig count, and of waiting for demand to increase - are compatible.
Yes, it is a bit. but, prices went high when stocks were very high, now prices are low even though stocks have dropped 65Mb, or 800kb since mid oct, down to approximately last year at this time. Meanwhile opec is cutting, and these cuts are just beginning to bite...
Warm winters but low and still declining stocks. every week teh market is surprised at how low total stocks have fallen, but price declines anyway. We may have recession, or maybe price is about to resume its climb. Personally, I think shares are at a very attractive level, but I'm not a trader and therefore are all in.
Looking at the quotes in this article, it strikes me that the world is sleepwalking off a cliff. Of course, we shouldn't expect anything else from oil men but it's still incredible that the only talk is about increasing yields and discovering more OOIP. Wow, we can get the equivalent of another 25 years of SA production if the world increased recovery rates by 1%! Big deal. Even if it was 25 years of worldwide production, it would be entirely the wrong thing to do. Aren't we supposed to be addressing the problem of peak? That is, what to do when available energy starts to decline? Is it better to decline from a higher peak than a lower one?
I know these quotes are from oil men, but aren't they human, too?
Tony
Tony, your problem is your point of view. You see the problem of peak oil as one of scarcity. The oil men see the problem as one of expanding supply, so to them, it's a matter of exploration and increasing recovery percentages. They're engineers, so they want to take positive actions and they need money to finance those actions, so they talk up the possiblities of more oil.
The last ill out of Pandora's box was hope.
Hi ImSceptical
No kidding. I'll bet you read "Beyond Hope":
http://www.oriononline.org/pages/om/06-3om/Jensen.html
"Wishfull thinking" or "delusion" are the impolite synonyms.
Sorry, I'm in a bad mood today. In truth, the above article is quite inspiring.
Sadly enough it is not the people in power who are destroying the planet but the people who buy a burger at the next fast food joint. Problem-awareness is what is lacking and most people are so little aware of things they don't deal with daily that they even fail to notice them until the train runs them over (I know that... I am riding a train every day and delays are common because some idiot didn't look). The solution is ancient... it is called education. People in Europe are educating their children for over two decades on environmental issues and the results are obvious. The failure of the US education system has all kinds of consequences. Ecological destruction being just one of them, albeit probably the most serious of all.
Sadly enough it is not the people in power who are destroying the planet but the people who buy a burger at the next fast food joint.
Sure, but then what "in power" means?
The "power" to do WHAT?
To hog more from the trough?
To be in power simply means you have more pawns to move around. It does not mean you can change facts. The POTUS can do as much about PO as the next best homeless person around the next corner: nothing. He can order the army to march around in Iraq and get their asses blown off but he can not change the mentally ill mind if a suicide bomber who pulls the trigger.
On the other hand, if enough people switched from SUVs to smaller cars and people ate more veggies and less burgers, some of our problems would be easier to solve (like PO and obesity).
It's not my problem, it's the world's problem. I realise that these oil men have the problem of expanding supply but then they must surely see that there will ultimately be no solution to that problem. Doesn't that scare the shit out of them?
That was rhetorical; if it did scare them, they'd either be trying to steer their energy company in an entirely different direction or resign.
But it's just so frustrating that day after day we read stories about oil exploration in difficult terrain or new technology to try to pump even more of the black stuff, presumably under an assumption that they can continue to do it forever, if they just try hard enough.
Hi Sofistek and IP (below),
"...we shouldn't expect anything else from oil men..."
Well...everyone is constrained by his/her circumstances, inner and outer. Which on one hand, isn't saying much (except not to cast stones, perhaps). At the same time, to me, it means - it's up to people who can see more (who can understand) to act; i.e.,
"...Aren't we supposed to be addressing the problem of peak?"
- Yes. "we". (exactly.)
- Q: What's the first thing we can do?
Great Post!!!
Saudi Arabia (SA) will continue to give the perception to the world that they can continue to increase production to ensure that the oil price is maximized.
SA always states that their new projects will deliver an additional gross amount without disclosing the net amount - that is additional production less decline. For example, Shaybah's production is 500,000 bd and can expland by an additional 500,000 bd. No mention is made of decline!!!! As their production is not audited, the world does not know the truth.
My view is that the production risk with these new projects (most of them are mature field workovers) is very high and that SA will probably not produce over 9 million bd again. I assume decline rates of 8% for Ghawar, 7% for most of the other fields and 4% for Haradh, Nuayyim & small oil fields.
To support the above decline rates, this is a quote from EIA: http://www.eia.doe.gov/emeu/cabs/saudi.html#oil
"One challenge for the Saudis in achieving this objective (ie to raise production capacity to more than 12 million bbl/d by 2009) is that their existing fields sustain 5 percent-12 percent annual "decline rates," (according to Aramco Senior Vice President Abdullah Saif, as reported in Petroleum Intelligence Weekly and the International Oil Daily) meaning that the country needs around 500,000-1 million bbl/d in new capacity each year just to compensate."
SA should take a brave step and allow independent auditors to verify production rates and reserves on a field by field and well by well basis. This audit may not be in the self interest of SA but would be greatly appreciated by their customers and the rest of the world!
I find you, Ace, to be very naive. You expect KSA to be forthcoming with correct data about its reserves when your national government is involved in a colonialist war on a neighbouring Arab state, has been threatening a neighbouring Muslim state, and has detailed plans to take over control of KSA's oil fields.
"Well, gee, let's trust these suckers", said Montezuma!
Thanks HO, good update. Scanning your numbers I felt that something didn't quite add up so I trawled through the detail and came up with this:
At end 2006
Abqaiq - 400,000 bd
Ghawar - 5,500,000 bd
Berri - 400,000 bd
Safaniya - 1,500,000 bd
Abu Sa'fah - 300,000 bd
Zuluf - 800,000 bd
Marjan - 450,000 bd
Haradh - 170,000 bd
Shaybah - 500,000 bd
(No Munifa, delayed to 2011)
Haradh - 300,000 bd
Productive capacity: 10.320 mbpd
At end 2007
Brought forward: 10.320 mbpd
FIP decline: -400,000 bpd
Khursaniyah +500,000 bd (by December 2007)
Productive capacity: 10.420 mbpd
At end 2008
FIP decline: -400,000 bpd
Shaybah +200,000 bd (increment part 1 by end 2008)
Nuayyim +100,000 bd (by 2008)
Productive capacity: 10.320 mbpd
At end 2009
Brought forward: 10.320 mbpd
FIP decline: -400,000 bpd
Khurais +1,100,000 bd
Productive capacity: 11.020 mbpd
At end 2010
Brought forward: 11.020 mbpd
FIP decline: -400,000 bpd
Shaybah +300,000 bd (increment part 2)
Productive capacity: 10.920 mbpd
At end 2011
Brought forward: 10.920 mbpd
FIP decline: -400,000 bpd
Munifa +1,000,000 bd
Productive capacity: 11.520 mbpd
Note that I have used HO's estimates where they differ from publically reported Aramco numbers and have used a very conservative ~4% FIP decline rate. The CERA "productive capacity" (sic) has been used for the result ;-)
This suggests that KSA ain't gonna produce 12.5 mbpd anytime in the next 5 years. I'd appreciate it if folks with better data and / or knowledge would check my numbers and assumptions and comment / correct / clarify where possible.
If a decline rate of 7% is used productive capacity barely peeks above 10 mbpd, and if increasing KSA domestic consumption is considered the export situation don't look too good.
Regarding this as well as the main post - I think this is a good start to figuring out future SA production. Could we refine this by figuring out how much current production, as well as future additional production will come from smaller fields?
Agric,
Here is an interesting article from the CSIS about KSA on Nov 9, 2006 which might help to improve the view on Saudi Arabia's oil production.
http://www.csis.org/media/csis/events/061109_omsg_presentation1.pdf
Ghawar's productive capacity may be lower at 4.5 to 5.0 million barrels/day. Page 15 states that Ghawar "has a sustained production capacity of 5 mb/d". It also states that the water cut has declined from 35% to 32%. This is hard to believe, usually water cut increases over time.
Page 6 shows new projects, volumes and start dates to 2009. Page 9, the same, but post 2009.
Page 16 states that Saudi oil fields have a natural decline rate of 8% but is reduced to only 2% due to KSA's extensive drilling program.
Good article, Ace, thanks, it's the most detailed summary of Aramco's position I've seen recently. I've abstracted the important details:
==============================================
Abu Safah & Qatif: Upgrade completed late 2004 at cost of $4 billion.
• In January 2004: 150,000 b/d.
• In March 2005: produced additional 650,000 b/d (for total of 800,000 b/d).
Haradh 3: Expansion estimated to cost $1.5 billion.
• In January 2004: 170,000 b/d.
• April 2006: 300,000 b/d came on stream.
Khursaniyah: $4 billion to June 2007.
• In January 2004: 50,000 b/d.
• By June 2007 to reach 500,000 b/d.
• (Originally scheduled for December 2007)
Shaybah: Expansion estimated to cost $500 million.
• Current production: 550,000 b/d.
• By April/May 2008: 250,000 b/d will come on stream.
• (Originally scheduled for January 2009)
Nuayyim: $350 million expansion project has begun.
• Currently offline.
• By Feb 2009: will increase to 100,000 million b/d.
Khoreis: $8 - $9 billion expansion project has begun.
• Currently offline.
• By March 2009: expected to increase to 1.2 million b/d.
11,000,000 b/d Estimated sustainable capacity in March 2006
+ 2,350,000 b/d Estimated increase in capacity 2006-09
- 800,000 b/d Estimated natural production decline 2005-09
12,550,000 b/d Estimated sustainable capacity in August 2009
Shaybah: Upgrade to cost $800 million.
• Current production at 550,000 b/d.
• Includes a third and final increase of 200,000 b/d by 2010.
• Decision to proceed has been confirmed.
Neutral Zone: Upgrade to cost $400 million.
• Current production (Saudi side) at 285,000 b/d.
• Would add 300,000 b/d by 2010.
• Decision to proceed with development expected soon.
Munifa: $6 - $7 billion to bring project online.
• Currently offline.
• Would add 900,000 b/d in production by 2011.
• Decision to bring online has been approved and project is moving forward.
12,550,000 b/d Estimated sustainable capacity in August 2009
+ 1,400,000 b/d Estimated increase in capacity 2009 - 2011
- 500,000 b/d Estimated natural production decline 2009 - 2011
13,450,000 b/d Estimated sustainable capacity by 2011
Without “maintain potential” drilling to make up for production, Saudi oil fields would have a natural decline rate of a hypothetical 8%. As Saudi Aramco has an extensive drilling program with a budget running in the billions of dollars, this decline is mitigated to a number close to 2%.
====================================================
As you say, HO, the devil is in the decline rates. Will they be able to keep Ghawar producing at near 5 mbpd now it is "almost 50% depleted"?
11,000,000 b/d Estimated sustainable capacity in March 2006
+ 2,350,000 b/d Estimated increase in capacity 2006-09
- 800,000 b/d Estimated natural production decline 2005-09
12,550,000 b/d Estimated sustainable capacity in August 2009
1. I don't think their capacity was any more than they were producing in mar 06, maybe 9.4M/d.
2. 800k/d reduced capacity is annual IMO no matter what they say regarding infield drilling reducing to 2%. Note that decline in 06 was much higher while rigs were up 3x in 2 years, and decline is no doubt accelerating. Max today looks like 9M/d to me, so with decline will reduce 2M/d by mid 09, then adding 2.4M/d 'estimated increase' brings us up to 9.4M/d... but, I doubt all of the 2.4M/d will occur, what with delays, field difficulties, etc. IMO SA is not likely to produce 9M/d, almost certainly will never produce 10M/d.
3. Entirely possible many saudis believe their claims... but ongoing increase in rigs, including long contracts for off shore units at any price along with stated intent to further 2x increase, looks like blind panic to me, and so far showing no results at all as infrastructure ramp up enters its third year. The scary thing is that they are trying so hard...
Just as Shell believed that production from Yibal would continue increase. . .
If memory serves, aren't you currently in, or were in, the oil business?
In any case, it's nice to know that someone else with industry experience agrees with me about the significance of the near certain decline/crash of the four current super giants (with Kashagan not expected to hit peak production, at best, until 2020).
No, my experience is (was) designing nuclear power & experimental reactor equipment. I became interested in po 12/04 as an investor. Ended up specializing in small e&p's with cheap reserves, some bought out from under me... had a fabulous 05, mostly flat 06 but down sharply since mid dec.
Your idea of falling exports always seemed logical but limited, however may be becoming a larger factor than I thought. Might be interesting to see what has happened to total exports 06/05... lower supply
eia shows 06/05 down slightly thru 3q, up slightly thru oct... flat supply... or maybe down a bit when opec cuts are factored in for nov/dec. (I noticed recently that high consumption in producing countries is resulting in reduced ng exports.)
China looks to be (logically) exchanging dollars for oil for their spr... increased demand. Meanwhile, car sales up 50%, expect chinese consumption up 20% as usual... which is beginning to matter.
US stocks down 65Mb since mid oct, ~800k/d, now in line with year ago... when stocks stop falling buying will return, 800k/d... increased demand.
OPEC actual cuts = 800k/d (not the same 800k/d as stock drawdown, at least thru mid-nov)... reduced supply. Current prices support the announced feb 500k cut, maybe actual will be 400k/d.
Chris might have a look at 06, and try to understand why 06 production is so much less than he expected as recently as 1 year ago... IMO his depletion is too low, but maybe there is some other explanation... projects late, etc. Speaking of which, I wonder if he has looked at the average delay, and has factored recent happenings in his coming schedule. Also, was he expecting more from SA in 06? If so, will he modify his future sa expectations? As the condemned man's lawyer said, delay is a good thing... Of course, others also expected more from 06.
Bumpy plateau looks good for now, with asian/producer/us higher demand simmering nicely.
2005 may be peak year, maybe not... I suspect 06 will be slightly lower... just have to wait and see.
Tsk, jkissing, I took care to say "it's the most detailed summary of Aramco's position I've seen recently". Personally I have doubts that Aramco will be able to produce all the new fields on target and with the above forecast production levels while drilling FIP to keep decline rates to 2% - availability of rigs is just one of several possible constraints. If they can, and they seem to think it is possible, then they may well achieve those forecasts. That would give us globally an additional 5 mbpd in 5 years, all the rest of the world has to do is equal that and peak oil is at least 5 years away.
You might like to revise my annual accounts of potential production based on the data above and see how it pans out over the next 5 years based on different decline rate scenarios. I think KSA will manage to exceed 10 mbpd sometime in the next 5 years (in fact I'd guess that they could probably do that now if they tried hard), possibly even 11 mbpd someday, but my guess is that more than 12.5 mbpd is very optimistic - I think Ghawar is likely to be in serious decline before they can achieve that.
Ah but the only problem is that the numbers I gave were from a 2005 report (and may thus have been 2004 numbers) rather than 2006 ones. But thanks for the projection - the devil is in the decline rates.
HO
agric (or someone else with the data),
would you be able to comment on the year by year breakdown on the quality of oil from this production - from what ive heard some of these field are quite heavy and sour, and what is declining is mostly light,sweet oil. (i don't have the figures for the oil type of the new fields and current production)
The PDF article that Ace posted above has the details of oil type for the new fields, it's well worth a read:
http://www.csis.org/media/csis/events/061109_omsg_presentation1.pdf
Quite a lot of the projected new production is "Arab Light" which seems to have its own refining difficulties.
Agric,
I think your assumptions here are wrong. Firstly, Haradh is part of Ghawar and you have counted it twice with 170,000 and 300,000. This needs to be subtracted from Ghawar which is far too high at 5,500,000. It produced around 5,700,000 in 1980/81 but never again after that.
I wouldn't believe too much from that link from "Arab News" .
The northern part of Ghawar had it's water injection increased from 7 million barrels per day to 9.5 million parts per day in May last year. At that stage the water cut was already 35% 3D Seismic of the Uthmaniyah section taken in 2004 show the original 1300' oil column is now below 150' and the water has now proceeded well past half the field.
I have spoken with a petroleum engineer who has spoken with the Aramco head of production who admitted they have severe water problems and barium sulphate is a huge problem throughout the field. This is akin to boiler scale. Some engineers on Ghawar have spoken of production being below 4 million.
Glen Morton, a reservoir engineer says Haradh needs 500 thousand barrels per day of water through that part to get 300,000 oil.
You should read Matt Simmon's remarks on Khursaniyah and the other Hawtah Trend fields- Page 220/221 They are based on SPE papers highlighting the problems, not through away lines in a newspaper with nothing to back them up. In fact everyone of these developments are in old fields with big problems Ghawar has had over 3400 wells drilled throughout the field and the well productivity for Saudi Arabia as a whole has been falling from 12,500 barrels per day per well in 1974 to 5770 in 2002 - it is way below that now. They first started using water injection in 1965
As a final thought I WONDER IF THE OIL PRICE HAS BEEN ENGINEERED DOWN to give them a reason to cut?
Down under - nice to see your phosphors.
Very, very interesting info, as usual.
Hi Leanan,
Have a look at Glen Morton's link with a 3D section of Ghawar taken in 2004. There are also other interesting comments by others there as well. http://home.entouch.net/dmd/ghawar.htm
When you look at the charts in the article above you can see why the Saudis have to keep drilling - because producing wells keep turning into water injection points. As I mentioned a few days ago, each 500 thousand barrels of water needs pumps that require 20,000 hp to push the water through the field at 2000 psi. Think of the power and cost - I think over 20 million barrels of water is being pumped now in various fields altogether
Yes, I've seen that page. Though it's been updated since I was last there.
I believe the owner of that page posts here from time to time. He posted that last graph here - pretty scary.
The one legitmate source of "new" production from KSA (and Simmons missed it) is Manifa/Munifa (I have seen both spellings). Very high levels of vanadium that poison platinum group catalysts and made it unprofitable to refine.
Per my understanding, KSA is building close to 1 million b/day of new refining capacity (and China another 160,000 b/day) that is specifically designed to process Manifa oil.
Manifa may not reach 1 million b/day till 2011, but it will reach that output and maintain it for a sustained period.
The oil produced is a problem, but there appears to be no problem producing it.
Best Hopes for High Vanadium Oil,
Alan
Down Under, if what you post her at TOD is on the "up and up", then you are our "true" missing link on KSA. Does anyone here have anymore credibility when it comes to the assessment of Ghawar than DU?
If not, then I think he is our best source for ground based data in KSA.
Dragonfly,
I wouldn't say that but I hope to get more information over time from a petroleum engineer friend working in the middle east.
I think the water injection tells the story - it's been going on since 1965 in ever increasing quantities plus the reduction in the oil column. I can't recall the link but I remember seeing where the Saudis mentioned a figure of $32 per barrel to cover their uplift costs on reserves these days (remember they have 54,000 on their payroll alone)
A link to a report by geologst M.K.Horn to the American Society of Petroleum Engineers says that of the 910 giant oil fields ever discovered there is less than 1 trillion BOE remaining. It shows Ghawar having depleted 79322 billion BOE with 17776 billion BOE remaining. See:
http://www.searchanddiscovery.net/documents/2004/horn/index.htm
Refer to Figure 9 for the Ghawar figures.
This same group with references from over 30 separate geologists show Iraq now with less than 40 billion remaining. Fairly sobering stuff but that is on another link I posted some time ago.
Those figures should have been 79.322 billion and 17.766 billion
They also use Gas from the Ain Dar Gas injection plant since about 1960 to keep pressure up.. Ghawar, like Shedgum has always been a wet field even back in the early 1950s.
What makes no sense is "showing the red flag to the bull." Iran is a large, powerful country, just a warhead's throw from the major Saudi fields. There is absolutely no way to defend those oilfields (or anything else that large) from ballistic missile attack. The wells and other irreplaceable facilities aren't going anywhere; their coordinates must be listed in precise detail somewhere in Iran.
We need to appreciate that the threat faced by the Iranian leadership is an existential one, so there are no tactics, weapons, or targets that they'd consider off-limits. In fact, it is only their unpredictability that can save their butts at this point, because who would gamble Gulf production on a US military "knockout punch?"
The only logical reason for any of this sabre-rattling that I can fathom is that TPTB need to fabricate a steady stream of above-ground reasons to explain away production declines - anything to deny the ultimate loss of control that the Peak signals. I just don't buy that AIPAC and the Decider's oedipal complex are all that underlie this ghastly brinksmanship.
Iranian IBM capabilities are considerably lacking when it comes to knocking out the Saudi oil infrastructure. If you will accept a low 10 percent degradation at each critical point, ie ignition, burnout, terminal guidance, and detonation, you are at about 2/3 effective yield. Those missiles don't have a great deal of throw weight, maybe 1000 pounds with a CEP of 500 meters. This means that only about half of are going to be effective. If the US Navy is in the Persian Gulf with Aegis crusiers, they can knock down about fifty percent if they don't have a thousand missiles coming at them. If the Iranians launch 100 missiles, 15 - 20 will be effective. Damage yes, Destruction no. They would do better sneaking some old Mirages in on the night Ramadan ends.
It's a fantasy to think that the Aegis cruisers can defend an airspace any bigger than a battle group - and they can't even do that decently against incoming ballistic missiles, either. They're made to take on aircraft, engaging them before they get within short-range missle ranges.
Besides, a hundred missiles is chump change. Hizbollah launched what, 350 into Israel? And of course these will come raining down simultaneously with the arrival of the old but fast Mirages, the Zodiacs loaded with martyrs, and probably some sleepers inside the complexes, too.
The whole system is very, very vulnerable: exposed, running near capacity, and brimming with liquid fire waiting to be detonated.
Almost all of Hizbollah's missiles where much smaller and much less expensive than these ones---they were basically WW2-level Katyusha technology.
Now what would an attack on Saudi oil fields do? Moderate short-term economic damage, but it would piss many people off.
Especially Arab oil exporters.
I am beginning to think that the Attanasi and Root reserve growth analysis for USA-48 is substantially off or just plain wrong (or I am delusional).
http://mobjectivist.blogspot.com/2007/01/censored-data.html
I think it is worth some serious discussion because I don't think anyone has looked at the way that they extrapolate carefully enough.
Thanks for posting the 1960 photo.. That's Tex Guyon.