Aramco and the rig count

Following on from Stuart's piece on Saudi oil, I'd like to interweave some thoughts.  From his third plot you can see that Aramco rig numbers have been fairly steady with about 15 -20 of the 30-odd total working on producing oil at any one time, until fairly recently.  Now if one takes Matt Simmons' number that these each drill around 5 wells a year (despite the OPEC claim that they do 10) then you get somewhere in the region of 75 - 100 new wells per year.  If each produced (as they did up until around 1998), say 6,000 bd, then the increase in volume per year would be around 600,000 bd, which is a reasonable number to use to offset the declines that they would be seeing in production. And so overall achievable output would likely remain somewhat constant.

Since then they have switched, increasingly, to maximum reservoir contact wells, with concurrent water flood, so that production rates are sustained, without decline, until close to the end of the well life.  In the older fields such a change is probably too late, since you have the odd thousand wells in place and producing and any significant change in drawdown pattern would likely have consequences beyond the immediate vicinity.  And at the same time world demand for their product is rising fast.  So they have two problems.

The first is that, after a while, fields do draw down.  Many have seen the picture of a depleted area in Abqaiq that was posted here some time ago.  In that situation the driving pressure has likely fallen rather far, and one can reasonably assume that performance has followed it.  So as one moves the line of producing wells across the oilfield, to replace the older wells running out, there is still going to be some loss in field pressure, that will lead to an overall decline in production from the field (given the same number of wells) as it ages, and residual volume gets less.  As this starts to happen, then the logical answer is to just increase the number of wells drilled per year.  But beyond a certain point this requires a growing increase in the number of rigs, since each well cannot produce as much oil, more must be drilled, and each rig can only do so much.

And now we have climbed onto a squirrel cage, because each year, with more wells the pressure drops more, and so the production loss is greater, and so we need to drill more wells, etc etc.  And in this phase the demand for rigs goes up (note how many are now hard at work in the US for the relatively pitiful reward that they achieve).  It is clear from Stuart's graph that Aramco are now entering this phase.  

Knowing their target promised production, they have decided to replace declining production in a given field by increasing the number of wells they drill in that field, rather than using the Abu Sa'fah increment to offset the decline as they initially has said would be the case.  But choosing this is to go backwards, since the nice thing about the new field is that it was, and would not be seeing the pressure declines that they will get in the older parts of Ghawar, Abqaiq and Berri.  At the same time I have previously noted that despite the promise of 800 kbd from Abu Sa'fah the numbers that it is producing still seem about 150 kbd short of that total, which may be another sign of trouble.

I do, however, have some concern relative to the topic that I posted yesterday on depletion.  The reason being that if one assumes that there is a 5% drop (which is likely on the low side) then the two greatest losers would have to be Russia and Saudi Arabia (both at around 9.5 mbd).  But in neither case are we really looking at seeing their overall production, even without the Megaproject additions, drop by this level in the next year.  And the reason is because of the infield drilling that they will do to sustain production in stage 2 depletion.   And that is the problem with just placing one's arguments on the gross numbers of oil produced, through the Megaproject studies, whether CERA or PR.  Without a better feel for the mundane infield drilling programs, a broader judgment can be out by a considerable amount.

On the other hand if one takes the drop in average well production for any country, and then multiplies this by the number of rigs, and the wells/rig/year one can offset the drop and the claimed increment against this to see where reality might lie.

With which gentle thoughts I wish you all a Happy Thanksgiving, we are off to slightly warmer climes and family.  Because of this travel, my posts will be curtailed for a short while.  Enjoy the break.

P.S. Being on vacation I invoke my travel rule, which is not to cite references to previous articles on the site while away - lazy I know, but that is what is what one is supposed to be.

Would it be possible to infer anything about Saudi Arabian production from other countries who have peaked by looking at their rig numbers before, at, and after peak?

Is there historical data for the States for rig numbers back in the early 1970's?

Perhaps when the number of rigs increases quickly that could be a leading indicator of a national production peak?

Thanks to everyone for the amazing posts!

Again, the most logical analogue is Texas, since Texas was the swing producer until we peaked in 1972.  (The Texas RRC increased production in 1967 to foil an attempted Arab oil embargo during the 1967 Arab-Israeli War).  When the 1973 war and embargo rolled around, Texas had no excess production capacity, and we were in the first year of a terminal decline.

Because of the price explosion in the Seventies, the Texas rig count also exploded, up to an all-time record.  This caused a 14% increase in the number of producing wells in Texas, from 1972 to 1982.  However, oil production dropped by about 30%, from 3.5 million bpd to 2.5 million bpd, from 1972  to 1982.  

A few weeks ago, I read with considerable interest a series of ads that Saudi Aramco ran in the Dallas paper that were basically begging drilling supervisors and petroleum engineers to come interview with them.  

Again, based on the Hubbert/Deffeyes P/Q versus Q method, Saudi Arabia, in 2005, is almost exactly where Texas was at in 1972.   After looking at the various plots, one thing that I found interesting is that regardless of the annual decline rates (high for the North Sea), fairly low for the Lower 48, peaking--in the absence of political problems-is clustering right around 50% of Qt (total estimated cumulative oil production).  

It isn't a big deal, but I've seen 1970, 1971 and your 1972 as the peak year of the lower 48.  Is there some doubt?
Problem is that you are talking about a theoretical peak rather than an actual peak....

It might just be that Saudi produced its peak production way back in the seventies, we have only just gotten back to roughly the same levels of Suadi production and may never actually even be certain when the actual peak production occured because of things like the data accuracy. So we have to determine a peak and that is not an exact science either, in reality a couple of years either way makes bog all difference anyway...

I don't grok how the Suadis figure into the peak of the lower 48 states.  Weren't the American production numbers published?  That would settle it
Re:  the U.S. "peaks"

The Lower 48 overall peaked in 1970.   Texas, which represents about one-third of Lower 48 reserves, peaked in 1972.  Using the Hubbert/Deffeyes method, the Lower 48 (excluding Alaska) peaked at 48% of Qt.  Texas peaked at 54%.  

The percentages aren't exact, but one can make a very good case that Texas (the swing producer) is to the Lower 48 as Saudi Arabia (the swing producer) is to the world today.   The Saudis are at 55% of Qt.  The world is at 50% of Qt.  

One could safely assume that Texas and Saudi peaks were postponed because they were the swing producers.  BTW, I saw a little news item the other day that the most recent Saudi oil production number was down slightly.  Normally, this would be irrelevant, but ANY indications of falling production--when a region/country or the world is at or in excess of 50% of Qt--may be very significant.  

So far, what we have never seen is a country/region show increasing production beyond 55% of Qt.  

Thanks for the explanation.  Your posts are great - insightful and thought-provoking.
Any good books on the rise and fall of Texas oil production?
WAAY OT....but

This article from the geologic genius Jerome Corsi caught my attention this morning, particularly as he is attacking TOD bloggers...

Today's article is even better.  It's promoting an "abiotic oil" conference.  You know, to counter all those ASPO conferences.  
Gee - maybe I should go and ask VP of exploration if I can attend....
I loved this nugget from the Geologic Genius:

No divine creator pre-ordained a plan that the dinosaurs would be brought forth on Earth such that they would die in bogs and swamps in order to produce the fuel we humans would later need to "go forth and multiply."

ROFL, the old "oil comes from dinosaurs" theory!

Oh -forgot.

Since he and his buddy are basically peddling their book, I would recommend the best thing to do is simply ignore them and carry on with our own discussion. Anything we do in trying to refute their canards only promotes sales for them.

Can someone help me out with an off-topic question? When the oil supply data come out every week, the gov't. and API estimates are frequently far apart, this week by almost 3 billion barrels. As I understand it, these numbers are supposed to be about actually existing domestic oil stocks -- oil that's actually on hand and in the US. They're not guesses about future production. So why should there be a divergence?
Sorry, that's 3 million barrels, not 3 billion. Duh.
It's just speculation, but I think that the EIA estimates are based on required cooperation, while the API, as a private group, has no power to compel answers.
My premise:  in terms of total energy supply, Saudi Arabia, is not that significant

In terms of oil equivalent, the world uses--from nuclear + fossil fuel sources--the energy equivalent of one Gb of oil every five days--200 million barrels of oil equivalent per day.  Saudi Arabia produces about 9.5 million bpd, or about 50 million barrels of oil every five days.

If Saudi Arabia disappeared, our nuclear + fossil fuel energy supply would drop by 5%.

If we found another Saudi Arabia, which won't happen, our nuclear + fossil fuel supply would increase by 5%.

Or, let's put it this way, if the Saudis boosted their oil production by 40%, it would increase the world nuclear + fossil fuel production rate by 2%.    

In other words, our current energy use is so gargantuan that the Saudis are only 5% players in terms of total nuclear + fossil fuel energy supply.  We are consuming the equivalent of the East Texas Field every 30 days--Prudhoe Bay every 60 days.

Unfortunately, that energy is not fungible.  The disappearance of Saudi Arabia would cut the availability of transportation fuel and chemical feedstocks by about 12.5%, with huge ripple impacts across other sectors as shortages of essential inputs slowed or shut them down.

Interesting counterpoint to your observation:  if the USA switched all its vehicles to plug-in hybrids overnight and cut liquid fuel requirements by 85%, Saudi Arabia could disappear at the same time and the overall situation would barely change.