Debating to the numbers (or more on Saudi production)

Well not that I am being awkward you understand, but what Bloomberg quotes the Saudi Oil Minister as saying is
Saudi Arabia, the world's largest oil producer, will 'soon' almost double its proven reserve base, adding 200 billion barrels to the current estimate of 264 billion, said the nation's oil minister, Ali al-Naimi.
 And in that regard I thought I would post the numbers from IHS that Jean Laherrerre cited on page 25 of his presentation at the ASPO in Lisbon this summer. (available here ) (Site corrected - thanks Stuart).

It should be noted that IHS, I believe, owns CERA. Further that, as is noted in the article, the gain in reserves comes from a change in Recovery Factor, and, while I have commented on this table before, I did not give the entire list.  This time I have only included the IHS numbers, since they are most relevant to the discussion.  

For those who are relatively new to the site, I should also mention, relative to remarks that "World Production will decline when Ghawar peaks" that Ghawar peaked a number of years ago(at over 6 mbd). Back in May we pointed to this Al Jazeera article which indicated that Aramco was increasing its drilling rate.  (At the time I missed that they were putting Abu Sa'fah and Qatif production at 600,000 bd, it has a current target of around 650,000 bd and was supposed - when installed - to be producing 800,000 bd by now).

The remarks yesterday about additional production having to be produced relatively rapidly were related to thinking that Saudi Arabia might be joining Canada, Venezuela and others in counting "tar sands' as potential reserves, since there is that tar mat on the Eastern edge of Ghawar that Matt Simmons writes about on pages 173 - 175 of his book.  (It also appears in some of his slide presentations).

My point yesterday was that despite potential changes in overall reserve numbers for the next few years Saudi production is pretty much tied to current projections of performance, because of the lead times involved.   Borrowing rigs to do more drilling in existing production fields, or to do more detailed exploration in their offshore fields, indicates how much they are willing to commit to trying to make even those targets.  Since those numbers are now used by most in reviewing the levels of achievable production in the short term, nothing has changed.  At least nothing for the better.

The difficulties in getting the metal for rig production, and the limited number of folk that can make to the technical requirements that Aramco must have to create their  more sophisticated wells will also play a role in probably slowing the rate at which they can bring their new rigs on line.  

UPDATED however, thanks to Leanan who cites this article apparently the first of the rigs has already arrived and it is planned that it be used to drill new prospects rather than existing fields.

"The Karan-6 location is actually one of the shallower prospects," said Mulaik. "Several of the locations will require more than 6,000 m of drilling. However, the Ensco 76 can drill up to 9,000 m." A second exploration rig will join the Ensco 76 during 2006 in drilling deep exploration prospects in the Gulf. The two rigs will drill 11 prospects scattered through Saudi territorial waters. The entire project will last from five to six years. This reflects a substantial investment by Saudi Aramco to discover new gas fields.
However it should also be noted that these rigs are being used to look for new gas fields, rather than new oilfields. It does however note that an old rig has been refurbished and
SAR-102 is now back in action, drilling and working over oil wells in the Ghawar field and helping Saudi Aramco meet global energy demands.
In talking about Ghawar the Minister said
Saudi Oil Minister Ali al Naimi who said production would increase by April 2006 and that the field had yet to reach its peak capacity. Saudi Arabia had planned to increase its crude output to 12.5 million barrels per day by 2009 but, according to Nawaf Obaid, managing director of the Saudi National Security Assessment Project, a government consultancy firm, “due to higher spending and soaring oil prices, the target will be met by mid 2008.”
Well the article mentions that the Aramco drilling rigs will now be increased to a total of 110, which is 20 more than the last number we quoted, earlier this summer. And that, in itself, sends a message. The realisation that Rita did serious damage is now getting more coverage but unfortunately at a time when other political events are starting to grab the attention of the MSM, and thus the public.  It may well be that this will make the next step up in prices that much more of a shock when it arrives.
Yes, but the market still sees this as a short-term problem. From the end of the Reuters story linked above: "Futures prices reflect sentiment that refineries will reopen in coming weeks. Near-term gasoline contracts are more expensive than those for delivery in future months. Gasoline for December delivery is 30 cents cheaper than the October contract."
Is the recovery factor over 60% realistic?
Is there something unusual aabout the saudi oilfilds?
Thanks HO. Your link didn't work, but Laherrere's discussion is here. He believes IHS is overstating reserves as it is "obvious that scout companies want to please the OPEC countries as the future important clients", and he details what IHS did to match what the Saudi's are now claiming. Most interesting to me is this picture:

For those of you unfamiliar, I explained this kind of graph here.. It will be interesting to see if the Saudi's can raise themselves off that straight line to 180gb. A 180gb URR with the last pre-Saudi Aramco OOIP of 530gb would be a recovery factor of 34%. Looks a lot more realistic to me than believing with Mr al-Naimi that URR is going to go to 570gb (or even 370gb with the existing proven reserves).

I added al-Naimi claim (12.9 mbpd in 2009) with a linear ramp-up between 2005 and 2009, the logistic line (in red) based on the new points leads to an URR around 570 Gb.

picture here

Nice observation!
Congressional testimony 1979 - proven plus probable = 177.5 Gb. That is ominously close to the above x intercept. I hadn't seen this Laherrere curve before, but to me it is very scary, especially when linked to the 1979 testimony. If a reasonable URR for SA is 180 Gb they are already at 58%. As I noted before, max. reservoir contact wells are likely to move the point of decline closer to 70% (not to be confused with 70% of URR recoverable) than 50%. At an assumed 180 Gb URR, a current production rate of 9.5 Gb/d and 70% peak point they are at best 6 years from decline, and probably very close to their peak production now.  Murray
I should have added that when water gets to those MRC wells, SA won't decline gradually, they will drop like a stone.  Murray
Exactly! if you look at the value for k= 7% (take the aP/Q value corresponding to the logistic line at Q=0), it gives you the maximum production rate at peak for a logistic curve:
Pmax= 180Gb x k / 4= 3.15 Gb/year= 8.63 mbpd

so if this model is true, they are probably past peak right now and they will have a high depletion rate. Conversely, you can take their current production figure around 11 mbpd and compute the corresponding URR which gives 229 Gb.
Ghawar peaked a number of years ago(at over 6 mbd)

HO, where are you getting your stats on Ghawar? (I looked at the linked page, and didn't find a cite there either).

Greg Croft has different stats:

The Ghawar Field was discovered in 1948. Production began in 1951 and reached a peak of 5.7 million barrels per day in 1981.
It may take a bit to go back through the posts to find it, since I suspect it may predate TOD.  It may have been that it came from Matt Simmons, but I don't really remember and so will need to go back and look.  Sorry for the confusion, I'll start looking.
Still looking - there was some information here that was useful as you follow the leads through, in regard to the use of 4-D seismic to map the ingress of water through Ghawar, but it refers to the Croft numbers. Continuing . . . .
Regarding Ghawar tar mat: I am no geology expert, but as I understood it in Twilight in the Desert, the Ghawar tar mat was decidedly below ground. If so, can the bitumen in the tar sands be easily mined? And if not, can it conceivably be an economically recoverabe resource?
There have been oil mines where the entire deposit was simply strip mined. McKittrick in California (poorly porous diatomaceous earth at a shallow depth) is the only one I can think of just off hand.
Ghawar could be dug up and steam cleaned if the field is shallow enough. Think in terms of the overburden/ore ratio. If Ghawar is one hundred meters thick, ten thousand meters wide, and one hundred meters down, then it is doable. Most oil fields are much thinner, much deeper, etc. I have no idea how deep Ghawar is though I know it is thick and wide.
It isn't that simple. You have fires, rock bursts, degassing, etc.
IIRC from Simmons' book, Ghawar is over 4,000 feet down - perhaps 6,000 - awfuly deep to strip....
It's not so much how deep it is as the depth of the ore versus the thickness of the ore. It's really the overburden to ore thickness. If the ore is low value (oil is only a few percent and oil is cheap) and the ore is thin (less than a thousand feet thick) then it is not economical to strip mine.
The Russians build mine shafts under one oil field and drilled up into it to get the oil out, but it was not economic and they shut the project down.
Probably we won't strip or shaft mine Ghawar. Maybe some other oil fields. Not looking important on a global basis.
Actually -

The producing oil reservoir at Ghawar is the late Jurassic Arab-D limestone, which is about 280 feet thick and occurs 6,000-7,000 feet beneath the surface.
6000-9000 meters down!!! That's 19,000-29,000 feet!!! If they really intend to drill that deep it means the cheap oil is long gone.
So, what are the specific reasons for these high -- mostly increased -- recovery factors? We're just taking their word for it, aren't we?
Well, actually that was the question !
Thought so, just checking. And there's no real answer, is there?
Re: "Since those numbers are now used by most [IHS, CERA] in reviewing the levels of achievable production in the short term, nothing has changed. At least nothing for the better."

Right. No explanation is set forth in your remarks, HO, or from anyone else. Nor will we ever know until some years have passed. "Most reviewing the levels...." are talking to Aramco. It's what we call in the logic business a "closed world" -- basically a "Black Box".

However, our love for Ali Al-Naimi is undiminished by his latest shenanigans.
Just curious, but it appears the Laherrere/IHS numbers only refer to  oil from oil fields. What's the outlook for NGL and condensate production from gas fields in SA?

CERA believes that NGL/condensate will account for 18% of OPEC liquids production in 2010.,2317,7453,00.html

OPEC does have massive amounts of gas and I believe the global peak in NG is expected to be at least 10-15 years away (from memory). I think it would take quite a bit of GTL to get to 18%, though right? (I haven't studied it, but that much condensate doesn't sound plausible).
It's not GTL. It's just plain NGL and condensate (i.e. natural gas fluids, collected either in the field or from natural gas plants). GTL will still be very small-scale in 2010 (like a few hundred kbd). GTL products are refined products like diesel and naphtha -- totally different substances from NGL and condensate.

NGL liquids play a very large role even today. NGPL (which does not include condensate) was 11% of world oil production in 2003. Saudi Arabia alone produced 1.2mbd of NGPL in 2003 (125kbd more than in 2002).

Laherrere admits that this is part of the reason that the Campbell & Laherrere numbers were so low: they left out natural gas liquids and condensates from their numbers.

In his May 2005 discussion, "Forecasting Production From Discovery", he notes that the difference is important:

Colin Campbell and myself were wrong few years ago, by giving forecasts only for crude oil, when oil demand (equals to total oil supply for the world) is reported not for crude oil (73 Mb/d now for the world), but for liquids (84 Mb/d now). The US 2003 liquids production is at 8.8 Mb/a including crude oil at natural gas liquids 5.7 Mb/d, NGL at 1.7 Mb/a and other domestic supply (mainly refinery gains, coming also from imported crude) at 1.4 Mb/d.

Further down, he concludes (among other things):

Forecasts of how supply may meet demand need to cover all liquids demand including crude oil, extra-heavy oils, natural liquids as well as refinery gains as synthetic oil as GTL, CTL and BTL. ASPO graphs should cover all. It explains why it is difficult to be too precise on the ultimate values.

Thanks for the clarification.