And Saudi Arabia had an answer . . .
Posted by Heading Out on February 9, 2006 - 12:33am
The company didn't say what the current output level is, but has said output is expected to be 300,000 b/d of crude oil and 140 million cubic feet per day of natural gas in the second quarter.Saudi Aramco said oil began flowing Wednesday through a gas/oil separation plant at the southern end of Ghawar, the world's biggest oil field, just 21 months after approval of funding and ahead of schedule.
In the statement, Saudi Aramco said 520,000 b/d of treated seawater will be injected into the field each day to maintain reservoir pressure.
Saudi Oil Minister Ali Naimi said in January that with the addition of Haradh, output capacity would be 11.3 million b/d in April.. It is important, I think, to note the use of the word "capacity" in that statement. Further, in light of Matt Simmons critique of the field in "Twilight in the Desert," it will be of further interest to see how production holds up, over the years.
At the same time, much closer to home, a battle is apparently brewing in the Senate over drilling off the Florida coast. In that regard we are still apparently in NIMBY land. Time will tell.
There was an interesting, albeit not enlightening, paragraph today in the Moscow Times about President Putin's visit to Spain.
Spanish Industry Minister Jose Luis Montilla confirmed that energy giant Gazprom and Spanish-Argentine oil and energy company Repsol YPF were in talks to collaborate on a liquefied natural gas project. He did not provide further details.It may be remembered that it was only recently that Repsol announced that they were cutting their estimates of current reserves by 25%.Spanish media reported in October that Repsol and Gazprom met to discuss business opportunities to supply Russian gas to Spain and possible cooperation in supplying liquefied gas to the United States and other countries.
As a footnote, yesterday I meant to cite an earlier post on Iran and their anticipated shortfall, it was posted back in May.
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.
Future Capacity - 12.0 million b/day
Future Reserve Capacity - 1.5 to 2 million b/day
Current Production - About 10.5 nillion b/day
--------------------
Beach Boy on Wed Feb 08 at 8:02 AM CST Comments top
"it will be interesting to see what the Saudi's do in regard to increasing production to maintain overall OPEC numbers."
We know at least what they say they will do:
From http://www.platts.com/Oil/highlights/2006/oilp_neft_012506.xml
Saudi Arabia will increase crude oil production capacity to 12.5-mil b/d by the end of the decade but meeting future oil demand will be a challenge for the world's producers because OECD production has declined and growth in the former Soviet Union has slowed, a Saudi oil official said on Jan 25. Ahmed A Al-Subaey, general manager of Saudi Petroleum Ltd in Tokyo, Saudi Aramco's Japanese arm, said some of the additional capacity would offset natural decline, while the rest would allow the company to expand maximum sustained capability from 10.5-mil b/d to 12-mil b/d, he told an international industry symposium organized by the Japan Cooperation Center, Petroleum.
"These capacity levels provide us with a cushion of 1.5- to 2-mil b/d spare production capacity, in keeping with Saudi Arabia's commitment to enhance market stability," Subaey said. Saudi Aramco also had an "aggressive exploration program" to expand the kingdom's current crude reserve base of 260-bil bbl, roughly a quarter of the world's proven reserves, Subaey said. He did not give target figures.
Saudi oil minister Ali Naimi has said that further exploration could add another 200-bil to reserves. But in spite of this, meeting future demand will still be a challenge with demand for OPEC oil expected to increase over time because of declines in other producing areas. OPEC's 11 members currently account for roughly 40% of global oil production of some 85-mil b/d. Subaey referred to declines in production from Organization for Economic Cooperation and Development member states, which include leading producers the US, Norway and the UK. He said that once strong growth in the former Soviet Union had slowed due to lack of infrastructure and depletion of existing giant fields.
Call on OPEC oil set to increase
"As a result, the world must look beyond many of the traditional OECD suppliers for the new production needed to meet rising demand, and the call on OPEC production will increase over time," Subaey said. "Maintaining that kind of capacity in reserve isn't cheap, but it does provide a critical safeguard in times of market turmoil or disruptions in supply from other sources, and its value in keeping markets steady has been demonstrated repeatedly over recent years," the Saudi executive said of the kingdom's capacity expansion plans. Global demand in petroleum was growing in "two vastly different sectors," he said. One was the developed economies, where growth in consumption was forecast to be moderate, but which had a substantial base of established demand that must continue to be met. The other category was developing economies like China and India, as well as countries in southeast Asia, which were starting from a relatively small base of demand but where petroleum consumption was set for "strong, rapid and sustained growth" as their economies grow.
At the same time, Subaey said that upstream capacity expansions were "of limited benefit" without corresponding midstream and downstream investments. And it was not just a matter of boosting downstream capacity, but also transforming refinery configurations, to overcome the current "mismatch" between global oil supplies -- which would continue moving towards heavier and sour crudes -- and refineries geared to run lighter, sweet oil. Saudi Aramco, in addition to capacity expansions at several of its refineries, is developing two new export-oriented grassroots refineries, one on the Kingdom's west coast and the other on the eastern seaboard, Subaey said.
[ Reply to This ]
AlanfromBigEasy on Wed Feb 08 at 11:18 AM CST Comments top
Several items of note in this Saudi statement.
A half million barrels of new capacity are going to offset Saudi decline (12.5 vs. 12 million b/day). So Saudi acknowledges decline at home (a first I think).
The Saudis think production will fall from traditional non-OPEC producers
Their extra capacity will not be routinely produced, but held in reserve to stabilize the markets. (Why knock the price down ?) Also "Look elsewhere for new supplies, not from us".
They implicitly acknowledge that we are past Peak Oil for light, sweet crude (2000/2001 were flat, now down about 2 million b/day)
Chris
of the field, it will take some time for the
water to migrate to the wells. I have a son
who works for Aramco. He says the water cut
for the first oil coming out of Haradh is
running about 4%. He said the engineers seemed
to be quite happy with that.
But can someone answer the second half of my question? Why are they putting in more water volume than the volume of oil they're extracting?
Chris
There are several possible reasons, but the most likely is what is known as Oil Formation Volume Factor (FVF for short, mathematical symbol capital B subscript little O). Basically, oil takes up more space in the reservoir than it does on the surface. The main reason for this is that oil in the reservoir contains large amounts of dissolved gas - possibly 1000 or 2000 cubic feet of gas per barrel of oil (say up to 300 cubic metres of gas per cubic metre of oil).
The gas molecules are small and fit in between the oil molecules, but oil with gas in solution is less dense and the oil simply takes up more space. Add to that the fact that the oil is up to 100 degrees Kelvin hotter at depth, so bigger, and then take off a little volume to allow for the high pressure downstairs, and you end up with Bo = 1.4; so for every barrel of oil you produce at surface you need to inject 1.4 barrels to replace what you are taking out.
1.4 is a very typical oil FVF - it can vary from 1.15 or so up to maybe 1.6 or 1.7, depending on a number of factors, principally the quantity of dissolved gas.
It is good reservoir management practice to inject one barrel of something for every barrel you produce. Here Aramco are producing oil, so they are balancing reservoir-conditions production by injecting 40% more water than they are producing oil at surface. I don't know what they are doing with the gas - they may be injecting it as well, in which case they are either over-injecting (and increasing reservoir pressure), or maybe compensating for an FVF of more than the 1.4 I mentioned.
When water starts to come through, the rate of water injection may be required to balance oil PLUS water production, so injection may have to increase further. Some of that extra 40% might be replacing that smll amount of water that they're getting already.
I don't know much about the history of Ghawar, so I don't know whether Haradh is far enough below initial pressure to need repressuring. So maybe they're overinjecting deliberately. Or maybe they've sized the WI plant extra big just in case of early water production, and they're taking advantage of it to overinject. With something that size you'd have to overinject like crazy before you did any harm.
4% is an acceptable inital watercut for an infill well, which this isn't, really. Probably means the water isn't quite where they thought it was. IIRC Ghawar is mainly reservoired in the Arab D Limestone, so a bit of water might easily cause scaling. It will be interesting to see if those expensive branched wells really make any difference to oil recovery in the long run.
Chris
Thanks for this little gem of news from your son.
I, for one, would be very interested in any news you can bring us from your son in the future.
can he (without risking his employment) give us any more inside news about Aramco and it's oil production?
or in production of oil in any way. He is in
training, or more correctly testing, of Saudi
operators and electronic maintenance. He
primarily in the northern part of the country
but he often gets sent to other fields to
qualify operators. He is part of the
"Saudiaziation of Aramco" that they have been
trying to do for the last 25 years. As you
probably know Saudi hopes to replace all
Western workers with Saudis. But my son seems
to think this will be impossible because of
Wasta. He says people never get promoted
because of their ability to perform but Wasta
rules everything. Those who get promoted have
Wasta and they get promoted even if they cannot
do squat. Those who do not have Wasta never get
anywhere regardless of how qualified they are.
http://www.freenewmexican.com/news/10507.html
I had to work with him to get him even
interestedin peak oil. But I gave him my copy
of "Twilight in the Desert" and now he asks
questions everywhere he goes. (He said when he
finished the book that seven other people were
already in line to read it.) At any rate the
next time he posts me anything concerning Saudi
oil I will post it.
Well this certainly counters the argument that ANWR will take 10 years to set-up shop and pump oil. Although ANWR is out in the middle of BFE (hey add it to the acro list) and may take a little longer than 21 months, 10 years is downright propaganda.
Doesn't sound like ANY of this preliminary work has been accomplished at ANWR -- let alone the building of roads, pipelines, and whatever other infrastructure needed up there. Bottom line: I'm not qualified to say how many years it will take to get oil flowing to market from ANWR, but I'll bet it's significantly more time than 21 months. What say you, HO?
Lots of work.
A full scale development plan must consider the optimum well completion rate, the expected optimum gas/oil flow per well, the optimum total flow from the field over the fields expected lifetime, when enough production will be available to justify beginning some temporary transportation operations out of the area, when enough production will be available to fill an economicly viable liquid pipeline, same for a gas pipeline. What the optimum pipeline economic diameters should be, given the many possible production rates from the beginning to the end of a field's lifetime and the pipeline ROI. I.E. it would not be practical to get 100 rigs up there and drill all the wells in 1 year, then flow at both maximum gas and oil production rates for 2 years while using very large diameter pipelines and high pump/compression power installations, and then flow at 10% pipeline capactiy for the remainder of the field's life. Optimum rates for net oil produced from a field can vary significantly over the field's lifetime, especially when it is far from the market and the transportation infrastructure is nonexistant. If this field was closer to market and 100% development did not include gas or depend on building the Alaska Gas Pipeline, it could undoubtedly provide a good oil only stream rate within 3-6 years.
I've talking with other people and it seems that the complete process of Uranium Enrichment is only made in two other countries: US and France.
Being that the case, Chirac's declarations and his completely new position as opposed to that taken towards Iraq makes much more sense. Iran could become a menace to their monopoly.
Many other countries have uranium enrichment facilities, including Argentina and (soon) Brazil.
Of those countries mentioned I think only Russia might have it. Correct me if I'm wrong.
Can somebody with real knowledge on this subject please comment.
Are not the engineering issues involved with synchronized timing of shaped charges the real problem?
Two clues. One is James Risen's new book on the CIA. State of War. See one of the final chapters on the bungled Iran/Russian scientist caper.
The other is a fascinating reference. See Nathan Hodges' reports on Iraq from Iraq in Slate. Tuesday's "dispatch" has a link to shaped charges on global security.org. Apparently shaped charges are not fully understood. Discussion of the topic makes it sound like string theory. Now you have to develop a mechanism that will time many of these explosions precisely.
How "easy" is this?
Also, can anyone comment on what type of bombs India and Pakistan have? Are these Hiroshima-fission type-"atom bombs." Or of the Hydrogen-Fusion-what we really need to worry about-variety?
It is easier to make crude nuclear wepons out of high grade uranium then plutonium but you must have an enrichment plant to get the uranium. You do not need any shaped charges for such a weapon.
It is easier to make large quantities of plutonium then large quantities of uranium since chemical separation of plutonium from other substances is far easier then isotopical separation of U-235 from U-238.
To make plutonium out of U-238 you need a nuclear reactor and it can be run on unenriched uranium if it is designed to be economical with its neutrons and moderated with etiher heavy water or ultra pure graphite.
This is the usual choise made by countries building nucluar wepons.
You also want to swap out the plutonium laden fuel often so you do not get much of the heavier plutonium isotopes that due to their radioactivity makes your plutonium harder to handle and also destabilizes your bomb so you do not know if it will go BOOM or pfft. Military planners hate unreliable weapons, terrorists are probably not as picky.
If the bombs then must be small, light, very reliable or boosted into hydrogen bombs there is need for far more reserach and development of tricky components.
www.fas.org use to be a good resource for more information:
http://www.fas.org/main/content.jsp?formAction=325&projectId=7
Weapon grade uranium is uncomparatively harder to produce and requires much better and larger equipment than for nuclear fuel. Clearly if they were making materials for nukes we'd know it because it is very hard to hide.
People who know cannot tell. People who tell generally do not know.
Possibly we have moved on from the first generation (cigarette burn on tritium) and second generation (gamma optics implosion of lithium deuteride) to third generation (not seen in open literature) designs. We may use some tritium in the intiators.
Making tritium is trivial. Just put some lithium in a nuclear reactor. Lithium alloy, because if you use lithium oxide the tritium will diffuse out quickly.
More seriously, producing enough tritium for a tritium boost stage (a few grams?) is undoubtedly difficult in detail. After all, uranium enrichment and plutonium breeding can be described in similarly simple terms.
Commercial tritium applications use relatively little - a typical 'EXIT' sign might contain 6 Ci or about 600 micrograms. Perhaps a neutron source trigger could be made using repurposed commercial tritium, but obtaining multi-gram quantities... not easy even to steal that much, probably.
In general I agree that it's governments that seriously try to build nukes. Terrorist plans should be simpler, preferably co-opting existing features/systems/facilities.
I think most groups of coordinated and intelligent people find productive and civilized ways to work for their agendas.
I think people will have to switch off part of their common sense to become dangerous terrorists. This is what scares me about religion, any religion. Its scary when people start to believe very hard and follow an authorative leader and thus turn themselves into tools for random parts of some old scripture or one individuals fantasies.
Since then, we've had Dr. Khan selling much more advanced designs all over the world. But you don't need much sophistication to do permanent nuclear damage. A dirty bomb made from few spent fuel rods and a truck of fertilizer could make a large area uninhabitable quite easily.
So, if anybody can get the materials, and anybody can get the knowledge, we just have to trust in good manners.
So yeah, it would make a mess. No, it wouldn't be the "keep away for 50,000 years" problem some claim it is. The immediate explosion would be much more dangerous than the fragments, and radiation detectors on roads would make it impossible to transport unnoticed.
One is material. One is the engineering.
See again James Risen's account.
Magnus, I haven't followed your link yet. I am about to do that. But please, how do you create a nuclear explosion without either a shaped-charge or high-velocity "gun" approach?
I specifically am not talking about terrorists, dirty bombs, or anything related. My question pertains to the ability to country's ability to manufacture a high-quality product. Iran can't make cars. Technologically, their only peer in the nuclear-club is Pakistan, and that might even be a stretch.
While I by no means think terrorists or dirty bombs are a not a threat, I believe the real nuclear threat and hence what countries need to achieve militarily to have "teeth," so to speak, is an arsenal of hundreds of reliable bombs.
Absolutely. Crude engineering can work with pure fissile materials. Advanced engineering with neutron injection at exactly the right moment and fusion boosting can make less pure fissile materials work.
Thus it is very good that large quantities of very pure U-235 from Russia is being blended down and used as reactor fuel. If nuclear armed countries with advanced nuclear weapons engineering refrain from using the best materials and destroys them by using them as fuel there is less risk that a theft of materials results in terrorist bomb.
> Magnus, I haven't followed your link yet. I am about to do that. But please, how do you create a nuclear explosion without either a shaped-charge or high-velocity "gun" approach?
As far as I know you dont. But it is easy to build a high velocity gun and it only need one detonator. There seem to be designs of shaped charges that only need two detonators, but I am no expert and cant judge them and neither do I want to become a nuclear weapons expert.
I mostly see nuclear weapons as a threath and a PR problem for nuclear power. Now when the genie is out of the bottle since manny decades I am happy that the most well armed country is democratic. I realy like having USA, GB and France as friends.
Wow. I thought everybody hated us. Now all I can think of is Slim Pickens as Major T.J.'King'Kong leading his B-52 crew onto the target in Dr. Strangelove with 'When Johnny Comes Marching Home' playing at top volume.
In addition to the Federation of American Scientists link given above, I recommend The Nuclear Weapon Archive. The NWFAQ is well worth reading.
I'm not convinced of that - you can produce a detonatable nuclear device but it is not likely you will be able to transport it in any way, which makes it pretty impracticle IMO.
The easiest to produce non-Plutonium nuclear device would be a gun type weapon like the bomb dropped over Hiroshima (I wonder who's making up the names of these things?). This bomb weighted 4 tons and needed 64 kg. of weapon-grade U-235. First it is very very hard to produce weapon-grade Uranium (> 85% U-235). The task is hard to achieve even for a state, let alone terrorists. On the other hand if the U-235 percentage is lower (theoretical limit is 20%) you will need a lot more fissile material and your bomb will end-up with the size of a truck. Obviously it will be hard for a terrorist or even a plane to carry a 20t bomb so this option should be excluded.
In the end - your options are either to make a very huge device, or to invest much more in uranium enrichment equipment which will give you some kind of detonatable weapon. Either way it is not easy.
Which is why my next sentence noted that making a nuclear weapon is difficult.
Aside from this being hardly usable for anything, you still need one ton of highly enriched uranium (20%) or else the "bomb" you try to detonate will fall apart before even 1/1000000th of its fissile energy has been released. For this purpose you will also need a very strong (and huge) shell to contain the nuclear fuel for some nanoseconds, but let's say this is relatively easier to produce. It is mostly the need for highly-enriched uranium that makes building a nuclear "device" almost as hard as building a usable nuclear weapon.
"...you still need one ton of highly enriched uranium (20%)..."
No. In the context of nuclear weapons, highly enriched uranium is uranium which is comprised of at least 80% U-235, not 20%. And you most certainly don't need one ton of it. A critical mass of pure U-235 is 52kg. Little Boy used 64kg of uranium, most enriched to 89%, some enriched to 50%. The South African bomb used 55kg, probably enriched to over 90%. Both used a reflector to improve the efficiency of the reaction, but that's not exactly hard to do.
In any case, I agree that obtaining the proper fissile material is the most difficult part of building a usable nuclear bomb, whether as a test of concept or as a useful weapon.
But basement nukes kill tens of millions of people and severely disrupts economies if you are lucky, and the weather if you are not. The only scale limit to a basement bomb is that at high enough yields you are just blowing the atmosphere higher into space. Think of the atmosphere as being equivalent to a layer of water around three stories high. Max destruction comes from the thermal shine of the firestorm for immediate kill, and from dust in the atmosphere for long term kill in the nuclear winter.
I'm relocating out of the Bay Area. Too dangerous for me. Urban areas are going to be something you see only in historical movies in my lifetime, if I'm lucky and dodge the dieoff.
Peak oil worries me because it will make people desperate and desperate people do risky things. Like nuclear blackmail and nuclear war.
Oh, BTW, I moved out of the Bay Area in 1970--as much to get away from the smog and congestion and crime and craziness (I was at UC, Berkeley from 1956 until 1970.) as because of fear of Big Bad Bombs.
On a related topic, I well remember October 1962, when people were coming to me as a survival consultant; they had already sent their kids to Mexico and wanted to know if they should follow immediately or if they could wait a few days to wind up their affairs. It was hard to reassure them that Russians are not insane, very hard, because unless you know some Russians you cannot appreciate that they are chess players, they have all read and understood "War and Peace," and they are as bright and rational as anybody. This is a really really hard point to get across to most Americans, I have found.
Khebab is finishing up a report I commissioned. One of us will probably talk to the TOD guys about posting it. In any case, Khebab took all the production data on both the US and Russia, picked the 50% point and then took only the 50% and earlier data to generate a new Hubbert Linearization (HL) plot and production plot. We then compared predicted versus actual production for both Russia and the US (also the North Sea). I thought that it was interesting to put it in terms of predicted average daily oil production.
For the US, the predicted post-1975 average daily production (over a 30 year period) was 6.2 mbpd, while the actual post-1975 average daily production was 7.3 mbpd--actual was 118% of predicted. The US exceeded the prediction because of North Slope production in Alaska, which began after 1975. If we had just used the Lower 48 data, actual production would have been much closer to the predicted production. However, the key point is that even with a significant post-1975 increase in production in Alaska, the actual average post-1975 production exceeded the predicted by only 18%.
My purpose for commissioning this study was to give us a quantitative way to assess the reliability of the HL based future production estimates for the world (at about 50% of Qt) and for the top four net exporters--Saudi Arabia; Russia; Norway and Iran--collectively at about 65% of Qt.
Based on this quantitative assessment of the HL method, I am predicting a gradual decline in world oil production, but a very rapid decline in net export capacity. For example, the HL method predicts that Russian production--at least production from existing fields--will be down to about one mbpd in 15 years.
My assessment is that a severe energy crisis is months--not years--away.
My guess--and it's only a statistically based guess--is that Alaska is to the Lower 48 as the lightly explored basins in Russia are to existing Russian production, i.e., in both cases the new production helped and will help, but it won't do anything to reverse the long term decline. People tend to forget how mature a producing province Russia is. They have been producing at least 2 mbpd for over 50 years.
Note that I am in good company in regard to being concerned about Russian production. (Russian production exceeded Bakhtiari's upper end estimate by about 5%, but the recent dramatic slowing in the rate of growth in production supports his view):
http://www.energybulletin.net/147.html
Published on 3 May 2004 by Oil & Gas Journal. Archived on 3 May 2004.
World oil production capacity model suggests output peak by 2006-07
by AM Samsam Bakhtiari
Excerpt (regarding Russia):
In the 21st century, Russia has taken over from the North Sea as non-OPEC's new champion. Unlike the North Sea, however, Russia is not a new province but a very mature one. Moreover, it is a region over which the defunct Soviet Union had ridden roughshod, especially during the 1980s (with the battering of the supergiant Samotlor field a case in point).3
During 2003, Russia achieved an average output of 8,460,000 b/d. The latest Wocap base-case scenario for Russia forecasts an oil production plateau of just under 8.5 million b/d during 2004-06.4 Under no Wocap scenario could Russian output edge over the 9 million b/d mark.
This is in stark contrast with many other forecasts, especially those issued by Edinburgh-based consultants Wood Mackenzie (WoodMac), which sees Russia's crude output going from strength to strength before reaching 10.4 million b/d in 2010.5 WoodMac Director Tim Lambert summarized his consultancy's findings on Russia's future oil production: "Russian production has been growing rapidly in recent years, and many observers consider that it should exceed 10 million b/d in 2010. On an unconstrained basisassuming that all required investment was put in placewe believe that production could reach 12 million b/d in 2010 and 2011."6
Both Wocap and WoodMac cannot be right, and undoubtedly one is totally wrong. The question remains which one is wrong.
But the Wocap-WoodMac discrepancy is not the only gap on Russian forecasts. Even in the short term, there is an abyss between the prediction of 2.2% growth in 2004 by Russian experts and the 8.6-10% rise forecasted by international analysts, translating into a difference of 550,000-670,000 b/d by yearend.
However, there is little doubt that Russia will be the oil industry's ultimate supply-side litmust test. And this year's output results might settle the short-term (and maybe even long-term) differences once and for all. And it goes without saying that as fares non-OPEC champion Russia, so will fare the whole of non-OPEC in 2004.
"During 2003, Russia achieved an average output of 8,460,000 b/d. The latest Wocap base-case scenario for Russia forecasts an oil production plateau of just under 8.5 million b/d during 2004-06.4 Under no Wocap scenario could Russian output edge over the 9 million b/d mark."
2004 - 9265/mbpd
2005 - 9480/mbpd (about 9 oil, rest other liquids)
On the other hand, year-on-year growth is slowing. But this may be due to above the ground investment impediments. Wocap is already wrong.
A less severe repeat of the first peak seems quite likely due to political issues alone.
What is under the Barents Sea, etc. will likely stay there for some time.
OTOH, oil substitution is continuing apace in Russia. The railroad to Murmansk was fully electrified last November and plans are to go to the Finnish border. One of several rail electrification projects underway. Natural gas is being used to replace oil for heating. And Russia does not have a growing population (except in Moscow, which has an excellent Urban Rail system).
I question the assumption that domestic oil demand will continue to increase in Russia.
I attribute the 1984-85 "peak" to the record low oil prices and the chronic resource shortage crisis the former USSR entered in these years that led to the so called "perestroika".
I would reapeat that again: Russia is a special case, do not risk compromising HL method with a set of data disrupted by politic and econoimacal turbulances. Russsia was not a capitalist country, and its resources were not privately owned and exploited prior mid 90-s. It did not apply the latest technologies for drilling and reserve estimation, it did not have the know-how, neither sufficient access to foreign capital to do it (there was a chronic shortage for foreign "hard" currency at this time).
The oil price plunge of the mid 80-s was disastrous to the whole socialist block. My parents told me that prior than that there were no major problems within the system, no goods shortages and lines in front of the stores. AFAIK Siberian oil was pumped at 10$/barrel cost as opposed to 2$/barrel in ME. In this situation the price of crude in the range of 11-15$ was hardly able to meet the costs and the only significant source of hard currency for USSR dried. If they did not cut production then the price would fall even more and they would sell at a loss.
My prediction? Russia has total URR about 200 GB of which 92 are already produced. Absent significant disruptions it will continue to grow (though with slowing pace) in the next 5-10 years. On the other hand Russian exports are likely to go stagnat or drop as the country economy is reviving and the state starts hoarding oil as it becomes more valuable.
I used this as a source, not noticing that it is from the distant 1995. After 10 more years of around 3.5 GB/year production the figure would be more like 125 GB cumulative.
My point is that Russian reserves/perspective production figures are even fuzzier than Saudis. I'm strongly convinced that they are underestimated because of the particular history of this country. BP figure for Russia was recently revised from 60 to 70GB. When USA which is much more thoroughly researched was at 70GB in the beginning of the 90s it was producing 7-8 mln.bpd as opposed to 9.5 mln.bpd. from Russia now.
Russia has produced approximately 142 Gb through the end of 2005.
Using only the 1984 and earlier production data, Khebab generated a HL based predicted production curve out through 2005. The predicted cumulative production was 67.5 Gb for 1985 through 2005, and the actual cumulative production for 1985 through 2005 was 64.6 Gb. Actual production for this 21 year time period was 96% of predicted, and as cumulative production gets closer to where it should be, the year over year rate of growth has been slowing from 11% to 9% to 2.7% last year.
I'm more than a little confused about the resistance to applying the proven HL method to Russia. How much more proof do you need than a method that has been 96% accurate?
Your assertion is that Russia--at least the existing production base--is 71% depleted. The HL method (using the pre1985 data) suggests that Russia is about 90% depleted. I can only refer you to the above mathematical exercise. I am a little puzzled by your assertion that a province that is--by your own estimates--71% depleted is going to show increasing production.
Unluckily I can not postulate any numbers for the remaining Russian reserves because like I said Russian production history is too much affected by politics and economic.
At least for me it is counterintuitively a country at 90% depletion to be able to produce more than 80% of what it produced in its peak. Even if their peak is today, this would require 23% decline starting from next year to fit the 15GB number. I am more inclined to take the recently revised number of BP of 70GB URR, or 67% depletion. My initial estimate was in the range of 100-110 GB left (56-60%), it is my fault that I used incorrect data that made it look like 71%.
I can refer you for example to this example of HL applied to UK production. Imagine you examine UK in 1990. If you applied HL to the past data you'd reach to URR of 11 GB. But as the future showed the drilling of new wells and EOR projects lead to boost in production and a secondary peak 2000, moving UK's URR to 28GB. A 155% difference!
Now imagine that Russia is in similar situation as UK in 1990, due to underinvestment in the period 1985-2000. Currently it is obvious that it is headed for secondaray peak, the only thing that is unknown is at what height it would be. This makes HL unapplicable in this moment, because we are not past that secondary peak and HL works well only past peak.
I'll repeat that in reality I don't have a slightest idea about their true recoverable reserves. I make my guesses that they are underestimated based on my observations of the political/economical reality of the former USSR.
"At least for me it is counterintuitively a country at 90% depletion to be able to produce more than 80% of what it produced in its peak."
This was possible because so much production was shut-in because of the political problems, which is why I think that you have to look at predicted versus actual cumulative production for 1985 to 2005.
In regard to the UK, I think that there are two problems with applying the HL method in the 1990 time frame: (1) it is a fairly small area and (2) it really didn't have the required years of serious production. The overall North Sea has declined precisely as predicted--peaking at 52% of Qt and down about 25% from its peak. Note that the 10 major oil companies working the North Sea were predicting a peak at 2010 or later.
If you want to see examples of catastrophic decline rates, check out the article on the Cantarell Field below, where it seems that a 40% plus annual decline rate is quite probable.
This would require an annual compound decline rate of about 15% (from 9.4 mbpd to one mbpd over a 15 year period). My guess is that there will enough new production so that the actual decline rate will be closer to 10% than 15%.
BTW, the predicted Russian Qt, based on 1984 and earlier production data, is 160 Gb.
100*Po/D%
where P is the production at year 0 and D is the decline rate.
If D is 15%, Po= 3.4GB (2005) than URR would be 22.9 GB,
10% - 34.3 GB
5% - 68.6 GB
I could make a bet that (absent significant socio-economical disruption) Russia will not experience 10% decline, not now not even in 5 years. Such rates are not characteristic to onshore fields, especially ones which have not been developed aggressively with horizontal drilling etc.
A more likely scenario is (if we assume 2005 was a peak) to see them decline by 5% or less, which would correspond to the URR reported by BP and the Russians themselves.
My WAG is that they will top at 10mbd in several years and decline by 4% for a URR of around 100GB.
I'm not an oil expert but Siberia is huge and comparing it to Cantarell seems unappropriate to me. A comparison with SA with its mature onshore fields and state controlled oil production would be more correct IMO.
HL analysis does not distinguish production from export. Therefore the rapid decline in export capacity that you predict cannot be based on Hubbert linearization. You must be introducing some additional economic assumptions, assumptions which you should state openly. For example, perhaps you are assuming that an oil producing country, when its internal production declines, will not reduce internal consumption at all and will reduce exports to make up 100% of the decline in production. I don't know if you are assuming this but it might be one way to reach your conclusion. Clearly this is an assumption which could be questioned and challenged.
In any case it is clear that your conclusion cannot be based solely on what you say, a quantitative assessment of HL results.
Even though their production may be falling, the net exporters cash flow will probably increase because of higher energy prices, driving more economic activity in the exporting countries. In any case, this winter Russian oil companies have announced that they are cutting back on oil and gas exports because of--increased domestic demand.
The math couldn't be simpler. The world is about 50% depleted, and the top four exporters are about 65% depleted. As the Cantarell article makes clear, a lot of the other exporters on the top 14 list aren't doing so hot either.
Most of us are proceeding blindly into a ferocious--and I think imminent--energy crisis.
I have been graphing EIA figures for Russian output, sure it was increasing 2001-2004 impressively, but since the middle of 2004 it is flat, within 2% of 9 mbpd, thats one and a half years!
PS this is my first posting, haven`t quite figured how to post graphs yet. Very impressed with work from Stuart HO Westexas Khebab and others.
Will keep watching and listening..
I was involved in drilling 3 separate wells on the Gulf of Mexico side of Florida. One was in the Florida Middle Ground area, another was in the Florida Straits and the final one was in Tarpon Springs area. These were all 2-1/2 mile deep exploratory wells, and while we did have some gas and weak condensate shows, all were dry holes. The rationale for drilling each was a huge seismic reflector combined with structural trapping in low-profile anitclines (large humps which looked petroleum filled). These would have been enormous finds if they had been wet.
The Gulf side of Florida is a huge carbonate bench, and is dramatically different from the remaining Gulf of Mexico geology. There is little in the way of shale-type source rocks within this large carbonate bench. The current flow in the Gulf is counter-clockwise, and river sediments are not deposited offshore east of the Mississippi much farther than the Mississippi coast. In each of the wells we drilled, we never encountered anything except carbonates while drilling.
The only area where we did find oil was immediately offshore of Pensacola, and that geology was similar to Mobile Bay, although much of the overlying strata had been replaced by carbonates. Even this find wasn't commercial.
There is a reason why the oil companies didn't kick and scream when Florida drilling was stopped - we hadn't found anything even close to what we have in the western Gulf of Mexico. And chances are that if we do find something, it will be extremely deep in both water depth and drilling depth, and related to the deepwater Gulf of Mexico basin play.
I'm sure we will take another look, but the initial peek wasn't very promising. Don't be surprised if opening up Florida is a big nothing in the oil basket. One thing to remember is that offshore geology is usually tied into onshore geology at the macro level. Onshore Florida doesn't have much in the way of oil due to no source rocks and very poor trapping mechanisms, and offshore looked the same after a few wells were punched.
Thanks for the information. This is the kind of perspective that only TOD provides. I would never see this assessment of Florida in the MSM.
Do you know the range of estimates for oil off the Calif coast around Santa Barbara? I see a lot of articles about the fights over opening up these leases, but I never see any reserve estimates (nor could I find any on the net)..
Rumor has been floating around that Repsol may be looking to seel all or part of their assets. That would fit in with clarifying their reserve estimates...
Today's (2/9/06) WSJ has a very good article on some internal Pemex studies regarding the Cantarell Field (kind of reminds you of the Kuwaiti "smoking gun" doesn't it?).
Pemex has five production scenarios regarding future production for Cantarell, which is the second biggest producing field (at 2 mbpd) in the world, behind Ghawar. The most pessimistic scenario envisions a production decline of about 1.5 mbpd, to 520,000 bpd, by the end of 2008. This is a compound decline rate of 44% per year.
Sound improbable? Consider the math. The current oil column, which is the vertical distance between the Gas/Oil Contact (GOC) and the Oil/Water Contact (OWC) is 825'. The oil column is shrinking at the rate of between 248' and 363' per year. As the oil column gets thinner, it is more likely that gas and water will begin to bypass the oil, and the harder that they produce the field, the more likely it is that the gas and water will begin to bypass pockets of oil, reducing the URR.
I believe that the Saudis are facing a similar problem with Ghawar. BTW, Khebab's HL based production plot predicts that Saudi Arabian oil production--at least production from existing Saudi fields--will be down to about 6.5 mbpd in 15 years.
Cantarell may also be giving us a road map as to how and why Russia should start showing a compound annual decline rate in the double digit percentage range.
However...Cantarell is an underwater field. Perhaps Ghawar and Russia will decline more slowly?
As a direct result of horizontal, or maximum reservoir contact, wells, when the decline hits, it tends to be ferocious. For example, the Yibal Field in Oman showed approximately an 80% drop in production over a five year period, once the water hit the horizontal wells. Matt Simmons used Yibal as a model for Ghawar. Following is a good article on Yibal, from the NYT:
http://www.peaceredding.org/Oman's%20Oil%20Yield%20Long%20in%20Decline,%20Shell%20Data%20Show.htm
April 8, 2004
Oman's Oil Yield Long in Decline, Shell Data Show
By JEFF GERTH and STEPHEN LABATON
Excerpt:
The Royal Dutch/Shell Group's oil production in Oman has been declining for years, belying the company's optimistic reports and raising doubts about a vital question in the Middle East: whether new technology can extend the life of huge but mature oil fields.
Internal company documents and technical papers show that the Yibal field, Oman's largest, began to decline rapidly in 1997. Yet Sir Philip Watts, Shell's former chairman, said in an upbeat public report in 2000 that "major advances in drilling" were enabling the company "to extract more from such mature fields." The internal Shell documents suggest that the figure for proven oil reserves in Oman was mistakenly increased in 2000, resulting in a 40 percent overstatement.
But I do think there's increasing pessimism. The WSJ article has this image:
Note that it lists Ghawar as "possibly declining." Burgan, too, though I'd list it as definitely declining.
If had never read Campbell, Defeyyes, Simmons (or seen TOD), but came across just that article alone, I'd say WHOA!
Amyone not aware of PO would probably be puzzled at what this means. What it means to me is that the WSJ has discovered PO. Now its just a matter of giving readers, over time, the bad news
I have been following all of your posts with great interest for some time.
Not too long ago, the WSJ in their new Saturday edition ran an editorial "The Bottomless Well", which basically said that we have so much oil left in the world (Oil Shale, Tar Sands and the like), that no one need worry. I wrote to them as a result of that editorial but they chose not to print my PO-oriented letter. They probably thought I was just some nut up in the woods.
I wonder if they are now coming around? They seem to have an energy-related article almost every day now in the front section. On the front page today they have an article about the Danish island of Samsoe, and the mixed results of its experiment with renewable energy. However, it probably says something that they chose to put the Cantarell-in-decline story on page 4 and the renewables-will-only-succeed-with-ridiculous-subsidies story on page 1.
If we are indeed just a few months away from the beginning of a major energy crisis, what do you believe will be the precipitous events that we should all be watching out for? (I for one won't have to head for the hills, as I am already in the hills.)
Many of us here talk to people about PO, but when these read authoritative sources like the WSJ, countering that there's nothing to worry about with regard to our energy situation, we come off looking like tinfoil-hat wearers. The more people are kept in the dark about the true precariousness of our position, the worse the social crisis will be when the inevitable arrives.
I can only imagine what the headlines will look like once the full awareness of the coming crisis sinks in.
The WSJ does it the way it's supposed to be done: the news and the editorial depts. are kept strictly separate. I don't think the same can be said of the NYT, alas.
I would keep an eye on imports into the US--and light, sweet crude prices. Imports will probably start falling this year, and oil prices rising.
The "opinion" page, on the other hand, was just plain nutty. One gets a mental image of a gaggle of Buckley/Hoover types goosestepping around their desks in pink frocks.
It's really a shame--if they could jettison those guys, they'd have the best paper in the world, IMO.
I too am a subscriber of the WSJ and value the news sections. However, I find that the main editorials are extremely selective in choosing their supporting facts and often beg the question. They are entertaining to read though ...
Like Joe Friday says on "Dragnet" just the fact's m'am!
maybe thats my attraction to it.
westtexas (and others), what do you make of the fact that the weekly EIA reports have remained quite bearish on price (i.e. bullish on inventory)? The crude and products inventory levels seem to be holding up extremely well. Gasoline demand seems to be growing slowly too, at a bit under 1%.
I spend alot of time trying to decipher the components of the simple, "catch all," 85 mbpd number. That is daunting enough. If the price of crude continues to escalate to the next level and production concerns do the same, I will most definitely be looking into this sweet-sour thing.
But look at the price of oil. $62? Maybe we're getting too excited :) I still have to look at yesterday's gasoline supply numbers. My guess is that they will be about 1% higher than last year. Business As Usual.
As an extension I propose
BAU-BOO -> Business As Usual Before Oil is Over
http://tonto.eia.doe.gov/dnav/pet/pet_pri_wco_k_w.htm
That link is the prices page. You can step up one level or more to get other info.
If you look at the countries represented, the different API's and there respective prices, and then match this against what you know is that respective country's daily production number, you can start to develop a picture of the mix of types of oil in the world.
I'm not saying it is easy, you definitely need to play detective, but the basic info is there. You could probably break out the major components of the 85mbpd as far as light, medium, heavy, etc. Then add in the fact that 13% is NGPL and other liquids. What does that compare to? Light-Sweet? Canada produce roughly 1mbpd from tar-sands. I've heard the final product is as good as LSC.But I don't know. Different refinery complexes all over the world are set up differently to deal with what they typically get.
If US oil is coming from Venezuela and Nigeria, I would hope that they are setup to get the most out of that oil, rather than Daqing 33, or whatever.
In the near term I don't know how exactly crucial this mix is. In the longer-term, I would think those involved would change their refineries' capabilities to deal with any known changes to the mix. Perhaps I have to much faith. These are my best guesses.