The Oil Drum | On production rates and refinery capacity

82 comments on On production rates and refinery capacity

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Stuart Staniford on April 11, 2006 - 12:46pm

Nice catch on that Saudi story with the "and the development of new fields". If it wasn't just a slip of the tongue, it's almost like they are admitting being at peak. I note that 8% of 9.5mbpd is 760,000 b/d. So by your arithmetic, they'd be off by 140,000 b/d, which is about 1.5% of production. The answer is pretty sensitive to the exact productivity of new wells, however.

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smekhovo on April 11, 2006 - 1:22pm

I think by now Aramco and the oil ministry have both <suppressio veri> and <suggestio falsi> pretty much down pat.

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Oil CEO on April 11, 2006 - 2:12pm

smekhovo,

The next time you post look down at the html instructions beneath the "Post" button. To create italics, put a "<eye>" before the phrase you want italicized and an "</eye>" afterwards. I'm substituting "eye" for the letter "i" above.

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MUDLOGGER on April 11, 2006 - 1:50pm

My understanding of the current situation is that SA wish to jump to about 120 rigs (of all types) in the near future and that they currently have about 80 working rigs.
These new rigs will include Jack ups and possibly workover hoists. One thing seems certain, You dont need to increase your fleet so massively unless you have or are about to have a problem with production flows.

So may be 16th December 2005 was the date after all?

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Stuart Staniford on April 11, 2006 - 3:52pm

I double-checked the Baker Hughes sheet, and it says 42 on oil for March 06 (plus 18 on gas for a total of 60). In Feb 06, it was 36 on oil and 16 on gas. What's your source for 80?

Here's the curve according to Baker-Hughes:

Oil rig count has been cruising along in the 15-20 range for a number of years, and then takes a sharp upturn in the beginning of 2005. Besides being about the beginning of the global production plateau, if we compare that to Saudi production specifically (the green line is the JODI version of Saudi production), we can see that the sharp upturn in rigs begans right after a litle drop in production at the beginning of 05. The upturn in rigs has so far not resulted in any production increase to speak of.

Does it smells like a duck? Walk like a duck? Quack like a duck?

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MUDLOGGER on April 11, 2006 - 4:26pm

Quack!

Source: 1) A mate in SACo. 2) Recent presentation given at Bahrain. Of course, both could be wrong. But the remarkable headline at the Bahrain conference, was the level of intended expansion to 120 rigs. This did not mention type, or over what period.

My thoughts? If they need to extract heavier oils, then lots of rigs drilling vertically with steam - flushing may be the plan. Bottle brush drilling could be another way to try and ramp up lighter crude reservoirs. Some of these additional rigs may be intended for a major exploration campaign.

BTW: SA is not the only country in the region looking to ramp up the rig count all appear to intend to do so.

Rig builders, Service Companies etc look to be busy for the next few years.

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Heading Out on April 11, 2006 - 5:17pm

Over the lifetime of this site the SA rig targets have gone from 70 to 100 to now 120. However, when I do a quick Google search the first site up has this. from last September.

Yet, little noticed by the outside world, the Saudis are making some bold moves. In recent months, Saudi Aramco, the national oil company, has been rapidly inking deals with drilling rig operators and oil field contractors. Some 70 drilling rigs are now operating in the kingdom, up from 55 in 2004 and about 20 in the mid-1990s.
By next year, Aramco aims to have 110 rigs drilling, although that may be unreachable because of fierce competition for equipment.

The EIA states that by the end of this year they will have 90 operating, doubling the number that were operating in 2004.

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westexas on April 11, 2006 - 7:25pm

Good article published one year ago:

http://english.aljazeera.net/NR/exeres/08B97BCF-7BE6-4F1D-A846-7ACB9B0F8894.htm
Bank says Saudi's top field in decline
By Adam Porter in Perpignan, France

Excerpt:

Coxe dismisses Saudi claims that the country can produce extra capacity to satisfy surging demand. He notes that Saudi promises to increase production last year failed to materialise.

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Heading Out on April 11, 2006 - 3:26pm

It actually depends on 3 numbers, the number of wells per rig (which in turn depends on whether they are straight verticals, horizontals or bottlebrush); the production per well (ditto) and the success rate, which is dropping. Over the past year I have tried to zero in on these, with justifications where I felt I could make them. The per well number is now below 4,000 bd, but whether it is below 3,500

One of the key factors in the USGS statistical evaluation was that they could not find cases where the Saudi's had drilled dry holes - that is no longer the way it is.

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totoneila on April 11, 2006 - 3:45pm

Hello TODers,

8% decline without any more infield extraction? Sounds like a Hubbert Cliff to me. Adding more infield extraction only TEMPORARILY SLOWS this 8% decline, then when these new infield wells water out in a relatively short timeframe, then aggregate yearly decline jumps to what:

10%,12%,15%,20% ???? --Oh crap! And exports will decline even faster [Westexas & Khehab's theory]!

ARAMCO Quote: "This maintain potential drilling in mature fields combined with a multitude of remedial actions and the development of new fields, with long plateau lives, lowers the composite decline rate of producing fields to around 2%," the spokesman said."

Even Alan Greenspan must be impressed with the carefully conceived 'mumbo-jumbo' in this statement. Since when has any oilfield had a 'long plateau life'?-->Sorry, but the extraction profile follows a bell curve. The overall Saudi decline rate might be 2% for one year, 4% the next, 6% for postpeak year three, year 4 = 8% [now back to pre-remedial aggregate], then getting progressively worse each year thereafter. In short, M. Simmons's BIG STRAW THEORY being confirmed.

Shaw's Law: Fastest beer consumption/second occurs at the moment they fear the bartender will take it away from them at closing time. An unfinished beer is a terrible thing to waste!

Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?

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Cherenkov on April 11, 2006 - 5:02pm

Bob,

Exactly. The Yibal field in Oman is an exact correlative to the Ghawar and other fields in SA undergoing extensive advanced extraction techniques. The Yibal collapsed spectacularly.

The collapse of Ghawar is imminent. Three years at best and we will see double-digit production decreases.

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