<Greenspan on Oil DependenceThe Oil DrumDrumBeat: June 8, 2006>

86 comments on Pessimists at EIA strike back

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billyt on June 8, 2006 - 3:03am Permalink | Subthread | Parent | Comments top
matt simmons said:

"the world peaks when SA peaks."

so SA peaked in 1980, then have we already peaked and have been in decline for 26 yrs?

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Luis de Sousa on June 8, 2006 - 3:41am Permalink | Subthread | Parent | Comments top
I'm not responsible for what Matt Simmons says.

Remmember that a country's production profile can have several peaks. The term 'peak' usually refers to the highest of those peaks.

For instance, the US all-time peak was in 1970, but a new peak was experienced when Prudoe Bay came on stream, this time somewhat lower than the first.

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Luis de Sousa on June 8, 2006 - 4:01am Permalink | Subthread | Parent | Comments top
Saudi Arabia production from BP's Statistical Review:

Two peaks:

1980 - 10,21 MBD
2004 - 10,58 MBD

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westexas on June 8, 2006 - 10:30am Permalink | Subthread | Parent | Comments top
Texas showed a similar pattern:  

  1.  2,948 mbpd (from 2,018 mbpd in 1949)

  2.  3,452 mbpd (from 2,437 mbpd in 1960)

The long term Texas decline rate has been about 4.1% per year, after peaking in 1972.  Interesting that the admitted Saudi decline is 5% year over year. It's possible that Saudi production may have been falling for a while, but they decided that they couldn't keep depleting their storage.  
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bradshaw on June 8, 2006 - 11:07am Permalink | Subthread | Parent | Comments top
Here's another chart on SA Production (from the folks over at Econbrowser)

Data source: EIA and Naimi's remarks



I'm no expert, but that sure does look like a Plateau...

-C.

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Luis de Sousa on June 8, 2006 - 11:30am Permalink | Subthread | Parent | Comments top
The difference in numbers from EIA to BP is probably LNG. Without LNG the all-time peak probably remains in 1980.

If SA is peaking their remaining reserves are likely lower than those of Russia.

By the way this month ASPO's newsletter reassesses SA.

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bradshaw on June 8, 2006 - 1:14pm Permalink | Subthread | Parent | Comments top
Good read, thanks for the post.


Production stands at 9 Mb/d giving a low depletion rate of 1.9%,, which itself is reason to doubt the higher official reserve estimates The country is endeavouring to offset the natural decline of its aging fields by infill drilling as well as advanced horizontal drilling to tap the less productive zones in the reservoir. A tar-seal on the eastern flank of Ghawar, deprives it of a natural water drive, meaning that massive amounts of water have to be injected. It is also bringing on new much smaller fields, including offshore extensions. While the country claims to be able to increase production to 12 Mb/d, it is here thought more likely that it will be hard pressed to hold present production, which is here modelled to remain about flat for another twenty years before decline sets in at about 3% a year. It may not be able even to do that.

  • 1.9% decline
  • flat for 20 years before decline sets in at 3%

Really?  Plateau for 20 years?  Wow...we should be so lucky

-C.

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veganmaster on June 8, 2006 - 6:36pm Permalink | Subthread | Parent | Comments top
A 20-year plateau, then only 3% depletion per year. HAHA, good one.  Are we talking about Saudi Arabian Oil production, or just somebody's wet dream?  I mean seriously, where are the unicorns?
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totoneila on June 8, 2006 - 3:02pm Permalink | Subthread | Parent | Comments top
Hello Bradshaw & Stuart & others,

Thxs for all the graphs being posted.  If one assumes the current SA plateau is due to lots of superstraw tech in numerous small fields/geopockets, along with continued enhancement of the normal secondary and tertiary water-drive tech in the big, old fields: is there anyway to statistically calculate when this plateau will end, and then extrapolate the final SA 'geologic' depletion rate, the overriding assumption being that they are pumping flatout as much as possible to maximize IMMEDIATE economic funds?

Or is it statistically more likely that a 'logistic' plateau/depletion control regimen is being imposed by the Saudis to maximize FUTURE economic returns?  In other words, they are going gangbusters to get the infrastructure installed now, but purposely choking back production to retain 'swing producer' pricing privileges over possibly Russia and other countries?  Every rig being used in SA is one less that can be used elsewhere; the idea being the less oil the other countries can bring to the market, the more pricing power is retained by the Saudi Princes.

The ideal situation for the Saudis/OPEC would be if they possessed sufficient combined economic/geologic clout to outbid everybody for rigs and other infrastructure, even if the equipment was just parked and not used.  By having 'First Mover Status' of fully developing the complete extent of their low-cost extraction system: they can thereby force higher costs to other oil producers and increased profits for themselves while continuing to plateau-choke production for as long as possible.

This strategy should work as long as the Saudis can produce oil vastly cheaper/barrel than any other oil producers.  Of course, when ultimate geologic depletion rears its ugly head, this strategy will be much harder to deploy as the extraction price delta/barrel narrows to other producers, but by already having the infrastructure in early and already paid for: the profits will accrue faster to the Saudis.

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

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jkissing on June 12, 2006 - 7:11pm Permalink | Subthread | Parent | Comments top
Actually, it looks artificial. Saudi fields decline every month, occasional new projects and/or wells make up the difference, which would generate a ragged line even if overall was level. Looks like oil flows raggedly into storage tanks, comes out smoothly. otoh, maybe the recent decline is real...
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