The Oil Drum

148 comments on Is Oil In a Price Bubble?

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JCK on June 23, 2006 - 5:57pm

Ghawar, the largest producing oil field in the world (found 68 years ago), has produced more than 90% of its 1970's estimated URR.

I would suggest that this indicates that the 1970s estimates were too low. What is the typical production of a field relative to its peak production when 90% exhausted and what is the production of Ghawar now relative to its peak production numbers from the 1980s?

While we cannot rule out the possibility of a sudden, severe collapse, I believe it cannot be taken as a given either.

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westexas on June 23, 2006 - 6:52pm

Matt Simmons' book is worth buying, just for the chapter on Ghawar. He talked to a retired Aramco executive, who said, in his opinion, that there was no way the URR for Ghawar could be more than 70 Gb. To give you an idea of how big 10 Gb (the difference between 60 & 70 Gb) is, it is almost the same as the entire recoverable reserves in the Prudhoe Bay Field, the largest oil field in North America.

The vertical wells in Ghawar started watering out long ago, so the Saudis responded by drilling high tech horizontal wells into a thinning oil column. This has the effect of prolonging the period of high production, but it probably does not increase ultimate production.

When the water does hit the horizontal wells, the resulting production collapse can be dramatic, e.g., the Yibal Field.

I can't think of any other producing region that has been quite so dependent on one field complex. It is not "if," but "when" the oil production in this 68 year old oil field, accounting for about half of Saudi production, starts rapidly declining. It may be happening right now.