The Oil Drum

Of course, the issue still returns to OIP ((Oil In Place) and URR (Ultimate Recoverable Reserves).  

It always amuses me to hear people, when the issue of URR is brought up, suddenly often back peddle and say "Well that don't mean anything, what matters is how much can be produced on a daily, weekly, yearly basis, etc.", and then start talking about things like labor shortages, political or war issues, equipment shortages and failures etc.

But if we are discussing geological depletion and using the Hubbert Linearization (HL) none of these "above ground issues" are issues.
The whole idea of HL and geological depletion is based on an very correct count of the starting point.  Westexas often makes the argument, the very correct one I think, that at about 50% of Qt, the production will begin to drop, and if you have been using water injection, horizontal drills, and bottle brush along with the 4D finding methods, it may drop quite harshly, since you have been able to evacuate the reservior so efficiently.

Notice, however, the importance of approximate 50% of Qt.  To have that number, you must have had a very clear count of what 100% Qt was, or an accurate count of OIP and URR.

This is the problem in fields that have not been third party audited and operated by a firm that has been let us say "restrained" in it's release of information (I may be talking about Aramco, all through it's history, but even more so since 1982.

It goes without saying that the larger the oil fields discussed, the more even a tiny measurement error can mean.  A couple of percent difference in URR numbers either way can mean a huge surprise either good or bad, and could move the so called "peak" date by decades.   Given that Aramco themselves have estimated their own URR with as much as 100% spread in URR, and outside "guessers" have put the overall OIP and URR both well above and well below Aramco's own top and and bottom estimates,

At some point we are going to have to admit that we have NO IDEA what Saudi OIP and URR ever were, and never did.  This is what we should be letting the American people know, and it is equally true of the rest of OPEC and Venesuala and Mexico, among others.  It is sheer guesswork.

Westexes makes the case that HL worked on Texas, and worked on the Lower 48.  To a lesser extent, it has worked on the part of Alaska we have explored and drilled, and on the North Sea.  That is because we started with relatively good information.  

There are places where it's anybody's guess:  The U.S. Outer Continental Shelf comes to mind, as does most deep ocean prospects.  Canada is still guesswork in many places and so is frontier Siberia.  These are big areas.

Why would an assumption of the possibility of upside surprise be viable in some of these cases?   The major reason is that from 1982 through 1998, oil prices were at historic low prices, inflation adjusted.  Oil was flowing cheap and easy from Saudi Arabia, Canterell, the North Sea.  Why would oil companies who were busting their butt to return any dividend at all to their own investors and shareholders, spend big money exploring in an environment in which they were having trouble even maintaining their production staff and and infrastructure?  Most effort was going to the merger and acquisition efforts just to survive.

Think about that time span again, 1982 through 1998...and with a bit of lag before the money started pouring back in, even a bit longer, you might as well say 20 years.

So we could see some real upside surprises....but the inverse is true too.
I have become more and more convinced that our first and greatest effort MUST be to let the public know that we are running completely blind, and that all possible "case hardening" and contingency planning must be underway.  In another string on TOD, there is a story pulled from Energybulletin about the demise of JIT (Just In Time) inventory and planning.

Right now, I cannot imagine anything more dangerous than JIT applied to energy, natural gas and liquid fuel sources.  We should be expanding and diversifying our reserve storage, and shifting control outward to small companies, counties, states, maintainence utilities, even hospitals and healthcare agencies.  This is the single most valuable thing we can do on a large scale now.  Sorry about jumping on the soapbox, but please, think about what I am proposing.  It has very little downside and great potential to prevent chaos.

Roger Conner known to you as ThatsItImout