Horizontal and Vertical Well Production
Posted by Heading Out on January 18, 2007 - 10:15am
Topic: Supply/Production
Tags: aramco, horizontal wells, natural gas production, UCSB [list all tags]
This post, in a way, is in homage to Connections, which I have just started to watch. I noted today that Leanan had posted that Matt Simmons is giving a talk at UCSB tonight, and I suggested to the Engineer that he might go downstairs and listen. (His report – among other things that the room was too small, but also that Matt did say that we at TOD do “an excellent job” – why thank you, kind sir).
And then I got a bit more curious about the program and found that there is a Conference coming up there on February 9-10 dealing with the need to transition from carbon fuels to renewables. While the current program looks fairly interesting, it is the second in the series. And so I went back to see what they had on the program last year. And there I found a paper on Natural Gas by Chris McGill, from which I took the following graph.
This is the first time that I have seen a comparison of relative production rates between horizontal and vertical wells that were relatively close, so I thought I would pass it on. More under the fold.
One of the topics that has been a matter of some considerable debate on these pages, is the relative changes in well performance when the more advanced technology of horizontal well drilling is used, rather than more conventional extraction using vertical wells. Aramco have noted the considerable increase in relative production rates, which, as they showed in the presentation to CSIS can be raised from perhaps 600 bd from a single vertical well, through 3,000 bd for a normal horizontal well, to some 10,000 bd with the newer maximum reservoir contact wells. To borrow one of their pictures, that shows this:
Now this is the positive side of the coin. By using an increased distribution of well laterals out from the main flow (and subsequently adding valves along the line) Aramco have been able to considerably increase the short-term production from a field, using a limited number of wells.
However, the question has to be, for how long can that production be sustained, given that there is only a limited quantity of fuel down there? And do you get the same amount of oil out in both cases? The plot from Chris McGill would seem to suggest that it might be possible to double the amount of oil coming from an individual well (though it might beg the question as to whether the company might otherwise have sunk two wells rather than one). But it also shows the dramatically shorter life at the higher production rate, in this case (bearing in mind it is a gas well) from almost 100 months of production down to 10.
This would probably be a good place to stop, except that there continues to be debate as to the amount of recoverable oil in the different fields within Saudi Arabia, so I thought I would also post the figures that Aramco gave at the CSIS presentation, since a number of you may not have seen them.
And the Connections twist? Well James Burke always seemed to start with one thing, wander around a whole host of related topics that all led back, in the end to the same thing. And so, if Matt Simmons had not challenged Saudi Aramco, then they would not have produced the above graphs, which would not have led me to wonder about the change in well lifetimes, which would not have got me interested in the UCSB site and the fact that Matt happened to be talking there tonight.
(Yeah, I know - I should probably go back to reading books!)
The graph near the end supports Westexas's contention that the Ghawar bottle could be half empty by now (or more).
But it doesn't support his contention that that is a very big deal. As Ghawar goes, so goes Saudi, so goes the world, we are continuously told.
The Saudis obviously have big expectations for those other fields if they are in fact claiming with a straight face only 28% reserve produced for all their fields.
So, the real question might not be the status of Ghawar.
Maybe the learned among us should be holding forth on those other fields.
And the unlearned.
They usually don't need to be asked. :-)
And maybe the learned among us can explain why the price of a barrel of oil is dropping into the 40s. Did the Peak Oil theory peak?
It bounced off of 50 pretty hard today. Today was options expiration so it had every chance to break 50 and it didnt.
Remember, there is no FUNDAMENTAL reason for oil at $50, or $80 or $20 or $1000. It all has to do with immediate supply and demand. Recently, due to warm weather, there has been plenty of current supply. And as PG pointed out in a post last week - Goldman Sachs reweighted their GSCI index which many pension funds are linked to so there was a spate of futures selling. Personally I think its overdone and we are due for a pretty quick $5-$10 rally. But the only thing Im VERY confident in (barring a world war or bird flu) is that we will be significantly higher in price 5 years hence.
By the way - the back months (2012 is what I watch) did not break the lows of two months ago whereas the front months are more than $10 below those levels.
By the way - the back months (2012 is what I watch) did not break the lows of two months ago whereas the front months are more than $10 below those levels.
I'm glad you pointed that out. For quite a while there, those back months exhibited backwardation. Contango for the front months.
Now we have contango all along the curve.
If prices rise with that contango intact, chaulk one up for peak oil.
A.
There are thousands (millions) of traders who try to explain price every day. Its the same for currencies, stocks, bonds and commodities. Explanations are most always poor.
During the oil price rises since 2003, the biggest "fundamental" reason for price rise had nothing to do with peak oil. Demand was increasing. Supply was also increasing, but capacity was not. What does Peak Oil have to do with it?
Once supply really begins to FALL more than one year in a row at ca. 4% will price be a "result" of Peak Oil. This could be next year. This could be 2012.
Peak: As WT advises, world exports are more important, fundamentally, to the oil price than supply. A lot of countries (e.g. KSA, Venezeula) are subsidizing internal consumption.
Right, at least at the moment that's true. But why not just call internal consumtion demand, even if it is subsidized (Iran, too btw.)? Again, it's still not "peak" right now which "dictating" prices. Right now we can still blame China...
Peak: Interesting enough, in light of the crash in oil prices is that if you look at the eia website their Saudi analysis as of August 2005 projects Saudi exports for 2007 approximately 40% higher than current. As of August 2005 they projected current (2007) Saudi production to be 11.5.
Why is it that we resent "our factories" which make "our products" paid for with "our debt" using "our oil?" Is it because some of the people who work in our factories would like to drive to work? Are they forgetting their place and getting too uppity?
If we don't want China to work for us all we have to do is boycott WalMark, KMart, Target, Best Buy, Home Depot, et al. Then China will stop using "our oil."
But since China is way more cost efficient using "our oil" (despite rumors claiming the opposite, the Chinese factory worker still does not drive an SUV), the Walmarts of this world are the cheapest source of high quality goods (oh, well... medium quality goods). Joe Average can not afford to buy the same products from American or European manufacturers.
Their labor costs are lower. In terms of efficiency using energy that is a totally different issue, and I suspect on the whole their energy efficiency is generally worse.
Higher energy use per unit of GDP *but*
that is normal. Poorer countries have lower GDP but also do more things with that GDP that require relatively more energy.
(example: Healthcare is 1/6th of the US economy, and relatively low energy intensity. It is a much smaller proportion of the Chinese or the Indian economy).
The question is whether the Chinese use 'best practice' on technology ie where the 2 economies are comparable, are they using as modern technology as the US?
In the typical exporting factory I would say yes. In terms of technology and productivity, the Chinese are up there with the best of them.
In the economy as a whole (including transport, power generation, domestic manufacturing, farming etc.) I would say no. For example their typical design of passenger car seems to be about 10 years behind the US.
One complication in the Chinese economy is that because they don't have a full market economy, the prices of energy may be distortedly low. This would seem to be particularly the case with electric power, but to a lesser extent with gasoline.
"And maybe the learned among us can explain why the price of a barrel of oil is dropping into the 40s. Did the Peak Oil theory peak?"
I have suspicions that it is like the mid-80's when they conspired (Bush I/Reagan/KSA) to "Pump like mad" to drop the price to the floor and bankrupt Russia. (that and getting Canada and others to drop the price of gold by selling bullion) Those two things were the ways that Russia at the time got it's hard currency. Their production price I heard was more than the market price for Oil, and I believe it went a long way to bankrupt them.
Now too, we hear that the current price drop is hurting Iran finanically. Hmm.
History might rhyme with the present tune.
Or
I could be totally wrong.
John
That would be nice!
"I could be totally wrong."
At least you have the learning to admit that yourself being wrong is a very likely possibility. I draw my hat before you, Sir.
It is far more likely that the US would never ask KSA to manipulate prices any other way than they decide to themselves because the diplomatic response to such a request would simply be roaring laughter. And even Condi Rice has limits to how much humiliation she can take (albeit they must be very, very low these days). I do understand, though, that Americans have to develop all kinds of conspiracy theories to make themselves believe that not they but someone else gets taken to the cleaners by OPEC and the rest of the oil producing countries. It is, after all, quite devastating to realize that one is the laughing stock of most of the world...
:-)
Well, you can't know anything with 100% certainty (in a philosophical sense) but we are getting into the 70% or so certainty range.
The NY Times reported on 12.23.06:
"A member of the Saudi royal family with knowledge of the discussions between Mr. Cheney and King Abdullah said the king had presented Mr. Cheney with a plan to raise oil production to force down the price, in hopes of causing economic turmoil for Iran without becoming directly involved in a confrontation."
http://www.nytimes.com/2006/12/22/world/middleeast/22saudi.html?pagewant...
... or "history might rhyme with present time".
(double post)
I don't buy the whole KSA wanting to bankrupt Iran. That's basically somewhere between speculation and a rumor and probably closer to a rumor (least credibility). KSA needs the money nearly as much as Iran does. Saudi Arabia is facing a massive population explosion, and massive unemployment among the younger generation. They really can't afford to forego money that would better be spent on development for short term political grandstanding. That isn't to say their leadership won't make mistakes, but if they are smart in the long run they should fear their own populace a lot more than they fear Iran.
Nagorak writes - "I don't buy the whole KSA wanting to bankrupt Iran. That's basically somewhere between speculation and a rumor and probably closer to a rumor (least credibility)."
It's pretty much accepted that KSA (Sunni) and Iran (Shia) both want to diminish each other's prominence in the world. We should remember that the more fervent adherents of these two parties hate each other more than they hate America.
There have been numerous other media articles on this subject. Web search around for them.
I was surprised to learn that about 80% of Shia are known as "Twelevers". Essentially they are messianic and awaiting the 12th Imām to return.
See - http://en.wikipedia.org/wiki/Twelvers
"Ithnāˤashariyya) are those Shiˤa Muslims who believe there were twelve Imāms, as distinct from Ismaili & Zaidi Shi'ite Muslims, who believe in a different number of Imams or in a different path of succession. Approximately 80% of Shi'a are Twelvers and they are the largest Shi'a school of thought, predominant in Azerbaijan, Iran, Iraq, Lebanon and Bahrain."
"The concept of Imāms and the Mahdi
The Shi'a Imams, the first of which is ˤAlī ibn Abī Tālib, are viewed to be infallible. It is an important aspect of Shīˤa theology that they are, however, not prophets (nabī) nor messengers (rasūl) but instead carry out Muhammad's message. They are considered as superior as all prophets and messengers except the last one. Shīˤa Muslims view all religions and groups that accept prophets or messengers after Muħammad to be heathen or heretical. ***They believe the last (who also is the twelfth and current) Imām, the Mahdī, is in hiding by the order of God and will reappear by God's command.***"
Shia messianic madmen want nukes just to be equal to our own messianic madmen with nukes. Go figure. And while you are figuring move that Doomsday clock several ticks forward.
Well you have a good point. Maybe I am under estimating human stupidity at work.
The graph is misleading, in that it appears to give equal weighting to all of the principal Saudi oil fields.
In reality, Ghawar accounts, or accounted, for more than half of Saudi production.
So, the sum of the production of all other Saudi oil fields did not equal the recent production from Ghawar.
The HL method gives Saudi Arabia remaining URR of about 75 Gb, and it estimates that Saudi Arabia as a whole is 60% depleted (from conventional sources).
Insofar as I know, there is no example of a large producing region showing steadily rising production beyond the 60% of Qt mark, and Saudi Arabia, as predicted by the HL model, is showing declining production, with projected First Quarter 2007 production down by over 11% from its 2005 high.
The graph is misleading, in that it appears to give equal weighting to all of the principal Saudi oil field.
Possibly. I certainly wasn't misled. I don't think a careful reader of graphs would be.
As far back as 2004, the Saudis were to a large extent agreeing with you about Ghawar. But they were claiming back then that other fields will take up the slack.
Your case rests on HL plots and current production data.
However the Saudi's have a long history of being disciplined about production, and have used their ability to be a "swing producer" to great effect.
How can Hubbert Linearization have predictive value for a country that has restrained production for political reasons, like Saudi Arabia?
(Before I get slammed for repetitive posts, note that I am responding to a question.)
There have only been two swing producers of consequence, Texas and Saudi Arabia. Saudi Arabia, like Texas, produced for long periods of time at less than capacity.
The Texas HL plot is very noisy, up until the peak, but we can get a solid Qt estimate, and we know when it peaked, at a higher percentage of depletion than did the overall Lower 48. Consequently, Texas has had a sharper post-peak decline rate, about 4%, than the overall Lower 48, about 2%.
Saudi Arabia, in 2006, was at the same stage of depletion at which Texas started declining in 1973. See related article: http://www.energybulletin.net/16459.html
Unlike Texas, Saudi Arabia has had a very stable HL plot, with a small change in inflection in the past three years or so, reflecting a ramp up in production, which we also saw in Texas, right before it peaked.
Hubbert predicted that the Lower 48, inclusive of Texas, would peak between 1966 and 1971 (it peaked in 1970). Khebab demonstrated that the post-peak Lower 48 cumulative production was basically exactly what the HL model predicted it would be.
Deffeyes predicted that world crude oil production, inclusive of Saudi Arabia, was most likely to start declining in 2006, which is what it has done.
"Unlike Texas, Saudi Arabia has had a very stable HL plot, with a small change in inflection in the past three years or so, reflecting a ramp up in production, which we also saw in Texas, right before it peaked."
Only if you count what you know, or know what you can count. There's the rub. No one knows.
By the way, what did the HL method say about say about that "stable" plot line in 1978 to 1985? Do stable plots often go wonky like that?
Roger Conner known to you as ThatsItImout
The model is HL.
My problem is I can't find an article that rigorously tests the model.
The sample of large producing regions includes: Texas, Saudia Arabia, North Sea, Russia, GOM. n=6 (others?)
Is there an article that rigorously applies HL to the sample and analyses goodness of fit etc?
Is there a piece the applies HL rigorously across all large oil-producing regions?
Thanks, Asebius.
Asebius, that is a point I have been trying to convey forever here on TOD, but mostly ignored......
Saudi offshore: how much is there, and why are they paying the highest rates for rigs in history to go offshore if they have plenty onshore?
Khaurais, how much? Is it the replacement super giant? Why are they spending billions on it if it is no good?
The empty quarter, how much? They claim potential riches beyond compare (by the projectionions the Saudi's give, we must have only seen the tip of the iceberg at Ghawar) How much?
Can anyone really do an HL on all this mystery oil? If so, what is the HL calculation for URR in and offshore Saudi Arabia?
Remember, these are things you would like to have some info about before you call your broker and sink your retirement fund into oil futures! :-)
Roger Conner known to you as ThatsItImout
Agreed.
Hubbert's curve is a mathematical model that it's proponents claim fits all large oil producing regions.
If the sample size is small (as it is) and if the goodness of fit when rigorously applied to all members of the sample is not the best, then much rests on acquiring new data and analyzing it. (And developing better models).
Small sample size is a problem in and of itself.
In the climate change world, the sample is unfortunately one. So there has been a huge effort in data acquisition and a proliferation of models before the grand picture gets clearer.
My (previously posted) "Coincidences" Post:
Heaven help us if this is considered rigorous analysis.
I agree that having to limit ourselves to the earth is a problem, but if you could provide us with case histories of oil production on other planets, perhaps we could broaden the sample.
The regions that I have referenced account for about 40% of all oil produced to date.
Perhaps you could provide us with a list of producing regions showing rising production where all of their top 10 producing oil fields are in decline?
In any case, as I predicted, Saudi oil production is declining. Let me know when Saudi oil production exceeds 9.55 mbpd on an annual basis.
Thank you. I enjoy your posts immensely and appreciate the necessary repetitions. Folks can be slow learners when their mental baggage drags them down.
pete
The only "information" which would change the analysis of the Saudi HL is the changing of the size of the "field". Comparison would be the widening of the US "field" to include Alaska and/or Offshore production.
Now the Saudi "field" is being widened to include offshore. How much can this really change the HL-Analysis? Well, if another Gawar is out there, then a lot. If it's anything the size of a normal superfield, not enough to change peak date, I would imagine. Post Peak decline would simply be dampened, less steep...
Let us not be absurd. Saudi has been producing from offshore for half a century. Safaniya was brought on line in 1957, the other offshore fields soon after.
Ron Patterson
Frankly, this is the best we can get. SA is not providing any verifiable data at all, just unlimited claims.
Imo, just look at what they are doing with rigs. Their number of rigs looking for oil is up 3x in 2 years, along with a constantly moving target of how many rigs they really want - last year the target was 80, now 130, maybe they will be targeting 180 by fall, and when they actually reach this number their count will be up 10x. Does anybody think the production/well is stable? btw, some of these rigs are going for 500k/d, 4-year contracts, plus transport costs from our gulf to theirs...
SOme people think sa is floating on oil, just dig anywhere. They already went to the bottom of the empty quarter to develop shayhah, their only young field, now the focus is expensive off shore. All others are very old, c1950; horizontals are watering out... even the use of horizontals is a sign the end is near, whether in the north sea, off mexico, or the sands of arabia. We're into the second half of this game, maybe well in.
Another way to look at the situation is, what is the lifetime of a giant? Ghawar is unique, but the others are not... they are all due for retirement. Repeat after me: there are no new fields, only reworks of old fields, some abandoned long ago. And, iran/iraq/q8 are all in the same boat. Not running out, but running down. Tanker rates are down sharply...
ThatsItIMout...
Billions is not that much money anymore. At these oil prices 80 million barrels of oil has a market price of 4 billion USD. That is how much money the world spends on oil EVERY DAY. The US itself spend a billion on oil EVERY DAY - that is only a few dollars per person.
The way I see it is the model is just a model and so it depends crucially on the assumptions you put in. But if you accept that the peak occurs at around the point where half the worlds oil is produced and you look at the estimates of URR to estimate when we will reach the peak, you find that the range of outcomes spans only a small number of years (less than 10). In other words the difference in the GLOBAL peak whether you make really pessimistic URR or really optimistic URR assumptions is not that much. You might estimate peak is 2009 with an error of 4 years or so. So the mystery about the actual URR doesn't really affect the reality in front of us - peak is soon (or is now) and we are not and will not be ready.
Bearing that in mind, the micro questions of exactly how much oil Saudi has or if there is an new giant offshore is largely irrelevant. The problem is we are consuming way to rapidly for it to materially change the outcome.
does that plot from the horizontal wells production go to zero? if so that looks like a 100% falloff in 3 months, as compared to the few % per month decline from vertical wells.
Does a similar production profile follow for oil, or is the suddenness of this falloff just associated w/ gas?
that would depend on the artificial lift method and reservoir mechanics. horizontal wells do present challenges and limts