Further Saudi Arabia Discussions
Posted by Stuart Staniford on April 6, 2007 - 9:05am
Topic: Supply/Production
Tags: ghawar, peak oil, saudi arabia [list all tags]
And the rest of North Ghawar might not be too far behind... Bob Shaw found this picture here:
The temptation to publish all this gorgeous reservoir simulation porn has just been overwhelming to Aramco's engineers I guess...
This post is a place to continue the Saudi Arabia discussion. To keep the ball rolling, I've extended a couple of my graphs. The above graph is the production data, with all series extended back to January 1995, or as far back as they are available online. I've also added a fifth series from the Oil and Gas Journal. Plotted on the picture is Saudi Arabia's OPEC oil quota.
I showed production against the quota since some folks have been suggesting that perhaps the recent declines represent Saudi Arabia's attempt to return to quota. Here's a production index constructed from the five series, together with quota (and rig count at top).
I don't find the "return to quota" explanation very appealing, since the decline begins over a year before quota starts to drop, when prices were rising, and the index has now gone below quota despite continued fairly high prices. But another few months of data should say a lot more.
"I don't find the "return to quota" explanation very appealing"
Looks more like a "return to below quota" at a glance.
"I don't find the "return to quota" explanation very appealing"
Just 'glancing' at the first chart - without the average production, I see that Saudi production tends to lead the quotas (especially for IEA data). That is what it is doing now. I fail to see an anomoly based on the chart..
----
My grandfather pumped oil with an engine-house,
my father pumped oil with a 20 lb. electric motor,
can't I just pump it online?
But I'd say that they're historically quick to lead on the upside and reluctant to lead on the downside. You'll also notice that when prices were going up, or were staying high, they were far exceeding the quota (most likely to take advantage of the high prices). So that last bit of the trend, being quick to lead on towards the downside, and at or below quota during times of high prices, represents a departure from history (over the span of that graph) to me.
Re: So that last bit of the trend... represents a departure from history (over the span of that graph) to me.
Yes but oil inventories are still at record level for OCDE countries and OPEC has historically always used inventory levels as a way to assess the demand and supply equilibrium.
ROFLMAO Great tag line. Keep that.
Actually to me it looks like quotas are reactive to what production is already doing.
Request
I'll put up a new thread after I get home tonight (Pacific time) -- as this one is getting full -- but in the meantime, if anyone isn't busy and wants to help the project, see if you can dig out any information that bears on the thickness of the Arab D reservoir throughout Ghawar, and particularly in North 'Ain Dar. We have the Greg Croft average numbers for each area, but if someone can find a map or picture that shows in detail how the reservoir thickness varies throughout the topography, I think that would be a big help.
Don't know if this is what you are looking for but here is a title: Geostatistical Model for the Arab-D Reservoir, North 'Ain Dar Pilot, Ghawar Field, Saudi Arabia: An Improved Reservoir Simulation Model.
Behind firewall at:
http://www.gulfpetrolink.net/publication/vol1.php
This one has lots of pretty pictures.
http://www.searchanddiscovery.com/documents/2004/afifi01/index.htm
Deleted
Sorry, I just posted the Greg Croft URL before realizing you already had it.
Hello SS,
Jean Laherrere has an excellent, next generation 3D rendering of Ghawar looking from the SW --> NE [opposite direction of garyp's post]:
http://lpsc.in2p3.fr/gpr/Dautreppe/Laherrere/Image78.jpg
This might come in handy later, maybe Jean has original software.
F_F & Euan: I am fascinated with Uthmaniyah's far eastern ridgeline. If you look at GaryP's cross-sections and compare with Ghawar Oil Sat graphic--hasn't the waterfront rolled over the crest? How is the fractional flow skewed, watercut ratio best managed, and reservoir sweep best accomplished with pressurized water going downhill? I have no idea, hope you can help SS out.
Where do garyp's slices go on the Laherrere 3D and on this Uthmaniyah Graph [scroll down inside website please]:
http://home.entouch.net/dmd/ghawar.htm
Notice this above graphic from Alexander was in 1996-- has Uthmaniyah had a lot worse waterfront problems since then? We can't see the Western side of the Eastern Crest
My guess is the thick green rollover about halfway down Uthmaniyah Eastern ridge, but on the unseen western side in the Ghawar Oil Sat is where those slices best match up--but you guys might have better ideas!
From Greg Croft website:
--------------------------------
The fact that the Ghawar oil-water contact is substantially higher on the west flank than on the east indicates a hydrodynamic gradient to the east, which may explain the much larger volume of oil in Ghawar than in Khurais.
The oil-water contact at Ghawar dips to the northeast, dipping more than 660 feet between the southwest end of Haradh and the Fazran area.
-------------------------------------
This suggests to me that Aramco should have put Uthmaniyah's water injection more heavily on the west side to drive the oil east and upcrest--they did the opposite [eastside injection wells watered over the crest in a western direction instead]. Could you explain?
Another thing from Ghawar Oil Sat graphic: why is the Southern lower half of Abqaiq orange instead of yellow--what is the significance? Major reservoir sweep problems compared to Northern lower half, which is solid yellow?
One last thing:
When I blow up the PDF of the Ghawar Oil Sat graphic with the magnifying tool to 1600%--you get much more detail--for example the Shedgum to Uthmaniyah thin connection looks all blue at normal resolution but shows green breakthrough at high magnification. Farzan is only 3 miles wide at its max [approx. 3 cells wide at 1600%]--can this be a tool to generate our own cells for our own Ghawar graphics?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob, your doing an amazing job here digging up all this stuff - heres the picture you posted. Does Lahererere indicate what the coluours mean here? I'll respond to your questions in a separate post
http://lpsc.in2p3.fr/gpr/Dautreppe/Laherrere/Image78.jpg
Any idea on the data source(s) for this impressive graphic ? Date of data ?
My guess is that this is an educated guess for today based on available information.
It may be worth noting that the most important thing I have learned so far from this extended discussion is NOT when Ghawar production will drop
A) Now
B) Very Soon
C) Soon
although that it is critically important.
The most important lesson is that it will be a very sudden and rapid collapse for each affected section, and the "at risk" sections (see multiple choice above) total an irreplacable ~4 million b/day !
Best Hopes,
Alan
Hello Euan,
Sorry, can't help with any more details on the graphic--I don't know French.
The TopToders have got to carry the ball forward. I have practically turned into a zombie trying to stay up with you guys. I have even been googling, then reading sponge coring links after F_F mentioned it---is that sick? =)
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
OK Bob, doing the same as yesterday (and wasting even more time).
First off the modeling grid from the "When 4D seismic is not available: Alternative Monitoring Scenarios..." and "Reservoir Monitoring with Permanent Bore Hole sensors", both by Shiv Dasgupta are the same. You can have great fun lining the things up and finding that there are more bore holes on one than there are on the other. That means we have the top down data from one and the cross section data from the other to compare.
Doing the now normal and arranging each on top of the 3D view leads to the two resultant image below. Its harder to decide exactly where these lie this time, but I think this is about right. I've highlighted the area I think is oil from the cross section in the overlay.
Thus in 2004 there was a good 120feet of oil across a reasonable area of Uthmaniyah.
Everyone can now commence saying I've got it all wrong !
Has anyone "picked up the phone" so to speak and called/wrote greg croft, Laherrere and asked to signon and take a look at the discussions here? Matt Simmons talked about this series of posts(financialsense.com), etc.
These two as an example have put alot of work into these pictures and graphs, would they be interested in the discussions here?
How about sending out emails to Heinberg, Croft, Laherrere, Simmons and asking them to take a look and maybe comment?
Worth a try.
If you refer to yesterday's discussion about how North Ghawar will or has played out would you rather
1. Accept the fact that North Ghawar is watered out and it is reflected in that 1 MMBOPD production drop and deal with it.
2. Know that if that drop hasn't occurred it is bound to happen, it is in process right now and who knows where we will end up. Some other problem has or is occurring.
Next stop Uthmaniyah.
Hi Stuart
Euan Mearns argued here that the average oil production per well did not show any sign of decline until 2005. are you arguing that it dropped actually since this date.? what's the difference between number of rigs and number of wells, is it the same?
Gilles,
The post you reference is a post where the comments are tremendously important. Euan's post had a few pretty big and important holes shot in it in the comments section...visit these links for the greatest hits...
Ace's original post proposing the effects of MRC/Hori wells on well productivity: http://europe.theoildrum.com/node/2372#comment-170432
Well productivity with cumulative horizontal wells on same graph: http://europe.theoildrum.com/node/2372#comment-171280
Well productivity revised for 3 to 1, vertical to horizontal equivalent: http://europe.theoildrum.com/node/2372#comment-170649
I addressed the issues I saw with Euan's post toward the end of Water in the Gas Tank
What Substrate said. Read the comments. IMO, the meat grinder of TOD pretty much blew Euan's post right out of the water.
Which doesn't mean he's wrong, but if he's right, that post doesn't provide any support.
Leanan, since you are an editor of The Oil Drum, I think you really need to back this comment up with some pretty meaty details.
As far as I was aware I was merely reporting a data set and making what I still consider to be reasonable interpretations. The main weakness was the fact the data series stop in 2005 - and I did not feel inclined to simply make up data to plug the gap.
So a detailed response please of all the errors and weaknesses in what I presented. I think you also need to add some details on how you would interpret the OPEC data - or would you simply choose to ignore them?
I'm just the news editor. I have no say in the content of the other articles.
It's all laid out in the comments to your post. Substrate and Darwinian have already posted in this thread the most salient points.
Don't get upset. This is how it's supposed to work. This is TOD at its best.
I agree. That's TOD at its best.
All the contrubtors take their knocks. I just wish I had as much to offer the board as you.
Euan keep posting, without great contributers such as you TOD suffers.
I'm not upset I'm just sober and waiting for a response. WRT to the opinon you expressed I would have thought you should have at least 2 to 3 good arguments at your fingertips and could at least have the courtesy to jot these down for everyone's benefit.
Hi guys
I didn't intend to cause any trouble between all TOD contributors ;-). I really find you're all doing a fantastic job, and I understand quite well that there may be some divergence and/or dispute to establish the truth, considering the complexity of the problem.
I DO believe that Euan's approach is potentially interesting - but may be a little bit more argumented : for instance, do we see, or not, a clear variation of the average oil production per well in the historic cases of peak production? (Texas, US, North Sea?) Is there a linear trend similar to HL, or an abrupt phase transition? and of course, what is the situation of KSA since 2005 ? looking at Stuart's plots, it seems obvious that nothing very special happened before 2005 - just chaotic production caused by the "swing state" status of KSA, but that something actually changed after 2005. It confirms the study I made on EIA's forecasts vs real production, showing a sudden plateau after June 2005, which was not planned at all. So is there a clear indicator that we can construct, clearly showing something has changed (and may be rotten) in the Kingdom of Arabia?
Gilles - I think you are entirely right that the avearge well porductivity with time needs to be examined in other countries - I've been thinking about doing this and will now give this priority.
The key points to me were the ones you conceded (or at least, it seemed to me that you did - perhaps I am mistaken).
1) The data ends just before it gets interesting. Therefore, it doesn't prove your point. It doesn't prove Stuart's point. The data you presented is mute on the period we were discussing.
2) The horizontal vs. vertical wells. Your graph looks very different when that is taken into account (and you posted it yourself, to your credit).
Given those two issues, the rest really doesn't matter.
Leanan, thanks for repsonding. As I've said here on several occassions the only time your hear the word crash used in the oil industry is with reference to stock prices and hellicopters.
So if Saudi production was about to crash (as the current decline rate would suggest if this were natural decline) I'd expect to see some evidence of trouble ahead leading up to 2006 (though note my comment in response to Gilles). I still find evidence for trouble ahead lacking in the average well productivity data. I'm sorry the data series ends in 2005 and as noted I feel disinclined to make data up to plug the gap.
I've also indicated that I find the horizontal versus vertical well debate to be rather sterile. The fact is that the Saudis used to have vertical wells that did 50,000 + bpd, but as these have progresively watered out, the productivity of these wells has declined.
The Saudis are using horizontal wells in two main settings:
1. Short radius horizontals placed at the top of old vertical wells to provide a tool for balancing dry oil production with wet oil production to acieve a target water cut.
2. Single bore and multilateral horizontal wells to produce oil from low permeability reservoirs (which are the norm throughout this part of the Arabian Gulf). These reservoirs are very difficult to produce at high flow rate using vertical wells.
I'm afraid I just plain don't understand this statement.
To me, the essential argument of your post is that well productivity was not declining, and it should be, if Stuart is correct.
But given the two factors I listed previously - that we don't have data for the period Stuart thinks the decline began, and that horizontal vs. vertical wells could make a big difference - that argument doesn't doesn't hold. It doesn't mean you are wrong, but it doesn't provide any reason to believe you are right, either.
Given that, I just don't think the rest of it matters. It's like arguing about what color you want to paint the walls when the foundation has collapsed.
There may be solid arguments that prove you are right, but if so, they will be built on a different foundation than well productivity.
At least until we have more data...
Euan - have you read the discussion of the monthly interpolation I did in Water in the Gas Tank yet?
No - but I guess I better had.
TOD could be described as a "meat grinder" but does that mean we have to act like "meat heads"? We can surely have a discussion about very speculative areas without this continual degradation into veiled personal attacks on people we happen to disagree with?
Sure, there's a robust and confrontational atmosphere, but where does the bile get us? The current discussion about Saudi Arabia is a case in point. It's hard to know what's going on there. It's a difficult and complicated country, yet some people appear so sure of what's happening their, based on data which is highly problematic. The publically available data is only part of the story, the real numbers are a state secret. Twenty years ago my Saudi friends didn't trust their government's statistics, and nothing's change for the better since then.
Given the "difficult" nature of this whole subject, and the fact that there's a lot of gropping around in the dark going on, arrogance is not only irritating, it's also juvinile. I think arrogance is a kind of ignorance.
Two things: one is to avoid being provocative other than with ideas; two is to not take an occasional jab in the ribs too personally.
"Don't get upset. This is how it's supposed to work. This is TOD at its best."
It's called peer review.
Writerman, DaveBG and Cid, I'm not sure who your comments here are aimed at and I do appreciate what is being said. I certainly take this as part of the TOD rough and tumble. I took exception to what Leanan said for a number of reasons. This is what she said:
This in my opinion is devoid of objective technical analysis and laced with subjective opinion - we've come to expect this from certain posters.....
This is an interesting concept. From the first weeks I contributed to this site I have asked PG where the truth lies. The real question here is how many posters contributing here are genuinely qualified to read and understand SPE papers published by Saudi Aramaco and the interpretations placed upon those by TOD contributors?
This is a serious issue, because we are increasingly rulled by the technically ignorant masses, who rule the media. IMO, on ceratin issues, technically sound minority views must prevail.
I have no gripe with Leanan's off the cuff remark - and I don't want to start a serious debate on Web - based peer review right here. But I think there are some serious media based issues at large here.
I'll mail this to PG, HO, Stuart et al and see if they want to join in - I want to concentrate on the technical content.
FWIW, I am totally in favor of involving as much expertise as is willing to comment. The more expert the better. I am willing to champion guest posts at TOD from anyone willing to put a decent effort into the subject regardless of their conclusion. But I think what we need is detailed technical forensics on the data that is in the public domain. What I don't think we need more of is CERA style PR blasts with no supporting detail, or vague assurances based only on the quality of Nansen Saleri's resume or a general sense that life usually works out ok.
And while it's true that other fora might have had more qualified people, I'm not aware of any public debate on this topic to go look at. It's happening here because it hasn't already happened somewhere else.
Sorry, I honestly thought it had been hashed to death already in the other threads. It wasn't my intent to do a drive-by trashing, just to avoid beating a dead horse.
Leanan, this is about the worst Troll comment I've seen on the site for months.
I got a lot better things to do with my time that sit here to be insulted by the likes of you.
Have the site to yourself and wallow in doom!
Huh? How is it an insult?
Leanan, my sincere applogies for the comment above which is clearly below the belt and unwarranted.
Its probably best to leave discussion about the quality of comments and "peer review" to another day.
Euan
Pax.
Way over reacting. She was apologizing to you.
There is also an unfortunate implication that non experts, and possibly even women as well, should keep their mouths shut.
Huh??? How do you get from what she said to this reaction?
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Wow! I can't get there with what she said. Somebody deserves an appology.
Calm down Euan. I've had a "don't know what you're talking about" comment to something I've written on TOD Europe, without sulking about it. Leanan is hardly Mr. Hutter!
Euan,
One of the implicit questions that continually arises, between the snipping, is, who are the "peers"?
TOD is full to the brim with lots of interesting posts and the replies are fascinating, but real peer rieview? I on't think so. What we have is vertual peer review, in a vertual school. Not only that, we've also dealing with a pretty obscure subject based on a great deal of rather defuse data. There's room for massive ammount of disagreement and controversy, given these wide and unclear parameters, and boy do people jump in!
That's alright, it's informative and fun, as long as we remain reasonably respectful of each others views and also retain a little bit of humility, which is an attractive quality especially in those who regard themselves as being strikingly brilliant. It's a secret, but a touch of modesty actually makes the brilliant appear even more brilliant.
righterman, the internet peer review committee reminds you 'virtual' is spelled with an 'i'...;P)
Yeah, I know, but then I don't know. I have two languages in my head all the time and I mix them up continually. Here, at home we speak two languages, and we also mix them up into almost thired one. It gets slightly confusing, and bits seem to drop off now and then.
Gilles, Euan Means argument is totally meaningless. Since the mid 90's many Saudi wells have been completely shut down, or their flow has been cut because of "Rigless Water Shut Off", or existing wells have been "Sidetracked" with horizontal drilling. Production in north Ain Dar dropped by about 20% beginning in about 1998 because of these changes. This is clearly visible in Figure 1 of SPE 93439:
http://freeoil.1111mb.com/spe/spe93439.pdf
So while the average production in many wells were dropping the average production in wells in Haradh and Shaybah, because of the type of wells, are several times that of older wells. The wells in Haradh III are supposed to produce 10,000 barrels per day. Just a little common reasoning will tell you that if the new wells are producing much more per day, then older wells much be producing much less per day. And, if new wells are being added with no increase in production, (or with the current decrease in production), then production from older wells must be dropping or, are being closed down completely.
And just one more not so minor point; Euan’s chart ended in 2005, the very year Saudi peaked! I would bet a pretty penny that “production per well” is currently dropping precipitously.
Ron Patterson
The Norwegians used horizontal wells to try to get max. production as the oil-water contacts rose. It worked for awhile, but the declines eventually happened. The drops in production from North Sea water driven fields were steep. Yibal was going well for a long time, then it started to slip, they have proped it up with tertiary CO2 driven recovery, it might collapse again as it will gas out like Cantarell in Mexico.
I cannot see the $300 barrel oil in the immediate future. Shell concluded some agreements with local governments and is supposed to bring some spare capacity in Nigeria online this summer. Nigeria is in the process of auctioning more onshore and offshore exploration blocks with a stated purpose of increasing reserves to 40 billion barrels and production to 4 mbod by 2010.
The Caspian Sea oil will be coming online in increments over the next decade. The Iranian Caspian is a potential growth area, yet undeveloped.
Canada is expected to increase oil production over the next ten years. Venezuela talked about developing the Orinoco heavy oil region, but cut back production there when worldwide oil prices started to fall.
Eventually Iraq should calm and reject killing people as an alternative. They might almost double production to about 4 million barrels a day.
Yet as time goes on and giant oilfields continue to fall, as more nations pass their peaks or secondary peaks, then oil supplies might diminish. Many little fields that were being brought in to create new production might see most of their expected lifetime production to occur within ten years. There were yet multi-billion barrel fields being found, thus suburbia is not over yet.
Continued economic growth in China, India, US, Russia, and OPEC nations might take up slack oil production. OPEC price controls have manipulated prices higher than might be the case if Saudi Arabia did a crash program to develop 80 undeveloped fields. Two new fields have been discovered in KSA during the past 12 months. Kuwait and Iran also announced major oil field discoveries in the past year.
There were yet multi-billion barrel fields being found, thus suburbia is not over yet.
Continued economic growth in China, India, US, Russia, and OPEC...
If I am not mistaken (and this is the forum to correct me), it has been over 25 years since a super-giant oil field (not oil equilavent in NG) has been found outside Kazakhstan. Mere "giant" oil fields have been found, but the trend is down for finding these as well.
And supporting US (as opposed to Moscow) suburban oil demands without the exports to pay for the oil imports is a game that is winding down quickly.
Best Hopes for Reality Based Planning,
Alan
Rainsong,
Too little, too late and a lot of wishful thinking. Let me correct that, Outright Fantasy. World financial markets are about to get real screwed up real fast. The cork is out of the bottle and the Genie is coming out. Everyone won't understand, but enough will and the rest will find out soon enough to their own detriment. CYA is now the rule of the day. If we invade Iran in the next few hours, God help us all. I got out of the markets before they closed.
well, you point to a lot of "potential" sources of new oil but some or all of these could and probably will be delayed some may not materialize at all.
if nigeria is auctioning exploration blocks, isnt a 3 yr timeframe a little short for these to be brough into production ? it is possible, but is it likely ?
you refer to multi-billion barrel fields being found, can you give specific examples ?
and finally do you have some details on saudi's 80 undeveloped and 2 new recent discoveries ?
Fractional_Flow,
I've been out of the loop for a while but may join in this discussion today. Could you perhaps start by remininding everyone what evidence exists to support this statement:
EM
Euan, try SPE 93439:
http://freeoil.1111mb.com/spe/spe93439.pdf
I think the evidence is absolutely overwhelming.
Ron Patterson
Ron, the main reason I was out of the loop was x country skiing in Norway. I just happened to take a copy of SPE 93439 with me - I read it several times together with my friend who is a senior production geology advisor. As you know I am a geologist with just a little bit of reservoir engineering expertise.
So its strange - you see the evidence for the watering out of North Ghawar as overwhelming and I don't.
Maybe you can go first and list the key points from this paper to support your position, then I'll respond.
Looks like I'm in for a busy afternoon.
It's good that your technically strong and have studied the paper in detail... it won't take me long then.
The paper explicitly states in several ways that the displacement feature here is gravity dominated.
Construction of a synthetic fractional flow curve using the Honapour correlation for a 600 md intermediate wettability carbonate with a 15% connate water saturation and 21% residual oil saturation results in the construction of a fractional flow curve which exhibits a 65% average water saturation behind the flood front at breakthrough. The endpoint Saturations exactly match the reserve figures in Saleri's May 2005 reserve pie chart. The 65% average water saturation behind the flood front matches quite well with the water saturation cross sections. The water cut at breakthrough via tangent construction is 93%, but the curve is steep here and the value could be as low as 85% -I think.
Now since this is a gravity dominated displacement we seek the vertical rise in water throughout the structure. Aramco gave us the 4.6 ft/day front velocity which I'm sure you noticed, and at an average 3 degree dip (stewart graciously analyzed the Greg Croft structure map for a 4.4 and 2.3 yesterday), the vertical rise in the water level is 0.24 ft/day on average, or about 2.88 inches per day.
Now, it has been about 3 years, 3 months and 5 days since 1/1/04 so that is about 1190 days. The horizontal movement of that front is 1190*4.6 = 5474'. So the total vertical rise up that structure is 5474 * sin 3= 286.5'.
Now, it depends very much on where we started. Here is where looking at those cross sections gets tricky. I posted over 2 weeks ago that some advanced image analysis was needed. Bunyonhead is to be commended for going through the process with me yesterday.
Now, I think there would be gravity equilibrium between Ain Dar and Shedgum, Stewart questions this. Please note that injection wells are widely spaced and the rise in water level is less than 3" per day. There is not much convection here. In my mind gravity dominates... and I believe the 4.6' day frontal velocity from the stream tube simulation must include the effects of the connected reservoir and injection activities at South Ain Dar and Shedgum. Reasonable men of good conscience can differ, I understand.
However, in the end, we must understand that breakthrough or not breakthough is the ballgame. As you know, the large mobile oil saturation and the tangent construction horizontally on such a large Sw span with the low oil viscosity must result in a high water cut at breakthrough. This is supported by the production logs.
I was alarmed with the height of the water rise from the frontal velocity over 1200 days. I think you should be too.
Cordially
FF
FF - lets take this in bite sized pieces to make sure we reach mutual understanding on some key points:
And so please correct me if I'm wrong. Original oil stauration is 85%. Final residual oil saturation is 35%. Suggesting that about 59% of the oil is recovered? That does seem pretty high to me - but there again this is a world class reservoir.
I'm not sure what you mean by this? Do you mean they had the same original OWC? I have read that the contacts on Ghawar are staggered, almost certainly suggesting a degree of reservoir compartmentalisation ± a dynamic aquifer.
I'm not sure what you mean by this either. I thought that first water breakthrough in Ain Dar occurred around 1976 and that water cut has been rising in stages ever since.
What I see as the key issue is whether or not Ain Dar (north or otherwise) still has a dry oil column that can be produced to compensate for wet oil being produced from old vertical wells.
Finally, I think it is very important to be aware of a couple of key geographic / structural features in SPE 93439:
1. The paper describes North 'Ain Dar which is the most mature part of Ghawar. North 'Ain Dar represents about 50% of the whole of 'Ain Dar.
2. The water saturation simulations (Figure 9 in SPE 93439) are from the flanks of the structure and tell us nothing / very little about oil saturation at the crest.
I think these are details that should not be overlooked.
I hope the skiing was good.
Goodbye.
FF
For the benefit of the non-experts among us, could you possibly explain why Euan's take on the paper in question is beside the point?
I for one, am lost, but it is not clear to me whether and why Euan is.
I'm just trying to learn what's going on here. And I have to say that I find the recent discussions on SA to be very valuable - an impressive tour-de-force of a free-for-all approach to things leading to helpful and well-argued results.
The skiing was great - 6 days of blue sky, no cloud, no wind and 3 m of snow on the ground.
If I have time I'll call back with some maps to set this in context, some comments on fractional flow and production in 'Ain Dar and Shedgum and water saturation profiles in Shedgum.
I was hoping you would continue to comment because as I said my understanding of reservoir engineering is a bit limited.
Hi Euan,
If you go back over the posts of the last 2 weeks, specifically Stuart's posts and a few of the drumbeats (search on F_F), you will find it all laid out in detail.
Now we are getting somewhere- the link between North Ain Dar, (and just what that is), South Ain Dar (and just what that is) and Shedgum needs to be worked hard. If you wonder why I wonder exactly what those boundaries are look at Figures 3 and 4 of the paper closely in comparison to the gregcroft.com. What and where is that hole??
But I will be hardpressed to believe you can buildup a 300' wall of water on the North Ain Dar structure independently.
And I am glad the skiing was good.
Well here's my interpretation of where the hole (more conventionally called a saddle) actually is, the basis for saying that N 'Ain Dar represents about 50% of all 'Ain Dar. This is based on matching the map outlines, the fact that it is called North 'Ain Dar and the fact that IPTC 10395 shows a small saddle in the exact location at the SE end of N 'Ain Dar.
The large saddle feature at the join between 'Ain Dar, Shedgum and Uthmaniya is way to the south.
The original map was nicked from Stuart's gas in the water tank post.
So we are talking about water saturations on the flanks of the most mature part of the most northerly extension of Ghawar - right?
Thanks very much for that I agree.
And yes we are talking about North Ain Dar... but we are not just talking about the flank. Are we not to assume that the area encompasses the entire -5750 closure... if not then it is hard to see a dry oil area if not (which existed on 1/1/04).
Then we are talking about the Northern Anticline which shares a crestal -5750' contour with the Southern Anticline and Shedgum.
Then the discussion should rapidly move to whether the Northern Anticline can fill without equilibrating to the other anticlines. And whether this is a wise reservoir management practice that Aramco would endorse.
And you are to be commended for leading this discussion here.
The cross sections (9a and 9b) clearly include the crest right? We can debate how far North or South they are, but you aren't trying to say that the cross-sections don't go all the way to the crest are you?
No Stuart, I'm not trying to say that because I don't know where the sections are located (but I gave you a guess on the map down the thread).
However, Saudi Aramco say this:
"Fig 9 shows simulation results on water evolution at the eastern and western flanks" (page 2 SPE 93439).
So its Aramco that says the sections are on the flanks - what ever gave you the idea that they go all the way to the crest?
I'll say this, however, if these sections did depict water saturation at the crest then N 'Ain Dar would be history. The oil production from horizontal wells not yet drilled would go out like a light.
But this of course raises the question why they are planning to drill some bilateral wells if all the oil has gone? But there again - they say these sections are on the flanks.
Here again is the west side (a) one:
Note that the two simulation cells on the right of the image both slope down (very slightly) to the east, whereas the rest of the cells slope down to the west. So the highest point in this piece of reservoir is two simulation cells over from the east side. I claim that must be the crest of the reservoir (in an East West sense). For it not to be, there would have to be a horizontal shelf on the west side of the structure. There is no sign of that in the contour map. Furthermore, it would make the overall scale not work. We know that the original oil layer thickness was about 200' (from Greg Croft). If we measure off the 1940 picture, I make the overall vertical scale as follows:
Here, I've shown my interpretation of the original 200' oil layer in the 1940 9a cross on the left, and based on that, the green boxes represent 250' intervals. So the whole structure is ballpark 850' high (probably plus or minus 100' given uncertainty as to exactly where the OOWC is in the picture). On the right is the Greg Croft map, and that shows the whole structure running 750-1000' high - around the same height as the cross section is. So I just don't think there is room for any interpretation other than that the cross section goes all the way to the top of the ridge.
The situation is even clearer with the eastern cross section, where it quite obviously folds over the top of the ridge:
I'll address the North/South issue below where you showed your hypothesized placements for the cross sections.
On this good Friday all I can say is "Praise the Lord"
From Mar 22 Drumbeat
http://www.theoildrum.com/node/2395#comment-171688
The ability to position that was way beyond my ability... it might be beyond anyone's.
It is in very much more capable hands now.
To any I have offended over the course of this discussion, I sincerely apologize.
Hope you all learned something, I know I did.
FF
Stuart:
I don't wish to detract from a very interesting dialog but could we for a minute think about turkey in reference to cross sectional images and the suppositions being made in reference to a "crest?"
Slice a turkey breast along the flank of the breast and you end up with a cross section which appears to capture the crest. But this is only the crest of that lateral slice, it is not a true transverse cross section of the bird. The true cross section of the bird would be presented by a cut through the bird perpendicular to the backbone.
I am acting as devil's advocate here, but if these images are in fact a lateral cross-section (which is what I understand Aramco to be claiming) then it makes the intent to drill further wells on this structure somewhat more understandable.
Cheers!
"I'll say this, however, if these sections did depict water saturation at the crest then N 'Ain Dar would be history."
I'm glad we now agree on that point, and it's just a matter of debating placement/timing.
"But this of course raises the question why they are planning to drill some bilateral wells if all the oil has gone?"
Well, my contention it's unlikely the demise of the oil layer is perfectly uniform, and so there's places where it makes sense to go in with a few extra wells to clean up the remaining patches of oil layer. That's what IPTC-10395 is about in my view. It's also why the anticipated life of the wells studied in IPTC-10395 is so short (see the pictures in Water in the Gas Tank).
it seems to me that we also have to keep in mind that we are dealing with a computer model that is history matched, in the final analysis, to production data (and possibly to some well log and/or 4d seimic data). if that is so, as i have pointed out previously, the history match is "probably not" a unique solution. the supposed "wall of oil" could be nothing more than the model's resolution* of production data and oil in place estimates.
* it would seem that saudi aramco would have "top notched" reservoir modelling experts. i would like to point out that i have seen some "top notched" reservoir modelling experts present some really bogus forecasts.
Great!
Surely you jest! If there were no watering would there be a need to shut down some wells as they did? If there were no watering would there be any need to plug some wells above the water line as they did? If there were no watering would there be any need vertical short radius horizontal drilling that limited the input to the well to the top ten feet of the reservoir?
The whole point of the SPE paper was to report on how they were attempting to control water intrusion into the field. If there were no watering out then there would be no need to do anything.
And the text clearly says that of these “Rigless Water Shutoff” operations, 77% of the time, by shutting off the wells above the high water line, they were successful in getting the water cut below 50%. In 19% of the cases they were successful in getting the water cut below 75%. And in 4% of the cases the water cut remained above 75%.
We saw in Figure 1 that production was decreased when these measures were initiated.
Euan, they are milking the oil from the top ten feet of the reservoir because below that point the reservoir is completely watered out. My God man, what further evidence do you need?
And Saudi admitted on 1/1/2004, 3.3 years ago, that Ain Dar and Shedgum were 60% depleted. Page 21:
http://www.saudiaramco.com/sa/webServer/general/Presentation_Fifty_Year_...
Knowing Saudi’s predilection for exaggeration, I would bet that on January 1st, 2004, Ain Dar and Shedgum were more than 60% depleted. But at any rate, even taking them at their word, that would put the area between 65% and 70% depleted today.
Let me repeat, what more evidence do you need?
Ron Patterson
Ron, SPE 93439 is for North 'Ain Dar and the water saturation sections (Fig. 9)are from the flank and not the crest of this small but important part of the North Ghawar area. The 10 ft oil column of which you speak is on the flank and tells us nothing of the size of potential dry oil columns up dip in crestal positions.
So how do you manage to extrapolate statements from the flank of North 'Ain Dar to include the whole of North Ghawar - which includes all 'Ain Dar and Shedgum?
Sounds to me we are in real good shape for a few years at least - even if they are 75% depleted - still 25% to go in this most mature part of the Greater Ghawar structure.
If I'm not mistaken, reading the charts in SPE 93439, Ghawar produces either water or dry oil (mixtures of the the two in vertical wells) and this gravity driven system performs like a piston. So if there is 25% left, this can probably be produced at high rates as dry oil from horizonatl wells.
Euan, this statement by you says it all. You think that if they are (northern Ghawar) is 75% depleted they are still in real good shape because after all they still have 25% left. Euan, though we are certainly concerned by how much oil is left in the reservoir, that is not our immediate concern. Our immediate concern is the decline rate. And in the past northern Ghawar has been the most productive area of all Saudi’s fields. The area has produced the bulk of Ghawar’s 5 million barrels per day for about 50 years.
Saudi says their existing fields are declining by from 5 to 12 percent per year. And if any field is 75% depleted then you can be assured that it is one of those near the 12% mark. If North Ghawar is declining by anywhere close to 12% then Saudi Arabia should in an absolute panic. And from all indications they most certainly are.
Ron Patterson
Euan - you need to indicate exactly where you think those cross-sections might be on a map or picture of Ghawar such that there is somewhere left for a significant amount of dry oil in reasonable rock to be hiding.
I would not normally be so speculative, but since you asked, here would be my very, very rough guess for the laocations of sections (a) and (b) from SPE 93439, Figure 9.
(a) is roughly in the same location as your prognosis. (b) is radically different.
Where I have drawn (b) is on the flank of the structure, rolling over the N-S orientated anticline in an area of exceptional reservoir quality. This seems to tie in with the shape of section (b) and the fact it is extensively water flooded. You drew section (b) in a crestal position with poor reservoir quality which does not to my mind match the data or the fact that the paper says the sections are from the flanks.
The yellow area indicates the crest of S 'Ain Dar which based on the data we have could still contain much dry oil. The reservoir quality here is less good - so if I were the Saudis I'd feel inclined to develop this using horizontal wells - someone should write and suggest this to them.
The map is from Greg Croft:
http://www.gregcroft.com/ghawar.ivnu
Would not the toes of the pay zone be getting wet in 1940 on a. -6250 -204 = -6444'
Thanks
FF
I'm afarid you're about 10 years out - the toes of the pay zone will have started to get wet around 1950 - so what?
I'm really intrigued to know what mental image you have of the Ghawar reservoir in 2D - any chance you can run up a sketch? I got lots of other stuff I want to post this evening which I hope you will comment upon - but if I find the time I'll run up a sketch of how I see the reservoir.
WRT a comment you made higher up the thread. Would it not be the case that once the saddle between the crests of N and S 'Ain Dar waters out that the crests behave as two independent GIANT FIELDS?
My guess would be that the saddle is already water, and sure we are talking about the beginning of the end game of northern, northern Ghawar. The difference here between the different positions being discussed is that I see this as the beginning of the end, while others see it as end in 2005.
The relationship of the structural crest/ pay thickness to the position of the water oil contact in 1940 is the only semi-reliable (although speculative as hell- I wish we had better data believe me) method I can see to position these cross sections.
Now we should be arguing about the ss of the original oil water contact on that west side. It is not readily apparent to me.
With regard to your post about being the beginning of the end or ending in 2005.. you redacted my original post to read "The Northern End of Ghawar is watered out" when basically it gave the choice of two options the Northern End being watered out or the watering out of the Northern End still looms ahead- I'm not certain which is worse.
In an effort to understand the too and fro here, I've been doing a little searching. I came across this paper "Ghawar: The Anatomy of the World's Largest Oil Field", which I'm sure is old hat to you guys, but makes things a bit clearer for us morals. PDF of the presentation is here.
In that presentation was a slide of a 3D view of the field, I grabbed the image of the northern part of the field, below.
The view is from the north east, looking south west.
At a rough guess I's suggest that shape of the eastern flank features could place the cross section at a number of points along the north-south line towards the northern 'peak'. See what you think.
You rock!!!! It is blindingly obvious where 9b) has to go on this from it's shape. Hold on....
Ok - here we go. There is only possible place for the 9b cross section on this picture. And it is within a mile or two of the very top of the crest:
Click to enlarge if need be.
There is nowhere left for oil to hide in North 'Ain Dar.
I consider that this removes all conceivable doubt on the location of the 9b) cross section. Anyone disagree?
I have to say that it is far from "blindingly obvious" that this removes "all conceivable doubt"! It is one possible location, but the general features you highlight of "sharp crest", "steep", "shallower" and "steep again" would apply to many points along that ridge as we sweep north and south from your chosen location. Keep in mind that the vertical and horizontal scales are probably not the same in the two diagrams. A cross section quite a ways north of the ridge peak would also go steep-shallow-steep along the east flank, and if the relief looks "gentler" than the cross section diagram, that could be accounted for by varying the vertical scale.
Again, I'm not saying your location is wrong, just that the degree of certainty you have expressed is far from appropriate given the quality of the data.
Take a look at my positioning of the cross-section, further down the thread.
The cross section location can be moved, but getting ALL the features to match limits the possible locations to points close to the peak of that field. I've put Euan's suggestion on my image and pointed out why I don't think it fits.
I spent quite a while this morning trying out locations, scaling factors, etc. There aren't as many possible places as you might think.
Go ahead and propose an alternative hypothesis Halfin.
Holy Heisenberg.
And for those who say the Saudis wouldn't release this info if it revealed this much...I disagree. A lot of intelligence work is not the cloak and dagger stuff you see on TV, but just putting together publically available information - research papers, newspaper stories, etc. - in ways not imagined by those approving the releases bit by bit.
Hello Leanan,
Good Morning! Please see the discussion between Garyp and I far downthread! Will you post a visual [possibly topthread?] of my recently discoverd Ghawar 3D oil saturation chart--I don't know how. Thxs!
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Here you go:
It's from here.
Holy crap Look at Uthmaniyah
Thanks for this
FF,
Take a look at the modeled change in Sw for Uthmaniyah 2003-2004 that I reference below. To me it looks like a lot of oil in the big white patch downslope of the peak, but I'd be interested in your view of this and the rest of the PDF.
Gary-
Send stuart an e-mail.
He knows how to reach me.
There is a lot here to talk about but I'm weary of the public domain.
FF
I can understand you guys talking in private about all this, but please, please come back with some statement afterwards...
If nothing else say whether we're "dead men walking already" or "I'd get my affairs in order within the next 18 months"
Or something...
Thank you all for your hard work and everything you have done for the public on this one.
The talent and knowledge here is incredible.
Thanks
JOhn
Hello F_F,
Full credit to you, SS, and the other TopTODers-- you guys set me off on big google Easter Egg Hunt! Hopefully you and the other TODers can make good use of this if it was indeed an accurate chart circa 2004. Can you and SS somehow match this up with the other slices and data? Have at it--give it your best shot.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Note the text references "over 4,000 wells" in the simulation.
I wonder how many are injectors and producers to make the 5.6 MMBOPD claimed for the field in yesterday's WSJ wood mckenzie table??
According to ths rather excellent post here:
http://europe.theoildrum.com/node/2372#more
Saudi Arabia had around 1900 producing wells in total in 2005. So the 4000 wells on Ghawar will include the historic data set used to tie seisimic to stratigraphy and to record water saturations.
Aramco drill a fairly large number of observation wells (used to observe pressure, temperature and saturations).
So the 4000 will probably include watered out wells, injector wells, producing wells, old exploration and appraisal wells and of course suspended wells waiting to come back on when global oil demand once again picks up.
Help! How about a clickable enlargement? I can't see the right half of the picture and don't know what I am looking at directionally.
use firefox, and drag & drop the picture in a new tab.
Great find!!! We don't know the exact date, or exactly the color scale (though I can guess :-) but what I think it does do is let us make a fairly plausible extrapolation from the North 'Ain Dar data to the whole of North Ghawar, and I would say it tends to support the following points:
Those are my quick reactions (I have to shoot off and do some paying work) - we can tear it to bits further in coming days... In particular, we can start trying to correlate the Uthmaniyah cross-sections with this picture.
The picture very much begs the question of what rate they can (or will) produce the oil from Haradh and Hawiyah.
I'm interested to hear Euan weigh in on the last 12 hours of developments...
You would not believe how many people are waiting for Euan to weigh in on this. If you, FF and Euan come to an agreement...I think you can propose an "official" announcement from TOD about the state of affairs in KSA.
Stuart Staniford wrote:
See, the guy needs funding.
Matt Simmons and Boone Pickens and other peak oil money-bags take note.
http://www.theoildrum.com/node/2420#comment-174937
Bob Shaw - a fantastic, find. I'll make a few comments here and suggest that Stuart re-posts this on a fresh thread tomorrow as this one has gotten pretty unwieldy.
What can I say - look at all that oil in N 'Ain Dar!
One think that intrigues me is what different folks see when they look at this. Yesterday I suggested F_F should post a sketch showing his view of Ghwar in x section and now I'd like to ask Stuart to do the same. I will prepare a sketch to show tomorrow. What I wonder is if a significant amount of missunderstanding stems from a poor mental image of the reservoir. There is I believe vast vertical exaggeration in this depiction - and so in the real world you need to visualise this without that exaggeration. The Arab D reservoir is about 200 ft thick and that northern part of Ghawar is about 79,000 ft across. The structure amplitude is about 1300 ft - maybe some drafting whizz kids to run up a true vertical scale x section using Greg Crofts contour map:
http://www.gregcroft.com/ghawar.ivnu
1. What does the blue show? In SPE 93439 a "dry area" means an area with a full (200ft) oil column - no water ingress at the sole. If that is what the blue is showing here then N Ghawar actually looks in relatively good shape. Imagine that 200ft thick slab of limestone full of oil covering all that area.
2. Yesterday I said that I imagined the saddle between N 'Ain Dar and S 'Ain Dar was probably water - this in fact shows there is still oil in the saddle (probably gone by now).
3. We seem to have extensive oil in the crests of N and S 'Ain Dar and Shedgum. Abquiaq is near history - but Aramaco seem to have done a great job ensuring efficient sweep.
4. The real shocker here is N Uthmaniya - but this needs to be kept in perspective. That tongue of oil is still 2 to 4 miles across, 20 miles long and 200 ft thick. It is interesting to note the less efficient sweep in this area that may be attributed to the poorer reservoir quality.
Are wolves smarter than humans:)
EM
Hello Euan,
Thxs for your analysis--I think you and fellow TopToder SS do a great job of taking turns holding each other's feet to the debating fire. Both of you need to stay calm and composed, but keep the facts and analysis coming for the normal TODers trying to keep up [like me!].
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
For what it's worth, I am an image analyst and my quick assessment puts the east flank profile here:
Without knowing a good deal more about the various scalings in these data sets, we are way out in SWAG land. Probably just WAG actually.
That area ends up being too far south in my estimation since the cross-section can't trail away correctly. Also peak width to 'saddle' width need to be comparible.
I agree with you that there are areas up and down that ridge that could be made to fit the profile data. Here are 3 versions of the profile laid over the basin model that look plausible, just depends on how you scale the axis'.
The view angle on the 3d model can also make you see things that aren't really there.
I guess my main point would be that we do not know enough about the resolution or binning of the profile data or the basin model to really match them up.
And what is that light blue horizon line running through the elevation model? Water level? If so when and what is the depth?
Too many ?s. Too many assumptions to make.
My assumption was the blue level was the original water level - see my posting for matching. Also the 'general' shape had to fit, not the specifics of particular bumps (which you are right, you can't really be sure if they are gridding or geology). Take that as a constraint and you see that options decrease.
As far as gridding is concerned, check Abqaiq.
To me, these don't pass the sniff test. The orange one has no way to get all the way down to the water without the grade shallowing out again - the actual cross has the grade steep as it goes into the water.
And both of them, but especially the blue one, suffer from a vertical scale issue. Again, my interpretation of the vertical scale (based on the Greg Croft numbers) is:
That blue one would make the pay and the reservoir really thin.
Actually I think the orange line would reach the presumed water line without flattening out, my graphic doesn't follow the ridge exactly. But that's not really the point. We're reading tea leaves here.
The vertical scale on elevation models is routinely exaggerated for display purposes and not always linearly.
We're also assuming that the profile is perpendicular to the ridge crest but there is no reason it has to be.
Perhaps I've missed this in the discussion,but on the 200' of oil, are you assuming that thickness along the entire ridge peak? Seems unlikely, but not my area.
"my graphic doesn't follow the ridge exactly. But that's not really the point."
No, that's exactly the point. If it doesn't fit all the parameters that's not it, Stuart's fits all the parameters. No one is reading tea leaves here. Everyone is being extremely careful.
There's a quite obvious large lump sticking out below your orange line that it would have to go over to get to the water (clearly visible by the shadow on top of it). That doesn't match anything on the profile.
"But that's not really the point. We're reading tea leaves here."
I agree that you are acting in that way, but I'm attempting to be as careful and precise as possible. You may feel free to make up random facts with no support (like assuming a non-linear scaling), but I'm attempting to find the best possible match given the facts we know.
There could easily be a valley behind that ridge, you only have one view angle here and it's a jpg of a 3d model created for a powerpoint presentation. Not a reliable data source. View angle, scaling and resolution have a huge effect with these models. It is very easy to be mislead by data like this and it happens far too often.
Given the undocumented data sources I think you may be working very hard for high precision but likely achieving low accuracy.
I haven't made up any facts, I'm merely pointing out that you know very few facts about this data set and are unlikely to come to a reliable conclusion.
You are the one assuming to much, I'm only mentioning some of the possible ways the data has been transformed.
Rugbman - thanks very much for this which at least shows differnt options. A few comments.
1. Stuart and others are right in saying that the tail end of the profile needs to dip below the pale blue plain depicting the original OWC.
2. Stuart I believe is wrong in placing this at the crest (your red line) because the paper says explicitily the profiles are on the flanks - I'm therefore drawn to your orange and blue lines (which are on the flanks) and which lie in the vicinity of my own prognosis (which I spent 2 minutes preparing).
3. How are you dealing with scaling? Both vertical and lateral scales.
4. A general comment - if the profile goes all the way from OWC to crest then it is about 4 miles long and 200 ft thick. There are about 17 grid cells (vertical and lateral) in the model so this would require cell dimmensions of around 12 ft thick and 1240 ft long. Cells in these models are always elongate but this seems extreme to me. So it would be interesting to play around for a match that allowed the profile to be much shorter.
Fabulous work!
What do you believe is the vertical extent of the 9a) and 9b) cross sections (top of simulated reservoir to toe of the watery region), and why?
(I agree completely that the vertical scale on all these models is exaggerated - we've got about O(1000') of height and O(10miles) width in 'Ain Dar). However, I don't see why it bears on the discussion at hand. The shape is the shape regardless of the scaling factors.
To be honest I haven't a clue and that's why I believe this debate of these cross sections could lead nowhere. Are they a half mile long? a mile long? or as you seem to favour cover the full structure from contact to crest - about 4 miles long?
You make them different lenghths then you can fit them in lots of different slots - as Rugbman I believe shows. So of course scale matters.
Hunt and Peck. Since it's all speculation, didn't see need for a systematic approach.
Do we know if this is profiling the entire 200'X4 mile structure or just a subset? 12'x1240' does seem like an odd bin size.
Photobucket will not allow registration without giving them a valid cell phone #.
I will NOT do this !
You should not use such hostile sites.
Alan
Didn't ask me for a valid cell #. shrug.
Site was suggest by TOD FAQ. I don't generally use such things.
And for what its worth, here's my guessimate of the location of the eastern flank cross section - with the image overlaid on the 3D view. A cross section somewhere close to the peak, probably somewhere very slightly to the north of the very peak (not south, sorry Stuart). This is the best match to the 'peakiness' of the peak, relative to the width of the 'saddle' area. Its difficult to be exactly precise given the bumpiness of the real data, but I've tried to match all features, including what I take to be the original water level.
Edit: For fairness I've a added my best guess at Euan's position as well. The problems as far as I see are the 'peakiness' is wrong in order to get the saddle right, and the water level is now off as well. Make up your own minds !
I disagree - I think the shape match is better a shade south of the peak. However, it doesn't matter to the conclusion.
Its the shape and steepness of the side as it comes off the peak that makes me shift it north. I've pawed over it in Photoshop at high magnification looking for the fit and the wall seems too steep at the peak to the south.
However, as you say it doesn't really make much difference north or south - either way it seems to have to be very close to the peak point.
For those reading up afterwards, Stuart and I came to our conclusions as to position independently, posting the original guesses within a minute or so.
I just don't think there's enough of a shelf where you've got it. However, I guess if these are the only two candidates, I'm not going to get into a massive statistical image processing exercise, since the difference between them doesn't change the conclusion. Here again is where I think it is - with and without:
With that, I'm going to bed!
Bed? I've just got up!
There is one further thing that comes to mind when I look at the overlay I made of the cross section and the geological data. That thin red band of dry oil in the simulation looks a lot like the same thinkness as the 'lumpiness' of the geology.
As you push the oil up and across with your water front, when you get to that thin shell, surely it begins to break up via the shape of your capping stone. Its difficult to tell if the artifacts are real geology or data sampling, but by comparing to Abqaiq I'd say real. Doesn't that mean you get more pockets of dry oil left behind unless you stick a well point into each and every local peak in the structure?
Something I hadn't thought about before.
Click to enlarge.
Agree with Nate.
Thanks Euan, F_F and Stuart for having the debate in public. I view all these posters as equally competent but having different experience and hypotheses. If they all believed the same thing there would be nothing to discuss.
Maybe it's not obvious to everyone but the debate (and data to support the debate) is what is important. No one is stating as fact that this how it is in SA. They are comparing notes with each other. My perception is they all learn new tidbits and concepts as they go and refine their arguments and hypotheses.
No one knows what the real state of affairs is but being privy to the discussion is educational for me. The overall impact is great concern but not dogmatism.
This is better than American Idol and Perry Mason combined!
No kidding! Thanks, both Euan and FF.
So I argue a better placement is like this:
This is about the required 250' or so below the very summit of the ridge, hits the crest in a fairly broad place (which matches the rather flat crest top that the simulation cross-section shows) and also, is about right for where I placed it on the permutation picture. Notice in the 9a cross that there is a notch downards four simulation cells over from the eastern side. I believe this matches the slight shadow that crosses my a) line 1/2 way along it in this picture:
So all of this works out fairly consistently. And as far as I can see, that area is of roughly average permeability (I agree with you it's implausible that these cross sections would be in regions of sub 100 millidarcy permeability, but think they could well be in averageish 500-1000 millidarcy territory).
Let me post this comment, and then turn to the 9b) eastern cross in a separate comment.
Ok. Let's do the same analysis for the 9b (eastern) cross section. Here is my analysis of the vertical scale, together with the original OOWC and Greg Croft contour map.
My analysis of vertical scale is this cross-section is taller - around 1100'. That means it pretty much has to go close to the summit of the ridge. Where you have it at the Northern end of the -6000 contour, there's only 750 feet of structure, which this cross section cannot be made to fit in. If I put it close to the summit, I have enough vertical space for it. Furthermore, the fairly distinctive shape of the reservoir here matches up on both the contour map and my reading of the shadows in the permeability visualization:
Your location does not look like the right shape to my eye.
My one problem is the OOWC looks somewhat high. However, there are two readings close together on the 1959 map that are very different, so maybe the original height of the OOWC is a bit variable in this area (the permeability is also changing fast around the bottom of the cross section too).
Overall, the permeability where I place the cross section looks to be around 400-800 millidarcies. I don't see that as low enough relative to the reservoir average to justify your concerns about the sweep efficiency at this location.
Finally, here's a summary of the state of the reservoir at the beginning of 2004:
Again, the green boxes are 250' in height (estimated).
Overall, I don't think there can be more than small patches of oil layer left behind. It's worth noticing that in the cross sections, the oil layer is of fairly uniform thickness but is not level. The OWC varies in height by two or three hundred feet and is hugging the top of the reservoir. So even if you think I'm wrong on the b) placement and think that cross section is a few hundred feet lower on the structure, still the most natural model of the three dimensional structure is it's like the two dimensional structure - a thin layer of oil hugging the top of the reservoir.
I have shown SPE #93439 to petroleum (reservoir) engineers from British Petroleum. I have talked to them. These people indicate that the SPE paper merely describes a mature reservoir. There is no evidence whatsoever in the paper to indicate that North 'Ain Dar has "watered out". To be more accurate, there is no way to "confirm or deny" anything regarding the field.
These discussions have also indicated that the Saudis would not disclose anything in SPE that might indicate trouble in any case. This is a thought I'd had myself. It is implausible, given Saudi Arabia's secretive policies. Therefore, it follows that there is little of substance in the paper, which was the conclusion of the BP reviewers.
The Oil Drum may be a "meat grinder", as Leanan said above, but it's not the kind she had in mind, I think.
I am tempted to just stay out of these discussions and let people give themselves enough rope to hang themselves with. There is such a thing as journalistic standards & practices, and that applies to those studying "peak oil" more than anyone else, because it is us who hold the controversial position. I also believe that a lot of naive people reading TOD get many wrong impressions. That's a shame.
My cynical view, moreover, is that people will believe whatever they need to believe, and will not let anything interfere with that agenda, disregarding evidence that contradicts their position or misinterpreting evidence that does not support their position.
More and more, this Saudi Arabia obsession takes a bizarre turn down a familiar road in human affairs. Apparently, fewer and fewer on this weblog give a damn about its reputation.
But, I guess I still care because here I am, writing this.
That reminded me of the "dry air" popcorn popper I had in college- man that thing sucked
You make many comments (like this one) that reinforce Dave's point. I am usually just a lurker, but I have to say, Dave voiced my thoughts extremely well.
Oh, Please. We have been presented with all the data Stuart, FF(and Bunyonhead yesterday) have been using. They have presented step by step analysis throughout. They have put there argument up for peer review on The Oil Drum. We have yet to see(other than cursorily by Euan) any arguments actually addressing the data and conjecture. Yet, the connucopian trolls start ringing in with "I know nothing but I think everyone is equal" and "I'm not going to comment on any of the data and cannot reveal my sources who tell me you are full of shit". Give me a break. Dave, go get your gun.
http://www.theoildrum.com/node/2330#comment-166160
Dave, if you have any dirt than spill it. If not shut the f* up.
Sorry to be blunt, but some of us have a lot riding on this.
Myself, I live in Japan. In response to peak oil I am in the process of relocating my wife and me to the US where my father is preparing a farm for PO.
Therefore I take this personally. You've twice now called Stuarts and FF's contrubutions BS without the slightest proof.
If North 'Ain Dar hasn't watered out then tell me why. Don't insinuate. For a lot of us its not academic. It sure as hell aint for me.
Maybe I've had too much beer tonight to post. You sure have posted good material in the past. But Dave, if you have the goods then spill them. I'd sure as hell love to see your evidence go toe to toe with FF's.
good night.
You think?
So you resent any information - even tentative information - that even suggests in the tiniest way that this drastic relocation could just conceivably, possibly, be an overreaction? If so, a site such as this, which specializes in analysis, really might not be the best place to be...
You have that completly 180 degrees backwards.
What I resent is the lack of information, unsubstantiated insinuations.
I would absolutely love any information that even in the tiniest way suggests my relocation is an overreaction.
You see I can't just casually move back home if the economy gets bad. I have to get a visa for my wife. This takes a huge investment in time and money. I'm talking several thousand dollars and a full year from start to finish. That's just for the visa, I'm not talking relocation costs.
I've been contemplating this action for a while now. I don't feel my employment position is secure here in Japan and I would have a much better chance of riding out any economic downturns in the States.
Based on what I've seen recently (Stuart's, Euan's, Fractional Flow's, Simmons, etc etc) evidence I've decided to begin that visa process. Once you start it you really can't stop it (or so says the immigration lawyer I consulted).
So yeah, if Dave has some good info from some BP engineers than I would really like to see it. This argument may be academic for most of the people on this board but it sure as hell aint for me.
Edit:
I have found Dave's work to be of the highest caliber in the past. That is why I am especially frustrated with his recent lack of transparancy (even if he stated he is working on getting the information out there.)
Let me also appologize to Dave. Dave I am sorry for my outburst. I didn't not mean to tell you to F off.
this is pretty much true for everything about Saudi Arabia! it's a black box and any discussion about Saudi Arabia will always be highly speculative based on sketchy evidence and crappy data. But webblogging is about being speculative, isnt'it!
If KSA were a black box, which is not quite true, then another approach to guessing at what the insiders there are seeing would be to analyze their geo-political actions. Why is that interesting? Because it just happens that KSA has only very recently begun a 180 degree shift from passive diplomatic observer to active participant. Why now? One reason could be that they see Ghawar starting to decline, they understand the implications of that better than anyone, and they see a need for a new political direction (toward a peaceful neighborhood) as a result.
Perhaps their thinking goes something like this:
1. Our asset base has always been valuable, but at scarcity-pricing for oil ($100?, $250?, $500 - you pick a number) it will be seen as vital to first-world prosperity.
2. Suddenly the number of potential take-over threats expands from just Osama/Al-Queda to who knows? - maybe even the US itself. Maybe a consortium of powers. In other words, if oil scarcity is recognized globally, a small weak country that controls the biggest supply of it is looking increasingly vulnerable - over time.
3. There are small fires breaking out in our neighborhood: Iraq, Lebanon. They threaten to spread. The more fire there is in the neighborhood, the more likely it is that some big power(s) will eventually use that as an excuse to bring in the First World Fire Department. They might use KSA as a landing strip and deployment point (otherwise known as an occupation). We don't want that, so let's start to turn down the heat in the neighborhood, put out these fires ourselves.
My point: one KSA action that's well documented is a huge buildup in recent years of new drill rigs. But a second one, just in the past few months (as KSA production has fallen dramatically): a 180 degree turn in KSA diplomacy. These two observable changes may not be unrelated.
if you look at stuart's 2nd graph (oil production vs quota) and focus on 2004, one might conclude that the saudis produced all out to the benifit of their useful idiot (that would be bush) and as a result are "resting".
a sprint followed by a nap.
With respect to your views, I really don't want to get into one of these tiresome, testosterone tumbles; I wonder if you're right about Saudi Arabia stepping forward as an active player in the Middle East, compared to the more passive role its had until recently.
Hasn't Saudi Arabia, in reality, played a key behind the scenes role for decades in the Middle East, only now its chosen to step forward into the limelight and go public?
I'm thinking about Afghanistan here, where Saudi Arabia was crucial to the war against the Russians, providing men, money and ideological backbone to the struggle. There's also their role in the Iraq-Iran war, which is too big to go into here.
I think you right about the main reason they are entering the stage so openly and actively. They are deeply concerned about the enormous destabilizing effect of american envolvement in the region. Specifically can the disasterous destruction of Iraq be confined to Iraq alone, or will it spill over to eventually engulf the whole region? Saudi Arabia's new, overt, policy shift, can be seen as a sign of deep frustration and profound fear that all the conflicts in the area could bleed into one another, into an unstopable and uncontrolable river of blood, or perhaps that should be tidal wave?
So, Saudi Arabia, above all wants stability in the Middle East, not more regime change, not a New Order, not more war. However, peace in the Middle East is easier said than done. Some kind of peace between the Palestinians and Israel is the key to reversing the slide towards chaos and extremism. Somehow the two warring peoples have to be forced to share the land and its resources. With their money the Saudis can probably, with luck, buy most of the Palestinians off. But only if the Israelis return to their old 1967 borders. But who will force the Israelis to do this? Only one country - the United States has the power to do this. How likely is this? Not very likely at the moment. But what of the future? Is Israel really, or objectively, all that important or of vital national interest to the United States? Will the United States one day decide its "had enough" of Israel? That Israel just isn't worth the cost? It's a very difficult question.
But how much time do we have? How long can we allow the festering sore to pollute the Middle East? I'm talking about the Israeli/Palestinian conflict here, not Israel. Saudi Arabia clearly thinks that time is running out.
Thanks, Oilaholic, for bringing up politics, and thanks, Stuart, for extending your chart back to 1995. A comment I made to Stuart 3/26 under "Water in the Gas Tank" seems worth restating here:
Stuart, you may be giving too much emphasis to geology and not enough to politics. So I ask again, Is there more room for a political analysis here? Under your 3/8 Post, A Nosedive Toward the Desert, I said in part (slightly edited and [annotated]):
"Politics tempers geology. Stuart's post may give too much emphasis on the geology, leading to a too pessimistic downward projection in KSA production in 2007-10.
"The two KSA swing-production events in 2003-04 tend to distort the shape of the 2002-06 KSA production curve – the large [but brief] increase for the Iraq invasion is the clearest of the two, and the second larger surge (larger in area/volume, not vertical scale), MONTHS before the 2004 U.S. presidential election (the elephant in the room no one wants to mention - the KSA tribe looking out for their Bush tribe friends - can we forget the picture of the two clan members holding hands at the ranch?) If you [arbitrarily] level these out [to partially adjust for the possible politics at play], closer to the OPEC quota limits for these periods, and then extend the production chart back to 1997 [for visual perspective - close to the lowest price in real $$ since 1973], then the later KSA declines don't look so severe.
"(Note also that the steep production drop at the end of 2004 closely matches the price drop for that period.) [But it is only a fraction of the pre-election increase, in relation to the price change.] In addition to KSA's offset for the Iraqi production increase in 2006 [observed elsewhere today (3/8)], note also that Russia continues to increase production to the end of 2006. (The overlapping KSA-Russian production chart posted, sorry I forgot by whom, yesterday was telling in this regard. While KSA swings, Russia steadily increases from 2002-2007.)
"Assume KSA has economists and sees OECD economic softening, and demand destruction in the third world; it's not too hard to imagine them in July 2006 anticipating lower demand beginning soon and continuing for some time, thus jumping the gun on the price peak. An added geopolitical factor is KSA's growing impatience with U.S. failures in Iraq: this could explain their reversion in 2006 to more closely hewing to the OPEC quota limits than in the prior three years (don't listen to us, invade; oh, you failed... now we need extra $$ to defend our Sunni Iraqi friends...)."
When you compare the huge KSA production response in 2004 in Period A (coincidental with a modest price increase from ~$30 to ~$36/bbl) to the smaller KSA production response in 2005 in Period D (coincidental with a less modest price increase from ~$34 to ~54/bbl), you have two main factors to consider, geology and/or politics. My only point here is that KSA's huge 2004 production increase might be equally or more greatly attributed to the U.S. election than to just an exercise of their swing role. This is not "tin hat" stuff. Bush needed that boost and the resulting moderation of the price increase (change a few thousand votes in Ohio...): imagine how a price spike resembling 2006's would have changed things.
Just for discussion purposes, modify your chart by taking the slope of 2005's production increase and superimpose it on the 2004 period, starting at the beginning of Period A - - the result is a slope that increases uniformly, blending well into Period D, almost to the point of peak (the end of Period D, or just after).
Thought experiment, Stuart: If KSA's production curve looked more like that posited above (i.e., the Saudis refrained from playing politics), would you have viewed the production drop in the last half of 2006 with the same level of concern... and (will you) would you have been less surprised if KSA resumes a higher level of production as we go forward in 2007 (in their swing role, assuming no major demand destruction)?
P.S.: We can also ask whether/why KSA "let" the Dems prevail in 2006 by NOT responding to the price spike - - were they just sending Bush a message (what do you say about a small country that gets to order the Vice President of the United States of America on a plane ("report to us immediately, we have a message for W"), that posts a veiled message in the Washington Post about their dissatisfaction with the treatment of their Sunni friends in Iraq, and, suddenly (check out the timeline for yourself) administration officials are dropping hints and making "surging" statements, and like, WOW, we get a surge...
____________
Rex Tillerson says the world’s oil would not run out in his lifetime. Means nothing... this guy doesn't buy green bananas.
Khebab,
Your correct about the value of speculation. So long as we try to remember that it is speculation and not fact. Models are fine, but one relating to the future, based on questionable data are problematic. Slowly but surely we are moving closer to real empirical data on which to base our theories about Peak Oil. It's just that the emperical data is always out of date, which seems to be why we're forced to use predictive models which will always be, in essence, inaccurate. How much this really matters in most cases is debatable. However, given the importance of oil to our whole civilization, these numbers are of enormous significance. It's just a shame, which is an understatement, that for a variety of reasons the available data and the models are so "fuzzy".
I make a distinction between empirical data (all real data collected is actually empirical) and empirical models. An empirical model can be one either based on first-principles or one based on an equation that you pull out of your butt. The latter is sometimes called a heuristic.
I agree that we get better empirical data but try to stay away from empirical/heuristic models.
Hello Dave :-)
See, your problem, Euan, is that you're sober. And for me, it's still way too early in the day. I see FF told me I "sucked" and told you "Goodbye". And, I've been told to f**k off. So much for this. I'm quite sure these British Petroleum people have no idea what they're talking about, right?
Giving people here a useful "heads up" here on my the outcome of my discussions was clearly a mistake. I'll publish and when I do, I'll post the link here. And you know what will happen? — nobody will pay any attention. And Khebab's remark — that the weblog is for speculation — well, that says it all, does it not?
Many of you may now resume your journey through
And now, adieu...
DAve says "m quite sure these British Petroleum people have no idea what they're talking about, right?"
As soon as you tell us what they say we can make a judgement Dave, you're trying to put the cart before the horse, and claim victory.
you say,..British Petroleum people have no idea what they are talking about.
This Dave is called pleading your case from Authority. This is not part of the scientific method Dave. There are no experts in the unknown, don't try and claim there are to prove a point. Its bad journalistic practice too.
Quid Clarius Astris
Ubi Bene ibi patria
The other option here is that maybe nobody knows what they are talking about - after all, these same BP people were presumably working there in 2001 when Lord Browne said BP would grow organic liquid production at 5.5% per year. Instead it's gone down at something like 5% per year. It may well be that the BP engineer has a different idea of what a "mature" reservoir means than the rest of us - if their meaning is along the lines that "Prudhoe Bay is a mature reservoir," we are still in plenty of trouble.
Bottom line: The future is cloudy, whether in Saudi Arabia or anywhere else. That in itself is cause for concern.
Re: speculation
Speculation is good for the mind.
The strongest arguments prove nothing so long as the conclusions are not verified by experience. Experimental science is the queen of sciences and the goal of all speculation.
Roger Bacon (1214?-94?) English philosopher, scientist.
Dude, it is very simple. If you think SS or FF or Khebab are wrong, then tell us why they are wrong. Let us have your analysis. This forum is open to all.
But all you have done so far is cast aspersions on their work based on the opinions of anonymous sources that are known only to you. Naturally, you should expect some hostility.
You are probably a nice guy I didn't imply that you sucked... your post had no butter.
FF
Dave - these contributions are utterly useless. If the experts in question will express their view in public in detail, then there's value. But "I know an expert who thinks there's no problem and therefore you guys are all idiots", is going to persuade no-one. Until we see people's reasoning and have the chance to debate and dissect it, "anonymous experts from BP say don't worry" is exactly as persuasive as "Daniel Yergin says don't worry". For some reason, you seem to be trying to persuade TOD that you are now vastly more knowledgeable than everyone else and have the real inside information. But saying so while failing to actually exhibit any such information is just going to undermine your credibility.
The main idea of Dave's post is not really the "I showed this to experts". The real substance is in the idea that people are seeing evidence that supports their position, and not seeing the evidence that does not support their position. In this very article, you show a graph and then say
And I can't help but note that my impressions from the graph is that it showed virtually nothing at all that one could draw any conclusions from. The behavior of their "return to quota" looked a like their their previous "return to quota" behaviors during previous declines. There were times in the past when they appeared not to be able to rise with the quota. So what? It is like reading the HL graphs - a lot of graph reading starts to look like tea leaf reading and all the so-called "experts" are seeing things that, surprise surprise, match up exactly with the forecast they've been predicting all along. We see what we want in the graphs, and so any disinterested lurker, like myself, despairs of finding an "expert" willing and able to stay objective.
Address the specific argument at hand. Do not point at some post that does not pertain to the analysis of Northern Ghawar and say "you ignore your own data". That is not providing a counter argument.
Your comment made no sense to me. Where do I say "you ignore your own data?" What argument at hand am I supposed to be addressing?
Jeeeeeeeesus Christ, Stuart, I sent you an e-mail telling you exactly who I was talking to. These are BP people within the peak oil community. I'm waiting around to get them on the record. It's hard to get people's time & attention when they think something is of so little importance.
This is too much. Give me a break. The craziness around here is just totally out of control.
You ain't seen nuthin' yet, just wait a year.
The main problem, as Khebab alluded to above is that there is no concrete data on many of the myriad pieces of the peak oil puzzle. Imagine we are trying to build a state of the art stereo system. We have alot of smart people on this site trying to contribute - some are running around with the volume knob while others are running around with a tuner amp, and others are refining the best type of wire to go to the speakers. Collectively we are connecting dots that arent being connected in the mainstream - every new dot we connect is a step towards pure sound.
What we do once we have music should also be being discussed.
Except that, to extend the metaphor a little, it is starting to look as if many of those waiting to hear the final result of the efforts are tone deaf, and lots of others have ear plugs in :(
It's also true that there are people know as "audiophiles" who apparently listen to the sound of their audio, hi-fi system and not to the actual music being played. Don't get me started on the difference between valves and transistors and which one plays music more accurately, that could so easily lead into controversy between the two camps and an awful lot of meat grinding.
and i would be running around looking for the nicest oak to build the cabinet from.
I'm with Stuart, if someone has something to say, then say it. If they don't have time to deal with it then it is a non-issue, there is no point to have unknown experts with knowledge that they can't tell you about. I really don't see craziness that you are talking about, people just are wanting to understand the argument.
My point is that until you actually have useful detailed responses, you aren't offering anything except generally insulting folks' competence. No-one here is going to take "I talked to an expert and they said not to worry" as of any evidentiary value whatsoever. So why bother saying it? In particular, why bother saying it wrapped in insults to other people's competence? I agree that if the person ASPO is talking to produces a detailed response of some kind, it may well move the debate forward and that will be a good thing. But in the meantime, we have no useful information at all from that source, and your attempts to suggest that you do, but you can't share it with anyone, are simply unhelpful.
Re: For some reason, you seem to be trying to persuade TOD that you are now vastly more knowledgeable than everyone else and have the real inside information
The whole point is that I wasn't vastly more knowledgeable than everyone else in the world. Part of wisdom is knowing when to punt the question off to someone who is.
This remark you made to me is beneath you. You have high standards I have always assumed ... [part deleted because I will not say anything I will regret later out of anger].
Dave, your original post here violates all those rules of journalistic integrity that you espouse. So rather than upset the apple cart with no proof, please do tell us when your article is ready and where we can read it. Right now you are simply appealing to authority and even you wouldn't accept such an appeal if done by someone else. I have no doubt that you feel you have good reasons for your position but unless or until you are able to discuss them publicly, we can't hold much of a conversation, can we?
So please do tell us when your article is up and where. It will most definitely be on my reading list.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
When did comments in a blog become journalism? Dave wants to say that math modelling articles on the main page are BS, well, fine, that's his prerogative. I disagree, mainly because none of the contributors are under the illusion they're reporters. But applying journalistic standards to comments?
Dave applies his "journalistic integrity" argument to any article he dislikes and to any comment he dislikes. He then turns around and does the same thing himself. There is a word for this.
Yes he can call the math modeling articles BS but then when people say hostile things back at him he shouldn't act all indignant as if his holy righteousness had just been questioned.
In short, he can't have it both ways and expect to be respected.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
No, no it wasn't. I appreciated it, and I'd bet a lot that many other lurkers did too. The site is threatened with being overrun by some of the personalities here and their followers. Clearly some of these personalities are not here strictly out of desire to share and receive information, and are therefore suspect in their objectivity, IMO.
Dave, Thanks for takin' the 'slings and arrows' to keep the discussion balanced!
Just wanted you to know - there are (still) many people reading this site who are seeking the truth, and do not consider the issue closed. Although many here have taken the recent inferential analysis on Saudi's reserves as definitive (while dismissing Euan's inferential analysis of well productivity as unfounded), I believe most of us recognize that both arguments are weak because of the lack of solid data, and need to be seen as conjectural. Solid input from experienced engineers is hugely valuable - please post it when you can.
I appreciate the expert analysis from you, Euan, SS, and even FF (when I can decipher it:). Hopefully we can all recognize that this is not a contest to see who "wins", or who is "right", but more like a "Lost"-style mystery, with plenty of plot twists yet to be revealed. There aren't any points for shouting the loudest, or being the most "faithful" to the Peak Oil cause...
CW
Global peak: 2007 - 2010
Global decline rate, Post peak: 2%
Economic response: Severe global recession, ~5 years, then slow recovery
well said,
you too speek
Solid input is valuable. Baseless name calling and throwing tantrums because someone won't accept Dave's "authority" is not.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
I very much agree with this sentiment. I've been involved with this board for a long time and I remain of the position that the situation is highly uncertain and that there is no clear indication of whether a near-term Peak Oil scenario is likely to play out. I have always found Dave's input to be valuable and he has been one of the best contributors to this forum since the beginning.
It's kind of ironic that just as we may be approaching a possible test of some of our theories, we seem to be seeing a new level of disagreement and even acrimony among contributors here. What happens in Saudi Arabia over the next few months may well shed considerable light on the true Peak Oil picture, particularly if there is a supply disruption somewhere in the world, or a new surge in demand that really puts pressure on SA to up their production.
Unfortunately, instead of adopting a wait and see attitude, many posters seem determined to come up with the answer at the very first possible moment. This is leading to these micro-analyses of every breadcrumb of information that leaks out of Saudi Arabia, trying to fit it into the big picture. And everyone is arguing over what these tiny fragments of information mean.
I would suggest that we should just chill out for a bit. Chances are that things will look much clearer by the end of this year. I know that uncertainty is not pleasant, and in a way, knowing that the answers may well be coming soon makes the waiting that much more difficult. But we have been waiting for a long time, most of us, for a clear indication of what the future may bring. I think we can wait a few more months.
If you have a counter-argument to FF and Stuart, present it. If not, then your comments are less than meaningless. "I like Dave" and "What Dave has said in the past has made me warm and fuzzy inside" Does not address the argument or it's conclusions. I believe if there was an error in their argument it would have been presented by now, especially with the fervor whith which you debunkers are trying to shout them down.
I agree. I think we need to exhibit some restraint and bit of caution until we get more hard, empirical data, rather than endless arguing about numbers that don't add up because they aren't there yet.
I would hate to think that attitudes on TOD are somehow a metaphore for how the future is going to pan out.
Dave, you say
That would be "Rethin". He apologized.
I have been on the internet for about 15 years now. I have seen group after group fall for extended Godwinization on USENET. Believe me, apologies on the internet are extremely rare.
The only way a civilized discussion takes place is by being stoic about namecallers, which rethin appears not to belong to, by the way. Just prove your point.
Just prove your point.
Agreed, no more bones.
I don't see what the conflict is. "Mature"="watered out" it seems to me. Nothing unusual about a mature/watered out field for a petroleum engineer.
Ding, ding, ding. We have a winner. There may be absolutely nothing extraordinary about the situation except that it involves the undisputed heavyweight champion of all the world's know oil reservoirs.
The only reason people are going back and forth on this argument so much is that spot oil prices are relatively low and people are generally not jumping up and down about a shortage. In short, the Mighty Consensus (informed or not) apparently says Everything Is OK (of course this consensus may be manufactured/simulated by all sorts of tricks). The vast majority of people, whatever their GPA in school, are simply not able to hold an idea that diverges from what they perceive to be the consensus. They will consider it, then feel lonely standing apart from the rest of the sheep, so they wander back towards the sheep ("maybe everything is ok"), then wander back towards the out-of-consensus argument if some interesting data appear, etc. etc. It's more of an emotional process than a rational one.
Quote "I am tempted to just stay out of these discussions and let people give themselves enough rope to hang themselves with. There is such a thing as journalistic standards & practices, and that applies to those studying "peak oil" more than anyone else, because it is us who hold the controversial position. I also believe that a lot of naive people reading TOD get many wrong impressions. That's a shame".
You were "tempted", and did not fight the temptation,.. you broke "the rules" and make claims without backing them up. This is not journalistic at all, its familiar of similar tactics used by the media of this administration. Basically the tactic "if you can't dazzle them with your brilliance, baffle them with your BS". The BS here is, I am a journalist, and have info, trust me,. I think a few majors have had to apologize for such "trust" over the last few years, when supposed sources and info was not there, but the journalist claims it was.
If you have info like the others said, lets have it, if not, why are you claiming journalistic evidence and then not producing it, yet laying claim to your journalistic prowess. You have not done this once, but on multiple posts concerning this subject.
Why are you delaying giving the evidence you claim to have.
I work in the media also Dave. I find your statements lately very troubling in how I am supposed to judge your 'standards".
EDited to add,
ALso Dave you claim to do something again in the future, and there will be "consequences" for those that disagree. You bring this out in the public. It can be regarded as a "threat" by some.
Disneyland Dave, Disneyland is a theme park of dreams, that break the known reality. A reality that has come true from many of their "exhibits".
Its meant as a disparaging remark from your POV. From my POV and knowing what "Disneyland" represents, you are way off base IMO in this tactic.
Bring on your evidence Mr. Cohen.
Quid Clarius Astris
Ubi Bene ibi patria
A few observations that spring to mind;
You see that's more interesting to me than anything else because it indicates that to these people, whom we are asked to believe (via an appeal to authority) are experts in their field, this is routine. Nothing new here, all completely expected, move along now.
To me what they are saying is 'yeah, that's a field at the top of its game. Seen it plenty before in other places. So what?'
So why release something that can obviously be interpreted to show trouble ahead? The Saudis are smart and know their game, if there is trouble to be inferred from those numbers they must have known it was their. Surely they are smart enough to have edited the worrysome bits out?
Finally I am reminded of a Quote Mr Gore used in his recent movie;
The quote is from Upton Sinclair
Yeah, like try getting Gore to understand that his family business of livestock (cattle ranching) is responsible for more anthropogenic co2 equivalents (18%) than all of transportation (13%), according to a recent UN report.
Which offers me the perfect opportunity to say thank you, once again, to Ralph Nader and all those who demand sainthood from Al Gore, for the past six years. They have been so lovely for us here in the US, and even more so for those in the Middle East.
Look, when someone makes a big documentary about global warming without mentioning livestock, it's equivalent to making a lung cancer documentary without mentioning smoking!
Except that it involves food, a topic which immediately flips the Off switch in most people's brains!
Asking for Sainthood it is not. In fact it's a pretty egregious error! And by the look of Gore now, he ain't gonna give up the steaks, and will probably keel over from a heart attack before you know it. Sad.
He did look a little large at the Academy Awards, talking about global warming to nearly a billion people.
By the way, when is your movie about livestock coming out, and where can I see it?
Riiiiiight, only those who make big screen documentaries are qualified to criticise Al Gore - now who is trying to make a Saint of him? Sounds like YOU! That being said, I supplicate myself and bow down before Al's inherent environment-loving greatness! Oh, how I wish to tickle one of his chins, just to see that sweet Angelic smile shine through!
I see - the livestock industry is the source of more than 80% of the anthropogenic forcing, since it's equivalent to lung cancer caused by smoking. Why are we trying so hard to regulate CO2 emissions when they're a small fraction of the problem?
Assuming you're referring to the unmitigated methane release due to livestock raising: CH4 has GHP of 21 re: CO2. In 2003, world emissions were 25*1012 kg CO2 and (I project based on linked data) 0.15*1012 kg CH4 from livestock (31% of total 0.50*1012 kg). These are GWP equivalent to 13% and 42% of the CO2 quantity respectively. Thus, out of total anthropogenic CH4+CO2 forcing, the livestock industry is directly responsible for 9%.
That's rather less than 80%; I would go so far as to call this "...a pretty egregious error!"
Edit to add:
I forgot to address the 18% number (although that's still a bit less than 80%). Mind posting a link to that UN report?
Since there is a three year delay (or more) between drilling and production, won't we see a big spike in production in 2009 after those 55 rigs kick in? Seems like it is too soon to expect increased flows.
Of course, it may have dawned on the Saudis that this blog is correct, the price of oil is about to go through the ceiling, and if you leave it in the ground until it reaches $300 a barrel you do not meanwhile have to figure out how to invest it in ways that other countries cannot readily steal.
George
Just out of curiousity, and frankly ignorance, since I'm new to TOD and relatively innocent of middle-east knowledge: is it possible that the overall strategy of the Saudi's is to convert as much oil as possible to "liquid" wealth that can be taken with the Sauds when they flee the country in their jets ahead of an inevitable revolution? That would certainly represent another aspect to their own calculations on oil left in the ground...
Welcome, greenish:
As another of the ignorant ones, i'm glad you're here.
The Saudi royal game can continue as long as they can pump enough at high enough prices to keep their restive youngsters appeased &/or paid off. When either price or volume falls, their massive demographic and economic problems will swamp them, maybe resulting in the revolution you foresee. So "leaving it in the ground" would only guarantee an early end to the other Magic Kingdom.
I lightly tiptoe thru the comments and dare to post thusly:
Greenish person...Its not Ozzie and Harriet with the Princes and King fleeing with all the wealth.
Its High Stakes Geopolitics with the stakes being the End Of The World as we know it.
Bush and Co. are very very synched in, though many here believe him to just be a chimp, very aware and playing the game. What they are not playing for is you and our lives. They are playing to be on top of the game of SUPER SUPREME EMPIRE.
We are just the useless pawns. Yet if they make some bad mistakes in gamesmanship then they could find out that an angry pissed off bunch of citizens can be very unruly.
They I suspect also realize this and have plans in place.
What you should do therefore IMO is make your own plans.
To not do so then invites a lot of very tough risk.
One needs to be able to hunker down when all this starts to play out.Stay out of the spotlight.
Airdale-"You better stay away from Copperhead Road"
Ok Cid? My kinder music. No HuHu.
Stuart
I find the spike in oil rigs that began in the 4th quarter 2004 very interesting. It coincides with a a small sharp drop in production.
Do you know what caused that drop in production?
If you look at the data from late 1998, late 2000, early 2003 and late 2004 you will see that Saudi production also fell prior to any quota cut. OPEC quotas are not the best way to judge Saudi production aims - Saudi Arabia esentially sets the quota unilaterally given its role as swing producer. I would argue that the drop we have seen recently was a sign of the Saudis deciding early that production needed to be trimmed. US and OECD oil inventories were particualrly high towards the end of last year (in fact they remain high) and there was real concern that prices could fall. Indeed the market bought into this and we dipped below US$50/b for a time.
Of course that does not prove Saudi Arabia is not experiencing a critical production problem in the north of Ghawar. However, the pattern certainly does not prove that this is the case as past examples do show similar patterns, and Saudi output and quotas are not always on the same page. Looking at the data I would suggest they are actually more in line with quotas now than at many times in the past.
Looking ahead I would expect the drop in Saudi output to at least stabilise (from a market perspective) though an increase in production may not come until the second half of the year. This is definitely a wait and see. The test comes when the market needs more Saudi crude - if they cannot deliver then I think the hypotheiss gains strength. Until then I cannot agree that output patterns really tell us anything at this stage.
But another few months of data should say a lot more.
Good, that's not even one Friedman.
Friedman's are the basic quantity used in software engineering to give the final production date.
Free Software has broken with the concept and uses the much stronger estimate of ...
When its ready.
I like to hide the use of Friedman's by using the range estimate of 4-8 months.
In general the people requesting a piece of software cannot understand why you cannot get it done on time as they continually lower the amount of resources you have and increase the requirements inducing friedman behavior.
another few months of data should say a lot more
I am reminded of a comment by Robert Rapier a few weeks ago.
Although he expects a KSA production increase in late May/June, if they do not increase production and exports then, then we have a strong signal of production problems (or words to that effect).
IMVVHO, June exports from KSA are the pivotal point in time and place for confirmation of a World Oil Production Peak !
In theory, the world could peak slightly after KSA peaks (perhaps a year) but the delta is of little consequence and may be due to above ground factors (peace in Nigeria, Iraq, increased production from Venezuela after skilled people are finally replaced, etc.).
In our rear view mirror, May 2005 may have been the all time C + C production peak. And has it not been said that we would know the peak only a couple of years after the peak ?
Best Hopes for Reality Based Planning,
Alan
I would not take any short term increase for KSA this summer as a signal. Euan makes a convincing argument that they have taken some wells off line. Next they consistently claim they manage production we have no reason to assume they don't throttle back wells. In short regardless of the oil price we can expect KSA to be slightly conservative in their production .
And they do have significant tank storage.
All three of these factors indicated that the 8% drop represents either of two conditions.
1.) A mix of falling production and contrained production.
2.) Constrained production only.
As of now we have no reason to believe that the 8% decline is 100% from falling production.
Depending on the ratio of the amount lost from constrained production and decline and adding the ability to overproduce we can expect KSA to surge production for a short time sometime this summer.
We can expect them to continue too rotate wells and rest them even as production declines since its sounds like good management. And it allows them to surge briefly to counteract spike and oil prices. Not to mention the political effect of slight unsustainable production increases.
What we have good evidence for now is that they probably no longer have any wells with good flow rates that are shut-in for the long term. Basically all their production capacity is now being used in their rotation plan.
We can only determine depletion effects better once they are
put in a position to increase production at least once allowing us to determine how much production is offline at any point in time via rotation.
Next the fact that all wells are in rotation would show as a fairly quick decline back to a safe production level. They don't want to surge production for long.
Finally the number of well that are being rested at any point in time is basically a constant so spare capacity from stopping rotation briefly is basically a constant. I would expect them to continue to manage as they have in the past albeit with this constant shrinking over time.
Depletion will ensure that this constant spare capacity is being increased from a lower and lower base production rate.
If this is a correct view the fact they keep dropping production seems to indicate that depletion is a real problem and maintaining a constant amount of spare capacity
requires them to lower production.
So a increase should be expected whats important is both how high they go and more important how long they are willing to stop rotation. My guess is about three months max then they will drop regardless of price and claim they are now comfortable with 70 per barrel.
I don't think they will ever stop rotating wells except for brief surges. But we can expect the rotation to be reduced to the minimum they feel comfortable with for maintenance reasons. I suspect the best rotation rate is done on a well by well basis.
Finally we really need two data points at least if they are post peak so we need to see the surge and drop this summer and the next surge and drop which could be required as early as the fall. Its the second call on KSA to increase production that is the most important esp if they refuse or continue to decline.
In any case the current production profile seems to indicate they are in decline but the exact decline rate probably cannot be determined without a better understanding of the rotation policy.
What about their failure to increase production after Katrina?
I recall news reports claiming that Saudi Arabia had taken over the floating oil rigs as the leases came up, and that was going to keep the Gulf to maintain production. Lots of rigs for water off the coast of SA.
Quid Clarius Astris
Ubi Bene ibi patria
Although generally convinced by the Peak Oil argument I am very far from being convinced by the graph posted. The IEA table 3/4 figures show the exact same trend during reductions in quotas in 1998, 1999 and 2002. Although it is possible that KSA has peaked the first real indication will be the reaction next time OPEC quotas are increased. (As they surely will be some time this summer). These ARE exciting times. And it is possible that KSA has peaked - but the evidence presented above definitely doesn't convince me!
Look more closely at the graphs. In every other previous OPEC quota cut, KSA moved in exact sync with the timing of the quota cut. But for this last drop, the fall begins over a year before the cut even occurs. This is what is remarkable here.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
I am astonished at how many people believe Saudi Arabia when they say their cuts are “voluntary”, but totally ignore them when they say their “existing fields” are declining at from 5% to 12% per year and need an additional 500,000 to 1,000,000 barrels per day of new production just to stay even.
In my humble opinion a person would need to be stone ass blind not to be able to see the true situation in Saudi Arabia. The decline in production has put them in panic mode. That is why they are paying top dollar for every jack up rig available and their total rig count has tripled.
It is true that they are very secretive and no one really knows what is going on. But all we must do is look at the evidence, the preponderance of evidence!
The Saudis admit that Ain Dar/Shedgum are both way over the hill. And even using their figures, the whole of Ghawar is also over the hill. (48% depleted three and one third years ago.) Saudi is clearly counting on “New Projects” to make up for the one half to one million barrels per day that their existing fields are declining.
And one word about the word “crash” which Euan refers to above. A decline of 5% is a steep decline rate. A decline of 12% is by any definition a crash!
Ron Patterson
The difference is you are seeing the multiple smoking guns and making a conclusion, while others are awaiting the decomposing corpse... wishful thinking is the hallmark of our species.
Dude, some of us, who are into math, are looking at Stuart and Khebab's work and seeing that they correlate pretty well with the SPE paper, especially the cross sections. Engineers and scientists use models all the time and are fairly comfortable with them. Others are applying journalistic standards, ie, a journalist is neutral until he finds evidence one way or another. To someone like Dave, having BP experts or RR say KSA hasn't peaked is more definitive than math.
To me, Euan made the only argument against FF possible. Someone has got to explain why a field that is 90% green and 10% red isn't watering out. Euan said the cross section isn't representative; he could be right, but at this point he has a busted flush vs two pair. BP engineers stating a field is mature doesn't explain the massive green.
Dude, some of us who aren't into math can still do a little math. Saudi Araia says their existing fields are declining at a rate of 5 to 12 percent per year. Now I take "existing fields" to mean all those giant fields that have been producing oil from 45 to 60 years. These fields combined produced, in 2005, well over 8 million barrels per day of Saudi's 9.5 mb/d of production.
Okay, that's only what the Aramco Exec, (Senior Vice President), is saying. How do we know he was not telling a bald faced lie? That is how do we know that Saudi's "existing fields" are even declining at all. The evidence says, (evidence produced by Aramco) that Abqiq is almost completely depleted. They also said, over three years ago that Ain Dar/Shedgum was 60% depleted.
Okay, I don't have much any information on the other existing fields like Berri and Safaniya but it is very likely that these very old mature fields are in decline. In other words, the Senior Vice President was likely telling the truth concerning the rapid decline of Berri and Safaniya as well.
And let me remind you, Aramco is investing its capital in projects to revive several very old fields that have previously been mothballed because of poor production or reservoir problems. What does this tell you? It tells me that there is very little new oil to be found in Saudi Arabia. Little, if any, new oil and their old giants are all in steep decline. And they are currently trying to revive old, much smaller fields, that had already been given up for dead.
Okay Dude, do the math!
Ron Patterson
Hey. I'm with you. Like I said, those cross sections tell the story. When they are almost all green, it's not a mature field, it's toast.
One can read it as Saudi are confident that their large fields will still produce and not fall as a cliff, so they have just have to bring back their 60+ old fields back into production to stave off the declines.
I think they are preparing to explore for more oil. They definitely cannot maintain anything above 10mbpd without bringing several new mega fields into production every few years.
If they had a lot of proven oil on the ground with good production potential, they would have already stated how they can reach 15mbpd. They have said if demand requires them to get to 15mbpd after 2020, they will be able to provide it. They claim they can ramp up from 10+mbpd to 15mbpd by 2020, but all they show is evidence to 11+mbpd by 2010 and maybe 12.5mbpd if they are lucky.
If this is not evidence of PO, then I don't know what will.
It's the new math!
Obviously, they have 12.5 million bpd capacity, of which they can produce whichever 8.5 mbpd you like!
Due to the decline of existing fields it seems unlikely that SA will produce more than 10.5 mbod at the end of the next seven years (Al Jazeera article):
http://english.aljazeera.net/English/archive/archive?ArchiveId=11252
I had read a general formula that the world used 2 mbod more in the winter than in the summer due to heating needs. A winter drawdown of stocks would not seem unusual given this formula.
Read that Russia was able to increase production in 2006 by about 300 or 400K bod, but that they used the added production internally and did not increase exports.
Ok, I get it. So they shut down older fields because the were poor producers and now they are spending huge amounts to try to revive them? Wouldn't if make more sense to start producing some of the Billions of Barrels they claim to have in undiscovered reserves?
But of course those are still un-discovered. Hmmm! So we can see a massive build up in drilling rigs for the revival. Where is the investment in Seismic or other exploration activities for the discoveries?
Stuart:
Are these values C + C? Condensates do not count against the OPEC quota if I recall correctly. Only crude production.
Second, aren't the quotas "export quotas," not "internal consumption (or trade within OPEC) plus export quotas?"
ST, I am not sure about C+C but I think it is counted because it is just mixed in with the crude. Now mind you I am not sure about this as I have asked the question many times, on this list, what happens to the condensate after it is produced. But I have never gotten an answer. Is it mixed in with the crude or is it shipped out seperately and refined seperately?
But quotas are production quotas, and definitely not export quotas. Indonesia has a quota yet they export nothing. They are a net importer.
Ron Patterson
Very informative post. Great discussion.
One graph that I think would be very informative would have these three data series:
A) oil price
B) Saudi oil production minus Saudi OPEC quota
C) Three year delayed Saudi rig count
D) World stock levels.
You have to have at least some estimate of the stock levels regardless of price since the producers are going to back off production when the refiners have no more storage regardless of the price of oil. This is the refinery throughput constraint.
E.) World Refinery capacity
Are the refineries running at capacity world wide or is a significant amount offline for maintainece.
F.) Projected seasonal demand and historic stock levels worldwide.
There is some evidence that OPEC sets quotas based on the world price of oil. But I know of absolutely no evidence that oil producers look at world stock levels before deciding how much oil to produce.
History shows that most world producers produce flat out whenever possible. During oil gluts, in the late 90s for instance, nations that were previously increasing production, Norway, UK, Mexico, Russia etc. etc, just kept right on increasing production, adding even more oil to the glut. OPEC paniced over the price collapse and stepped in and cut quotas. But it was the price of oil, approaching $10 a barrel that got their attention, not the inventory levels.
Ron Patterson
Interesting yet today world stock levels are being used as the key argument for cuts. Its a big change from the past according to what your saying.
Can you clarify a bit more since obviously supply cannot be more than demand. It seems to me that your saying that as far as we know the world would use all the oil provided at a given price point down to like 10 a barrel. This means demand is for all practical purposes infinite ?
I'd guess this is caused by industrial fuel use as apposed to NG and or NG/Oil feedstocks for chemicals. So their exists a huge potential demand based on the price of oil vs NG ?
Yes, OPEC for the first time ever is using inventory levels as a reason to cut production. That is why it is so very dubious. They are cutting production while the price is still very high. True world inventory levels were a littlt high last fall when they inituated the cuts but not that high. Since then they have been falling. In January OECD inventories fell by 8.6 million barrels and I am sure they have fell far more since then. But OPEC says they are "still high". Yeah Right!
Of course there is a level where producers, even Russia or Mexico, would cut production. That level is where it would no longer be economical for them to produce oil. If it costs them more than they are getting for the oil, they will stop, I promise you they will.
Ron Patterson
Wouldn't there be a water cut where it would be uneconomical for the Saudis to keep a well open? The Saudis are after all pumping sea water hundreds of miles. There probably is even a water cut where the EROIE is less than 1, which would imply that the wells would never open again ever, even if oil went to $1000/bbl.
Your confusing two things.
Negative EROI is fine if the energy source is different from the energy produced. I.e is perfectly fine to use coal to make electricity to pump oil and have the total EROI negative if your more interested in the form the energy takes i.e liquid fuel.
The price point is not important since the cost is using the electricity to pump oil vs using it for some other use. The price point at which even negative EROI oil is still usable is probably a lot less than $1000/bbl and related to creating liquid organic fuels with other feedstocks including plant material. I've guessed this is around $500 or so a barrel at that point almost any feedstock is viable.
The worst feedstock case would probably electrolysis of water and reaction with C02 for methane thence via GTL to liquid fuels. You would not do it exactly that way but you get the picture most of the energy is in the hydrogen production once you have hydrogen you can make any organic fuel given a carbon source regardless of its state.
Using a nuclear reactor for the electricity. This would be the most expensive way you could make liquid organic fuels.
So this provides the absolute upper bound on the cost for liquid fuels.
Btw thats why I never understood the hydrogen economy stuff since you can always make methanol using carbonate or air extraction of co2 with NaOH and from methanol you can make anything or use it as your H2 source. We have never needed
pure H2 it makes no sense. Since its trivial to use a bit of extra energy up front to create the methanol instead of high fixed costs or compression costs for moving and storing hydrogen.
That point is probably well in excess of 99 percent water. KSA however may be constrained by separation plant capabilities and is probably not yet interested in processing "oil stained brines."
One other point. There is no loss of water inherent in processing fluids with a high water cut. The oil and water [and gas] are separated. The oil goes in the tank. The water goes back into the formation down dip from the producing wells. The gas can either be reinjected or used.
At a minimum a field producing 3mbpd of oil would require 3mbpd of salt water staying in the ground if it's water flooded. That's got to be pumped in from somewhere.
True, but that is different question. To maintain pressures, the fluids being extracted need t be replaced.
The operators are already extracting a volume of fluid and injecting a like volume of fluid. If in the future water represents 99 percent of the fluid being extracted, much less additional processed sea water would be needed as the oil field brine would travel in a closed loop from the prodcuing well to a separator then back [down dip] into the formation via an injection / SWD disposal well.
Maintaining millions of bbls of oil production per day with these sorts of water cuts is wildly improbable.
Assuming supply is unconstrained we did not hit this number even at $10 a barrel in the past so its lower than that.
Also as you say some production is not economical at the various price points so its simply not produced.
This explains the $20 bl estimates given a long time ago as a good price point for oil and even the 30-40 band on the outside.
Not till you get below that are you going to even effect the supply demand equation and the main effect is to reduce supply as expensive production is removed.
So the whole over supply argument is a bunch of hogwash ?
Not exactly. Supply cannot possibly be divorced from price. If there truly is an oversupply then it will be reflected in the price of oil. It will fall.
But, and this is a very big but, if the Saudis are claiming an oversupply while prices are still high, then their argument is hogwash. And right now it is totally hogwash. World oil supply is very tight. Brent spot, at this moment, is $68.51. It would be an oxymoron to say that the world is oversupplied while oil is trading at $68.51.
Ron Patterson
I echoed the same idea downstream: Demand is not equivalent to the level of supplies.
http://www.theoildrum.com/node/2437#comment-176688
I still don't get it sorry. The market as far as I know has been able to absorb any and all oil produced throughout history. Certainly the price drops over time as oil suppliers compete for customers. But they never have once ran out of customers willing to buy oil. Even down to $10 a barrel at that point they cut supply because of the price demand was still their.
The whole supply/demand or oversupply argument makes no sense.
Now it does make sense to say that the market demand for say 60 bbl oil is lower than they want so if they supplied more oil the price would go down. But at all times demand exists regardless of supply its just that the price is too high to use oil as a fuel source for the demand.
Its better to say they were not happy with the demand destruction at 60 ?
Oversupply at 50 makes no sense as you state further down.
Oversupply at 40 makes no sense since demand increases as the price drops.
At best you could say they claimed the market at the 60 price point was oversupplied ? I'd not call it oversupply and demand but simply demand.
A better way to put it is maybe 60 oil destroyed so much demand that the price dropped ?
I never bought the argument that 60+ oil is not hurting us and to say that continued high prices eventually resulted in a real demand drop at that price point from demand destruction makes sense.
It also means they eliminated potential customers and they don't care. You cannot expect demand/supply/demand destruction to stay balanced so you get constant higher prices. If they are really cutting production on purpose they almost certainly will undershoot demand and cause skyrocketing prices and and assuming they can increase production they will hit the same problem on the backside as demand destruction kicks in after a certain price point dropping demand.
At best they are simply increasing the imbalances in the market. Since the current price points are way beyond simple demand supply considerations and demand destruction is a big factor.
memmel,
There is definitely sense in saying "The world is oversupplied" even when the price is at $60 or much higher.
In the short term (ie. measured in months or even quarters) demand is inelastic. i.e. Supply too much and price falls like a rock. Supply to little and price blasts off. So, arguably there is a sweet spot that KSA, as a swing producer, can target. What KSA wants is a stable price that still allows world GDP growth. (And OPEC continually talks about targetting an oil price that allows for growth).
If oil is $100, and the world economy is still growing nicely than KSA could claim the world is over supplied if new supply comes on that drives price to $90. And then could reasonably cut production in response.
Medium term (measured in years), things are different. If KSA has vast nearly unlimited oil resources remaining, one could argue it might be rational for them to drive the price down to $40, say, in order to create over a period of years a world economy that consumes their products in much larger volumns.
But they are not behaving as though supply is endless.
Instead, they want decent world GDP growth and the highest price of oil possible consistent with that.
In my view demand destruction is not a large consideration for anybody now because the world economy is growing quite nicely.
I don't know as far as I can tell real demand exist for oil at any price that its been sold at. The supply/demand equation will control the price but at no point have you had oversupply ever in the sense that more oil was pumped than existed buyers. No oil supplier have ever stopped pumping oil simply because no one wants it.
Next you don't go from a over supplied market to under supplied with small changes in the supply over almost a year.
You can say things like they did not have buyers at a certain price for their oil sure. But thats different. And the $60 bl is a fair price argument came out later.
The comment seems to have come out in Q4
http://in.news.yahoo.com/060926/137/67xz9.html
Exactly at the time that supplies were not sufficient not when they started cutting.
I'm not arguing that the cuts are voluntary are not. I am saying that it looks to me like the market is not and has not been well supplied thus the high price over historical norms and it means KSA can voluntarily or not be assured of high prices going forward because ....
The world has peaked.
This argument makes sense and it does not try to figure out if KSA's cut are voluntary because of depletion or a mixture
it does indicate that whatever spare capacity existed outside of KSA prior to 2007 seems to be gone and furthermore it does not seem like production can be increased any where outside of OPEC so far to take advantage of the recent run up in prices.
Kinda sorta, but remember the long history of cartels and swing producers. Rockafeller / the Standard Oil Trust, the Texas Railroad Commission, the KSA / OPEC.
I will beg to differ.
World oil supply is not as tight as you claim prior to OPEC cuts. Refinery input utilization has been steady and no shortages of crude oil has been seen. If the world is short on oil, Refinery input should be dropping and oil prices should go up. What we see instead is refinery operations holding steady and storage increasing while prices go up and Saudi production going down in Q2 throught Q3 of 2006. The picture changes in Q4 2006 when OPEC instituted production cuts.
If its not tight then how can a fairly small cut of 1.7 mbd have a big effect on oil prices ? It should have had no effect. Last time they cut for price reasons 5 or more mbd had to be taken off the market to really move the price. We have seen production changes greater than 1.7mbpd in the past without large swings in the price. +/- 1mbd is not abnormal.
On the other hand if supply is tight then small tweaks can cause large price swings.
The tightness of the oil supply was reflected in the price of oil at the time. That is the way it always is, it cannot possibly be otherwise. Unless there is rationing of course. The price was in the fhs sixties. End of story.
I haven't a clue as to what world refinery input is. I know that the world price for oil is about four dollars higher than in the US. Refineries bid for the oil they want and if they bid high enough they will get the oil they need.
Again, in the absence of rationing or other government price controls, the scarcity of oil is reflected in the price of oil. That is the way it is for any and all goods and services. (Economics 101.)
Ron Patterson
I agree with you. The term over supplied and well supplied is a misnomer oil prices are much higher that historical norms.
The market is not well supplied.
KSA may well be playing games on purpose or not to get the oil prices at certain price points but this is only because the market is not well supplied and has not been well supplied for some time.
At that point if they are the only game in town why 60 why not 70 80 100 ???
If they are going for price then as long as the increase makes up for lowered production on their part they can keep on cutting.
Are you not forgetting that several countries, including Uganda, South Africa, Ghana, Nepal, Bangladesh, Nigeria [yes, Nigeria], etc., are experiencing extreme shortages of oiL>
James Gervais
In general these countries are basically priced out. Don't forget the Philippines either they seem to be pretty unhappy.
I guess their demand is not wanted.
Looked at this:
http://freeoil.1111mb.com/spe/spe93439.pdf
Found this, which is about all that made any sense to me:
and I have probably misinterpreted, but does that mean they have to do this because that is as low as they can go before striking water. Meaning not much oil left?
Has anyone a copy of Oil Drilling for Dummys? (as everyone seems to be having a good time slinging mud about thought nobody would mind a question here?)
I have wished Stuart refute the point about lack of demand.
It is very clear from 2006 oil data that no one wanted more oil from Saudi Arabia.
The evidence points to Saudi Aramco reducing oil production to balance supply and demand.
Evidence:
1. IEA survey data show World oil refinery input/output stay constant
throughout the period Saudi Aramco cut production in 2006. No
shortages of oil. If Saudi Aramco did not cut output, there will be
more supply than demand. Lack of refineries to utilize the oil.
Link: http://www.iea.org/Textbase/stats/surveys/OIL_WEB.XLS
If you look at T7, you will see total output is steady with minor
fluctuations in 2006.
If you look at T9, you will see total stock levels of all products
were rising in 2006.
2. US EIA survey data show confirms IEA world oil survey data. US
refineries operated to similar capacity in 2006 compare to 2005. US
stock in 2006 did not show decline as expected if oil shortage. Saudi
cutbacks are acting as a swing producer balancing supply with demand
as any increase in supply will increase the stock build.
Link: http://tonto.eia.doe.gov/dnav/pet/hist/mgirius2m.htm
Monthly oil refinery input
Link: http://tonto.eia.doe.gov/dnav/pet/hist/mttstus1m.htm
Monthly crude oil and petroleum product stocks
3. EIA world supply and demand statistics:
http://www.eia.doe.gov/emeu/steo/pub/3tab.html
2006
Q2 demand: 83.5
Q3 demand: 84.7
Q4 demand: 86.9
Supply:
Q2 84.2
Q3 85.2
Q4 84.7
Both Q2 and Q3 have more supply than demand according to EIA link above. Q4 is when oil prices drop and OPEC instituted cuts. In Q4, we got stock draws, but not in Q2 and Q3 where stocks increase. Also, Q4 stock draws did not support prices at all as prices decrease.
Those are statistics supporting the lack of demand.
Here is Saudi officials talking about this situation in 2006 when they
started cutting production.
Wall Street Journal:
http://online.wsj.com/PA2VJBNA4R/article/SB114947042044271151-search.htm...
If you don't have access to WSJ, here is a public one:
http://www.postcarbon.org/node/3811/view
Actually I think the whole demand argument is probably false.
See my above post. Since industrial use can accept a huge amount of oil or NG for production. I don't think their is any real limit on demand. Only in the case of very low NG prices and very low oil prices are you going to get a situation where demand is saturated and of course you have to ignore growth.
Add in growth and its probably impossible for us to pump oil faster than demand can use it.
Demand is a function of price.
If Saudi Arabia continue to flood the market despite refineries operating at maximum levels, they will trigger a price collapse. They started throttling back production when they started seeing a large build. They had come out and said if buyers are willing to pay a high price, they will let them stock them in storage. Buyers stopped buying and started demanding lower prices, despite NYMEX posting record prices. I don't have proof of this, but only interviews. You can see that supplies are above demand due to increase stocks and refineries were operating near peak. You will also see prices start dropping and despite Saudi cutbacks, prices continue to fall. You also hear that Saudi Arabia is charging too much for their lower grade oil throughout Q3 and Q4.
The main point of my original post is not so much demand, but that Saudi Arabia claims to be a swing producer, so when they are reducing supply, then we need to see if there are new supplies from others filling in. If not, then that means they are not supplying demand, but are no longer swing producer. Since supplies are plentiful, this means they are acting as swing producer.
But from historical data thats never happened. Even when oil hit 10bbl. The whole argument is suspect. Oil went to 10bbl and we kept using it. At 10 they finally got unhappy not that the market could not take any more oil. I see no proof that the markets have ever been oversupplied once in history much less at todays prices.
Show me one case where the world oil market simply rejected oil because it was over supplied.
What are you talking about?
There are several instances in history where people refused to buy oil because it was too expensive.
They could get it for cheaper else where.
That is the problem Saudi have ran into. They are selling oil above the market price. They had no problems doing this in 2004 and 2005. They were able to institute a program of decreasing the crack spread between heavy, mid and light grade. The spread increased again in 2006.
If Stuart is going to use price as part of his argument, he needs to understand what is the demand picture. His argument is fill with holes as far as Saudi should have produce more oil during June of 2006.
You don't see it, do you? KSA didn't produce more in June 2006 because they could not. Think about that.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
GreyZone,
I can bet you $1000 that Saudi Arabia could produce more.
The point is not whether they can produce more, but whether they can sustain their production. They can easily boost oil production at the cost of future production and extra water to handle.
Well maybe.
I'm just saying the concept of the market ever being oversupplied with oil makes not sense its never been oversupplied. At times the glut of oil on the market dropped the price down to $10 a barrel but every drop of oil pumped was bought even at that price point.
Demand exists for oil at any price point. If the price drops more willing buyers exist. At no point in history have we ever had the case that no one was willing to buy oil.
Real "oversupply" would have resulted in a much more dramatic drop in price down to say $30 as it simply takes time to purchase all the oil supply and demand are not in perfect balance and it takes time for demand to rebound.
At best you could say that $60+ caused enough demand destruction that you got a temporary mini-glut leading to lower prices which allowed formerly shut out buyers to buy oil.
I would say that $60+ oil simply hurt the world economy more that KSA had anticipated. At best it was a very temporary imbalance in the market that would have worked out quickly as buyers re-entered the market. A decline down to $30 or lower would have indicated that the price was low enough to increase demand from willing buyers.
The problem is oil demand is for all practical purposes infinite but the supply/demand is not in perfect balance esp at high prices where real demand destruction i.e people leave the market since they cannot afford to buy oil is happening.
To use another example in the US housing prices got so high that everyone was "priced out" of the market and demand collapsed and prices collapsed. The recent mini-glut is simply a symptom of a collapsing market because the prices are too high not that the market is oversupplied.
We will see the same or worse variation in prices post peak and it has nothing to do with supply and everything to do with collapsing demand or demand destruction.
So the KSA response of oops we accidentally cause a minor collapse in the market lets cut supplies does not make sense. In a expensive market with demand destruction the price will rise and collapse.
memmel,
You are using supply and demand to mean something totally different than how it is being used. Balancing supply and demand means you are providing supplies at a given price where all your supplies are sold to buyers at the highest possible price.
If you got more demand, then you raise the price or increase the supply.
Saudi Arabia is very clear on how they balance supply and demand. They set a price and they will deliver as much supply as there is demand. That is their role as swing producers. They often adjust this price based on their own models that I do not know.
What I do know is that Saudi Arabia made sure there were more oil on the market than refineries were able to process. Allowing speculators to buy oil and hold in storage. The amount of oil held in storage increase in Q2 and Q3 2006. This is the same time that Saudi production started declining. Saudi officials spoke in June 2006 saying they are having problems finding more buyers, so they are reducing production. We see production drop and increase in price. Stuart and many of you here are harping on this phenomenon to say that Saudi Arabia could sell more oil, which is not the case at all. Refineries were already operating near max. New oil production supplies were being shipped to refiners and storage facilities during this time. Saudi Arabia had to cut back and lose market share or else they will need to sell their oil at a lower price.
I have shown evidence of world oil production exceeding refinery input for Q2 and Q3 2006. I have also shown evidence of increase oil supply in the market despite Saudi cuts in Q2 and Q3. This means Saudi Arabia is reducing supplies as other oil producers are increasing production. They have not cut production and force refiners to go to storage, until prices start dropping a lot.
I have shown evidence of world oil production exceeding refinery input for Q2 and Q3 2006.
You've claimed alot of things, you haven't SHOWN anything. Give us links. Give us some data. Show us who said what where. That's how this works.