Jeremy Gilbert's Comments on TOD Saudi Analysis
Posted by Stuart Staniford on April 12, 2007 - 9:47pm
Topic: Alternative energy
Tags: ghawar, peak oil, saudi arabia [list all tags]
Born and educated in Ireland. Moderatorship in Mathematics from Dublin University. Joined BP in 1964, worked as production engineer in Libya and then helped introduce the new technique of reservoir simulation into BP - working in Libya, US, Kuwait and Abu Dhabi - prior to eight years in Iran in reservoir engineering posts and as Planning Manager. From 1979, supervised BP’s North Sea reservoir engineering and later managed all BP’s UK petroleum and reservoir engineering activities. Worked in San Francisco as Vice President of BP Alaska Exploration before returning to UK in 1987 as Technical Manager for the development of Wytch Farm field. Appointed BP’s Chief Petroleum Engineer, responsible for the company’s worldwide petroleum engineering performance and for an associated R. and D. program, in 1988; later became Resource Development Manger, overseeing technical recruitment and helping design and implement the ‘Challenge’ program for new staff.Steve Andrews and Randy Udall at ASPO-USA asked him to comment on recent Saudi Arabia discussions here at TOD. The verdict? Read on...In subsequent posts worked on a range of staff development, equity and major legal issues in London, Houston and Anchorage. Retired from BP in 2001. Is now Managing Director of Barrelmore Ltd., a company providing technical audit and training support to the oil industry worldwide. Has been Chairman of Heriot-Watt University (Edinburgh)’s Industrial Advisory Board, a member of ImperialCollege (London)’s and of University of Alaska (Fairbanks)’s Industrial Advisory Boards, an external examiner for Masters’ courses at Robert Gordon’s University (Aberdeen) and Heriot-Watt Universities. Has also occupied several significant posts in the Society of Petroleum Engineers, including that of Chairman of the London Section. Lives in West Cork, Ireland - where he and his wife own a bookshop.
- SS: Saudi Arabian Oil Declines 8% in 2006
- EM: Saudi Arabia and that $1000 Bet
- SS: A Nosedive Toward the Desert
- EM: Saudi Production Laid Bare
- SS: Water In the Gas Tank
- HO: Of Oil Supply trains and a thought on Ain Dar
- SS: Further Saudi Arabia Discussions
- SS: The Status of North Ghawar
- HO: Simple mathematics - The Saudi reserves, GOSPs and water injection
- Ace: Further Evidence of Saudi Arabia's Oil Production Decline
Lots of questions - not so many easy answers!Also, this is totally unrelated, but I'm putting it here for the sake of somewhere to put it. Various folks were complaining about the Linux supercluster oil saturation picture having the opposite color convention from the various SPE paper cross sections. On the plane earlier this week, I had time to do a little image processing code, and here's a better one:Yes, I have read through the Oil Drum articles and comments and also the Peak Oil News article.
I am amazed at the energy and diligence which the authors exhibit in carrying out their analyses. It is, of course, almost tragic that the Saudis won't release more detailed performance data - and their own analyses - which would show the situation clearly and avoid the need for the painstaking work reported in Oil Drum. The conclusions reported seem to me to be credible but I have to emphasise that in any reservoir engineering analysis there are almost always more unknowns than equations. As a result, one is generally faced with having to make estimates for part of the solution and then be concerned about the uniqueness of the solution derived. This is a situation which users of complex reservoir simulators are continually faced with.
It seems likely to me that the conclusions the authors have reached about Ghawar's current status are broadly correct. However, it's a big step to take from concluding Ghawar is currently at or close to maximum achievable production rate to saying that that rate cannot be maintained, or even increased, through the addition of additional production wells, through increased or more efficient water injection schemes or through surface facility modifications. Oil companies employ reservoir engineers and reservoir geologists, and use massive numerical analyses, to deal with just the situation we probably have here: "a mature field is showing signs of declining production with its current development, what can we do profitably which will change this situation?"
Does the situation which the Oil Drum people have described mean that Ghawar's production rate is about to decline? Possibly, but not necessarily. It depends on the amount of additional investment that would be required to address the problem and whether the cost of this work is economically justifiable. The answer to that depends a lot on the oil price scenario which the company has adopted.
I think the problem with what the authors are doing is that they have got to the limit of what can be achieved by well-meaning amateurs who have limited access to geological and reservoir data. Any more detailed analysis requires reservoir engineering expertise and better data. Sorry, but in my opinion it's just not possible for the authors to produce results which are as definitive and reliable as those produced by Saudi Aramco's professionals; they are the people who will decide Ghawar's future.
Now for your 'separate' queries!
1. Reservoir Modelling prior to project sanction.
Right from the time a successful discovery well is drilled the geologists will put together a 'whole earth' model, using PETREL or similar software. This contains all the geological and petrophysical data available and is continually updated as more data is collected. Reservoir engineers will upscale the 'whole earth' model to produce a less complex (smaller) model which can be used to simulator the future performance of the reservoir. Over the years when the field is being appraised hundreds of prediction runs will be made showing how recovery efficiency can be influenced by varying well numbers, well locations, well completions, pressure maintenance and gas/water flooding, different production profiles. The best of these prediction runs will be used as the basis for making a decision on whether or not to proceed with field development; the total cost of the development will be assessed, the future production defined; DCF analysis can be used to decide if the project would be profitable - and to rank this project against others that the company is considering. Once the company's board have approved the project and development drilling begins the numerical model will be continually updated with many prediction runs being made. These will continue through field's producing life as history matching becomes possible.Although BP's geologists forecast 13 billion barrels of recovery from Prudhoe, the field facilities and TAPS were designed for reserves of 9 billion. Field life was predicted to be about 25 years at the time of sanction. The field stayed on plateau longer than predicted and the decline rate post-plateau was much less than had been predicted.
This brings about another possibility; a step function in water cut and total fluid production.
Let us suppose North Ain Dar "waters out" over the space of, say, 6 months. Water cut climbs (made up #s for example) from 33% to 92% ! This rapid climb is only possible because of the superb quality of the reservior.
Total fluid production before was 1.5 million b/day = 1 million b/day of the good stuff (more likely #s for North & South Ain Dar combined).
One can note the large volume of yellow mixed oil & water underneath the rapidly shrinking dry oil at the crest.
Could North Ain Dar be redeveloped to produce, say, 10 million barrels/day total fluids (it is good rock), 92% water cut with oil production of 800,000 b/day (still down 20%) ? Or something comparable.
GIGANTIC GOSPs would be required ! Is there any indictation of such on order (I know some are on order).
I think this is what he is saying.
If I interpret his point correctly, then I can also discount it (with very low confidence). Possible, yes, but is it likely ?
North Ain Dar will NOT be plugged and abandoned in my lifetime (should I live another 50 years). It will be redeveloped. However, any redevelopment scheme for a watered out reservior is unlikely to maintain current oil production rates, or even close IMVHO. Aramco is NOT a share holder company that operates entirely on Net Present Value.
The answer to that depends a lot on the oil price scenario which the company has adopted
Saudi Aramco has more pricing power than any other oil company (or nation) in the world.
Best Hopes for Rational Planning,
Alan
Alan; You are correct, Giant Gosp's or Gathering Centers are being built. SK Eng'rg of Korea is won the contract for GC-24 This particular one was damaged when Iraq invaded Kuwait. However, I believe oil service companies will become busy going forward.
If higher water cuts are the norm, then bigger OWS facilities will be announced. You can extract additional oil out of a declining well/ field by increasing pumping rates and separating equipment, but then you going into demand destruction faster.
Good barometer of this issue imho
OCB
Thank you very much Mr. Gilbert.
Back to the Data.
Whilst you'll was arguing about how well ol Dolly would survive PO, FF was burnin the midnight erl crouchin ov'r the digit-tizing tablet with good ol' SPE 93439er (which don't hav nuthin cordin to much expurts) and doin massive linaer interp'lations with his 386 deep in the Holler.
Alan from big easy is lookin for a step change in water cut
Jeepers- gander at that 33% production drop pert near good ol 98. Oil prices????
Devil -lopin......
F_Flow...just to state what I am assuming is obvious here...
Blue = water
Green = oil
Correct?
Yep. Standurd Erl Bidness Colours.
Hundruds of Thousands of Barr'ls Pur Day
Excuse me for being dense, but isn't this just an extract from fig 1 of that doc? I'm missing where we know the production drop is due to something other than artifical contraint?
OPEC quota increases 10% 2.5m Jan 1 1998
quota cuts 1.25m Apr 1 1998
quota cuts 1.335m July 1 1998
Garyp-
Where I come from we don't have no valve that can turn off the oil and keep the water a comin.
FF
but mother nature has a valve that does the opposite.
FF
Yes, but at least in fig 1 the blue line is the water cut %age. Turn down the flow from a few typical wells and you would expect the %age to stay that same (assuming you can turn down the flow, I expect that's the case).
Just playing devils advocate, it is very similar to the time when oil prices went into a downward spiral...
If you're turning off high water cut wells to rest them, the water should come down too, right?
Your next question- Oil Production for Total Wet Dry
Emailing you my data- verify it is to your liking
FF
OK, if I get this right you've reversed the ratio data towards the back of the doc (fig 10?) to generate kbpd from wet and dry areas, given the total production figures?
The figures tend to show a significant event in mid 1992 that increased the %age of oil produced from 'wet' areas, but without changing the water cut %age rate of change significantly.
In mid 1993 action was taken which stabalised the water cut %age somewhat, but didn't change the %age of oil that came from 'wet' areas.
In mid 1998 the %age of 'wet' area decreased sharply, back to its pre 1993 level, as the total production decreased. %age water cut took a small step change from here to 2000.
The %age of dry oil has been gradually increasing since then.
OK, so what does it mean?
Dr. Husseini
Buried in the text down the page
http://www.saudi-american-forum.org/Newsletters2004/SAF_Item_Of_Interest...
Look at the previously debated xsections. THe water saturations are 65% when the residual oil saturation is 21%, the theoretical end point water saturation is 79%. To take the post breakthrough water saturation as high as you can ... is where the potential lies.
The crash of this 200kbopd around 1998 might have been caused by shutting in the best oil cut wells in the wet area... only 20,000 bwpd was lost. But why did the dry oil area production increase at the end of this drop and continue on an upward trend ????.... Possibly answer- the oil was needed to supply world markets.
You are trying to post peak model- what happens when the degree of freedom to pull the dry area is gone??
FF
OK, try this on for size.
1991-1992 the waterfront nears a set of vertical wells, all along a isofront. As it does so the watercut increases.
1992 the waterfront nominally hits those vertical wells, converting them to nominal 'wet'. However you can still produce at about the same level without too many issues.
1997 production begins to drop off.
1998 you take significant action, cutting off some high water cut wells, drilling new infill higher up the slope to increase the number of dry wells. Overall the water cut situation continues to get worse (why?).
1998-1999 you stabalise the production figures.
1999-2005 you continue to drill new wells, possibly vertical to horizontal sidetrack conversion, probably MRC to keep the water cut and production to a figure.
I'm not convinced it explains the shape.
I cannot see any high water cut wells being shutin on the water produced.
1998- You sit around in meetings all day and discuss "where is it going to bottom" .... where can we make up this production... "we have to start producing the crest " Is it not interesting that there was no where else to turn but to violate the "prime directive" in the most mature field.
... this period is not defined by action, but by inaction.
You are right to see dry oil wells being assimilated by the Borg of the wet area... it had to happen on that WOR vs. cumulative oil that you have.... look at the production logs in 93439.... I did an exponential fit of the WOR versus cumulative but that includes the influence of absorbing those good dry oil wells..... if that field has no more dry area (which was the point of the last 3 weeks discussion) Where are we now???
1998 has to see either new dry wells, or wells reclassified as dry after sidetrack drilling - how else can dry area production increase.
However the water cut rate of change increase doesn't tie in with that.
Are you sure you've comparing apples with apples? Where did the water cut %age come from? Its not measuring the physical geology rather than the well classification is it - they would be two different things and might explain things, a little.
open a choke???
C'mon guys....Fractional Flow just gave you the proof of the looming catastrophe on a silver platter. He might be the next deep throat. Look what he found that Mr Hussieni said:
"if cost cutting strategies and high risk production
practices are allowed to prevail, the consequences can be both
devastating and sudden. Examples of such ill considered
strategies might be an early shift to in-field water injection
patterns, a shift to dry crestal production strategies away
from wet flank areas..."
DRY CRESTAL PRODUCTION!
That's what they've been doing the past few yrs and FF's data shows that.
So they are doinng the worst possible thing the last 3 yrs!!!
Desperation.
They are drilling the crests, opening up every well they have and just plain producing flat out to try to keep production up. In the VERY near future the whole thing will collapse. Maybe by the end of the year...
So...if this is true...back there in 2000-1 timeframe...KSA and BushCo "probably" knew there was going to be a problem with Ghawar...SOON...meaning 3-4 yrs. down the line?
Just trying to piece together my conspiracy theories.
Stuart,
Thank you for getting Mr. Gilberts remarks on TOD. He is a man with impressive credentials, and a seemingly well balanced view of things, not "cornucopian" nor "run for the hills!"
The central point of his remarks seemed to me to be: It's a tough complicated business, and it's in the Aramco specialists hands now.
One cannot help but notice that he seems to have a fair amount of faith in their abilities, and does not show any indication of thinking that they are telling outright untruth, at least not knowingly.
I said in a post the other day that I hate to bet against the Saudi's money. We can watch where they are spending it, on the assumption that they don't want to willingly just throw it away, and "follow the money" to borrow an old phrase. This brings to point Alan's remarks about the giant gas oil seperation units. Are they spending that kind of money? Also Khurais and the empty quarter, how much are they spending? Would they spend it on fields that couldn't deliver payback? That seems unlikely.
But, there is always the risk that they simply are at the limits of their own knowledge. That the world is now so relient on such a small area of the globe for it's energy and economic, perhaps even cultural survival, should not give us great comfort. We are hanging now by a thin thread, and that thread is in the Saudi desert.
We should be prepared for anything.
(edited for correction, and in consideration of Alanfrombigeasy's remarks)
Roger Conner Jr.
Remember, we are only one cubic mile from freedom
"Follow the money" Indeed!
Another saying from the political world (which is intertwined in all this) "Watch What They Do, Not What They Say". Obviously, GOSPs would be exactly the kind of thing to look for, along with water pumping stations, pipelines, etc.
Knowing what we know now about how Gov't political types can "influence" civil servants, even in more open gov'ts like the USA, I presume that the same thing is going on in KSA with its Oil ministry, and the companies doing business with it. Something along the lines of "Yes, the emperor has no clothes, but don't you DARE say anything about it to anyone!"
Franc (penguinzee)
Taken out of context, Jeremy Gilbert's comment would appear to dampen Stuart's analysis. But consider these points:
1. Brent Crude futures prices remain quite high
2. KSA production has dropped
3. Stuart developed an explanation consistent with the public evidence for the drop, which was a high-level depletion analysis involving the timing of KSA mega-projects
4. Prompted by Fractional_Flow, Stuart performed an in-depth resevoir analysis providing support for the depletion assumptions in his first argument
Others here have argued that the presumably well informed Saudi Aramco professional management have biased their public pronouncements for political reasons. So it is all well and good as Jeremy Gilbert says for these professionals to manage their resources wisely and with the best information, but how does that help us know more about the unfolding crisis?
Surely a truism, but it is relevant ?
A few hundred professionals (with perhaps a half dozen senior experts on the top) with access to ALL the data (and new monitoring wells drilled at their request), decades of experience, no constraints on computational & software resources, etc. certainly can produce better projections than what The Oil Drum has available. However, that information is behind a wall.
The relevant question is can TOD extract enough information to get a better understanding of what is happening, and likely to happen, with North Ghawar ?
I think the answer is yes, with error bars and relatively low confidence.
As I posted a while back, taking a string of the most likely of the alternatives will give one the most likely outcome; but the confidence will be low (less than 50% probability in many cases).
In this specific case, I think that Stuart's conclusions are more than 50% likely to be right and an error (misplacing that North Ain Dar cross-section profile is the most critical one) will affect the timing of watering out but the trend is clear and rapid watering out (whenever it happens) IS ANOTHER VERY IMPORTANT CONCLUSION !
Another important conclusion is that North Ain Dar, South Ain Dar, Shedgum and Uthmaniyah are all likely to collapse within a few years of each other.
Another means of predicting the future is tracking equipment buys by Aramco and interpreting them. Their forecasts and resulting plans will be reflected in their purchases. And there is always that "spy in the sky" from Google Earth, etc. and rumors and leaks.
In summary, IMVVHO, Stuart's conclusions on the near term (today ?) decline rates are both alarming and most likely right. However, there is a good chance that he is in error by a few years.
Other important conclusions are that
1) a complex that recently produced 4 million b/day are all at similar points of decline.
2) This North Ghawar complex is composed of at least 4 "high points" and these 4 points will water out independently of each other.
3) Watering out is likely to be a fast process with dramatic rises in water cuts on the order of days to months. This rapid watering out is possible because of the very high quality of the reserviors.
Anyway, that is my take on it all. When I have a spare day or two I will reread it all for better understanding :-)
Best Hopes for the Truth,
Alan
You couldn't run the GOSPs without extensive process data. The Saudis have years of data on GOSP operation, which wouldn't tell you much about any individual well, would certainly tell you a lot about the aggregate field. Aramco could instantly prove the point one way or another by releasing five years of GOSP data.
One thing that I keep remembering, and which should be kept in mind throughout this discussion, is that the data Stuart et al are working from is THREE YEARS OLD. (I apologize for the shout, but I think it is important to keep in mind that today's data is likely much worse.)
Alan, you say, "However, that information is behind a wall."
Maybe it's behind TWO walls. In 1977 the CIA correctly predicted that the Soviet Union would peak in the 1980s (doc on CIA's FOIA Web site). It will be a sad state of affairs if we learn too late that, in the name of 'National Security' the CIA kept, behind its wall, the info that the 'working middle class' (Clinton's term) needed so it could prepare.
Mr. Gilbert is a professional in the business. The vast majority of professionals failed to foresee the Texas and Lower-48 peak and decline. The vast majority of professionals failed to foresee the peak and decline of the North Sea. The vast majority of professionals failed to foresee the peak and decline of Yibal. I could go on (and on and on) but the record of these professionals is not heartening either.
Brent futures have continued to rise. IEA is saying OECD stocks are at dangerous lows. OPEC, including KSA, refuses to increase production. The world appears to be running a daily shortfall of at least 1 mbpd that is being covered by stock drawdowns.
But all is perfectly well because Aramco professionals say it is? I find this appeal to higher authority unconvincing in light of current events.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
When Texas went to a 100% allowable in 1972, there was widespread shock in the industry when oil production started declining in 1973.
According to Matt Simmons, the majors working the North Sea were predicting a peak around the 2009 time frame, while the humble HL method clearly was pointing toward a peak around 1999 (when the North Sea, on a rock solid HL projection, crossed the 50% of Qt mark).
In the Yibal Field, which like Ghawar was redeveloped with horizontal wells, Shell was expanding their surface production facilities to handle an expected flood of new oil, when they instead had to deal with a flood of new water, as the horizontal wells started watering out.
IMHO, Gilbert's response is mostly a case of "Sour Grapes:"
An exceedindingly smart, hard-working -- and perhaps bolder-- "amateur," in the name of SS, has beat them all in acurrateley predicting Saudi deline.
Also, RE the end example of Prudhoe Bay producing more and longer than anticipated.... what about the North Sea example of peaking earlier and declining faster than anticipated? This example always sticks in my mind when talking about the oil company engineers with all the sophistication and access to all the data. They can still get it spectacularly wrong. Ditto for Shell (I think it was Shell) and Oman. The Prudhoe Bay example seems designed to give the impression of the BP engineers being conservative in their assumptions. Other examples show a different picture.
Prudhoe Bay oil could only be shipped out via the pipeline, and that pipeline was very expensive to build, and was built at a certain size. Thus eventually the rate of extraction had to plateau at the pipe's capacity for a while, no?
I think that you are talking about the Yibal oil field of Yemen. Shell put real $$ into processing infrastructure that was not needed as Yibal quickly watered out. (Does anyone have the stats on just how quickly Yibal watered out ?)
Best Hopes,
Alan
Stuart has put forth a hypothesis and supported with some good data. However, Gilbert is only verifying what we all know, and that Stuart's hypothesis will be proved out in the future by Saudi oil production since Stuart's hypothesis has some uncertainty in it (mainly that the Saudis may have a few oil production tricks up their sleves), or that they may have in fact turned down their oil production.
What is also interesting to note is that I believe that Skrebowski's forecasted total liquids peak two years ago was 2010. Since then I believe that he now has been convinced that Saudi oil production has also peaked (Ghawar is in decline) and thus the total liquid peak will be in 2009 instead. Thus, the difference that Ghawar makes in the whole scheme of things is one measely year. WhoopDeDoo We are still headed for a train wreck...
Retsel
I am the merest of lay readers.
But here's what it's like:
A magnifying glass held over a stunned insect.
"So it goes."
The point I made earlier was that not only were there no signs of the contract from SA necessary to bring such a thing about, when you look to their in-house technical journal they are not talking about "how to extract even more from mature reservoirs", they are talking about gas and refining.
Now maybe, once they have their new megaprojects onstream they are planning to go back and attempt to force a little more from North Ghawar. But that will be at a much reduced rate, and won't last that long in anycase.
Which brings us round to the key question. If there were an attempt to force longer, high flow rate from North Ghawar, where is the practical sign of it, given the demonstrated situation of those reservoirs? Without those signs, surely the unique solution is that further effort does not form part of their short to medium term planning cycle?
garyp,
I like how you are playing devil's advocate here.
Saudi Aramco is on the forefront on how to reduce water cuts at the lowest cost. They have worked on and expanded horizontal wells and related technology. They use placement of injectors and pair them with oil producing wells. They use different injectors like acid HCL and emulsion. They use different pumps to increase pressure on low pressure wells. The list goes on and on. SPE papers on these types of solutions and their latest results have been published.
Saudi Aramco is betting heavily on these different methods to reduce water cut and keep production in a 1-3% decline rate.
nth-
They can make the water go back from whence it came.
Since 1988
um, could someone please explain the color codes to us plebs?