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271 comments on DrumBeat: August 1, 2007

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Darwinian on August 1, 2007 - 9:45am Permalink | Subthread | Comments top

The report from National Petroleum Council is drawing criticism. I don't know when the report came out, perhaps it has been discussed already here on TOD. But it was requested in 2005 by Energy Secretary Samuel Bodman. And I don't even have a link to the report itself. But I thought this criticism of the report was well worth reading anyhow.

Oil report is overly optimistic on foreign production increases

Simply stated, the report's key assumption is that the oil-producing nations of the Middle East will increase production to meet anticipated future demand. This actually is a dual assumption increasingly being called into question. The first part of the assumption is that Saudi Arabia and the other major producers in the Persian Gulf are willing to raise production to meet the needs of the consuming nations. And the second part of the assumption is that the claimed oil reserves of these countries are actually true and that they possess the capability to increase oil production significantly to meet future global demand.

It appears that a few oil industry analysts are starting to get the message because one stated that the NPC, with this report, has drilled “a dry hole”.

Ron Patterson

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Leanan on August 1, 2007 - 9:56am Permalink | Subthread | Parent | Comments top

It leaked in early July, and was officially released July 18. It has been extensively discussed here and in the media. Search on NPC and a bunch of stuff should come up.

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Leanan on August 1, 2007 - 10:14am Permalink | Subthread | Parent | Comments top

P.S. I think the "analyst" who called it a dry hole is ASPO.

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ace on August 1, 2007 - 8:44pm Permalink | Subthread | Parent | Comments top

From Darwinian above:

The first part of the assumption is that Saudi Arabia and the other major producers in the Persian Gulf are willing to raise production to meet the needs of the consuming nations.

Saudi Arabia willing to raise production? Hmmm...these are Aramco's scheduled crude projects until the end of 2010 from Aramco’s most recent project schedule, released in June 2007. Although this project schedule showed Khurais start-up on June 2009, a recent press release dated 25 July 2007, on Saudi Aramco’s website states that Khurais is “scheduled for the end of 2009”, which is assumed to be December 2009.

Aramco originally intended Shaybah to produce 1 mbd but their project schedule shows only 0.75 mbd peak plateau. Aramco claims Khurais will produce 1.2 mbd. If Shaybah's downgrade from 1 mbd to 0.75 mbd is any guide then Khurais will probably produce a maximum of 0.8 mbd. Matt Simmons Twilight in the Desert book, page 215,

It is puzzling to consider that Saudi Aramco would entertain spending $3 to $4 billion on Khurais, thinking that the field could produce as much as 800,000 barrels of oil a day. The odds of reaching that production goal must be relatively long.

Here is the updated list of Aramco's additional crude capacities by project until end 2010 (Manifa heavy crude is excluded from below as it is schedule for 2011)

Khursaniyah (including Abu Hadriyah, Fadhili)aka AFK
Capacity 500,000 bopd – Arab Light
December 2007 start

Nuayyim
Capacity 100,000 bopd – Arab Super Light
December 2008 start

Shaybah Expansion
Capacity 250,000 bopd – Arab Extra Light (total Shaybah capacity 750,000 bopd, not 1,000,000 bopd)
December 2008 start

Khurais (including Abu Jifan and Mazalij)
Capacity 1,200,000 bopd – Arab Light (maybe 800,000 bopd)
December 2009 (was June 2009)

Is December a lucky month for Aramco? Every project start up is now December.

Aramco’s crude production is now 8,600,000 bopd. The capacities of the projects above will probably be only just enough to offset natural production decline from their current production.

Recent news on the AFK (Khursaniyah) project from
http://www.energyintel.com/DocumentDetail.asp?document_id=208996
"State oil group Saudi Aramco has converted the largest engineering and construction contract for the Abu Hadriyah, Fadhili and... "

Anyone have a subscription to this site to get the rest of the article?

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R W Reactionary on August 1, 2007 - 11:30pm Permalink | Subthread | Parent | Comments top

I have seen Simmons comment in print a number of times, but have never understood where he was coming from.

$5,000 per bbl at 800,000 bbls per day of long lived production -- high volume production at that -- is dirt cheap. Maybe by KSA standards this is a lot, but I have no question that if it only produces at one third the targeted rate, the KSA "royals" are either spoiled brats or will recognized that it was money well spent.

If Simmons point is 800,000 bbls per day isn't much in the big picture, I am still uncertain about what point he is trying to make. One percent of world production is nothing to scoff about.

If Simmons point is that he believes that this is the best the KSA can do, I understand that point. If this is the best the KSA can do as part of its short term package of new developments, a 12 or 15 million bbl per day sustained production rate at any time in the future is grossly implausible.

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ace on August 2, 2007 - 4:33am Permalink | Subthread | Parent | Comments top

This article states that "Technip Announces Conversion of Khursaniyah Gas Plant Contract into Lumpsum Turnkey"

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news...

As the gas plant is to produce natural gas liquids (ethane, propane, butane), the article above says that "The plant is scheduled for completion in the first quarter of 2008".

Another project delay. I will assume that Khursaniyah natural gas plant liquids will start production in April 2008, instead of Dec 2007, ramping up to peak production of 290,000 bpd NGPL. I assume that Khursaniyah oil production is still scheduled for Dec 2007.

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