The Oil Drum | DrumBeat: December 29, 2007

180 comments on DrumBeat: December 29, 2007

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Darwinian on December 29, 2007 - 11:50am

There has been some discussion lately about decline rates. I did a quick calculation of North Sea decline rates according to the EIA’s International Petroleum Monthly, spreadsheet 1.1d and found these decline rates.

2003 decline rate 4.67 percent
2004 decline rate 5.71 percent
2005 decline rate 9.01 percent
2006 decline rate 8.39 percent

But keep in mind that this was the rate for the entire North Sea even though some new production was coming on line every year. So the decline rate for only the mature fields was far greater, probably in the range of 12% to 15%. In 2007 the UK had the Buzzard field come on line and Norway recently had five new fields come on line. (Though production from three of them has been reported as “disappointing”.) When the average for 2007 is posted in early March, the North Sea will still show a decline but due to these new fields it will not likely be as great.

A 2004 report showed that for the past six years Oman’s Yibal field had been declining at a rate of 12% per year.

According to the Department of Energy’s Energy Assurance Daily of December 28, Cantrell is declining at 23% per year.

Mexico’s November Crude Oil Production Down 8.2 Percent as Cantrell Oilfield Continues Decline
According to a report on the website of Petroleos Mexicanos (Pemex), the state-owned company’s oil production fell 8.2 percent in November from the same month last year. November output fell to 2.9 million b/d, down from 3.16 million b/d a year earlier. The fall has been attributed to the company’s inability to stem or replace declining output from the Cantrell oil field, the country’s largest field. According to Mexico’s Energy Information Agency, the Cantrell field’s November production fell 23 percent from a year earlier to 1.28 million barrels a day.

I recently read a report that said Alaska’s oil was declining at a rate of 6% though I cannot pull up that report right now.

In conclusion it seems to me that the average decline rate for mature offshore fields is in the range of 12 to 23% while onshore mature fields decline at an average rate of 6% to 12%. However this is only during the “collapse” phase of their decline. After their collapse they seem to have a long tail where very little oil is produced but the decline rate is in the range of 1% to 5% per year.

Ron Patterson

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westexas on December 29, 2007 - 12:00pm

Matt Simmons defines the gross decline rate as the decline rate from existing production. The net decline rate is after new wells, enhanced recovery techniques, etc. The net decline rate for the Lower 48, about -2%/year year, is probably the best case for the world, since we had intensive drilling and enhanced recovery efforts in the Lower 48.

In addition, as Memmel and others have pointed out, MRC (horizontal) wells to some extent have probably had the effect of "borrowing" oil that would normally be produced a later date, which would result in a steeper decline rate.

Offsetting all of the above, we do have the contributions from nonconventional production, but like many others, I anticipate that it will just lower the net decline rate.

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fireangel on December 29, 2007 - 1:32pm

This is an amazing article about Natural gas and Oil prices
http://www.321energy.com/editorials/mckenziebrown/mckenziebrown122907.html

"In a world where oil and gas prices have decoupled in the way I have described, it makes economic sense to bail out of gas producers like Rider Resources. Put your money into companies developing pollution-intense resources like the oil sands. And let the global environment absorb the cost."

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Subkommander Dred on December 29, 2007 - 3:09pm

This guy isn't serious, is he? I mean, is this some kind a sick joke? If not, I hope he has a long and miserable life. When he dies as a resident of an increasingly polluted and toxic planet, he can use that quote for his epitaph. Whatever humans are left can use it as a guide to find his grave, so they can all breakdance on it...

SubKommander Dred

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fireangel on December 29, 2007 - 6:11pm

I dont think you have read the article. He was implying that was what is likely to happen given the current pricing situation. he was not advocating it. He implied that investment in NG was suffering for a variety of reasons.

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mcgowanmc on December 29, 2007 - 12:03pm

This is huge.

"November output fell to 2.9 million b/d, down from 3.16 million b/d a year earlier. The fall has been attributed to the company’s inability to stem or replace declining output from the Cantrell oil field, the country’s largest field. According to Mexico’s Energy Information Agency, the Cantrell field’s November production fell 23 percent from a year earlier to 1.28 million barrels a day."

Mexico has 4 years left.

But that's a linear scenario. Less considering
positive feedback loops.

A Non linear scenario becomes more likely.

Such as Mexico has to decide between the US
and its domestic market even as it's deal
with the US calls for it to import its gasoline from US.

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Darwinian on December 29, 2007 - 12:19pm

It works like this. IF Cantrell continued to decline at 23% then the output would be, in millions of barrels per day:

2007 1.28
2008 0.99
2009 0.76
2010 0.58
2011 0.45
2012 0.35
2013 0.27
2014 0.21

Of course there is no rule that says that a 23% decline rate must be maintained. It could be 15% or it could go to 30%.

Ron Patterson

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mcgowanmc on December 29, 2007 - 12:58pm

Still 4 years left.
Notice as, you stated, fields never go to zero.

There's always an indefinite "tail".

At 2010 and 580 k bpd, the damage is done.

Cantarell is no longer a King.

700 000 bpd will have to be replaced.

15% only comes from pulling out the oil faster which means
the decline after 4 years will be more severe.

Thanx for the clarification on the 23% decline rate.

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MUDLOGGER on December 29, 2007 - 7:16pm

buzzard, always buzzard...

Buzzard is a piss-ant, tiny little field.

It is NOTHING

Think in terms of the Northern North Sea complex , or the Central North Sea Complex.

Look at the geology of the Viking Graben.

Then bear in mind this phrase:

'Flogging a dead horse'.

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JD on December 29, 2007 - 10:59pm

This is just the usual cherry-picking exercise. The North Sea, Yibal and Cantarell constitute a miniscule fraction of the total number of wells currently producing. You can't extrapolate from such a small, highly-biased sample to the performance of larger groups and the aggregate.

I know a few people who are in a rapid terminal decline. That doesn't imply that everyone will decline rapidly, or that someday everyone will decline rapidly and simultaneously, or that the aggregate will decline rapidly.

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elwoodelmore on December 30, 2007 - 7:53am

" the usual cherry-picking exercise" ..........ok, how bout you cherry pick a few new fields that will replace the decline in these giants.............report back here.

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JD on December 30, 2007 - 8:56am

Those new fields are listed here:
http://en.wikipedia.org/wiki/Oil_Megaprojects

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180 comments on DrumBeat: December 29, 2007

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