131 comments on Saudi Arabia Announces They Will Produce More Oil
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131 comments on Saudi Arabia Announces They Will Produce More Oil
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from bloomberg :
``The Saudi announcement of a possible increase in capacity to 15 million barrels a day is a robust statement; it would be a huge increase,'' ENI SpA Chief Executive Officer Paolo Scaroni said in an interview in Jeddah today. ``The world is worried about the shortage in spare capacity and any improvement will change this sentiment.''
Zuluf, Shaybah Fields
The further daily capacity includes 900,000 barrels from the Zuluf field, 700,000 barrels from Safaniyah, 300,000 barrels from Berri, 300,000 barrels from Khurais and 250,000 barrels from Shaybah, Naimi said.
...i do hope naimi has some viagra to pump up these old geezers
I loaned out my copy of Twilight in the Desert. I remember the other fields, but what is Zuluf ?
Old field being redeveloped ? Onshore, Off shore ? Heavy, Light ?
Thanks,
Alan
hi alan!
zuluf is an offshore field in production since 1973, according to the bible,p.201..zuluf's production is 400-500,000 bbls/day.
"...by 2004,the field had clearly become very mature and was exhibiting an array of aging problems...a 2001 SPE paper described.." a litany of operational problems...such as gas slugging, gas humping, and phase segregation"
...gas humping?...hmmm...may need that viagra after all!
So to add 900,000 bpd to a field producing (a few years ago) 450,000 bpd would mean tripling its output. In a 35 year-old field. Viagra indeed.
i sometimes wonder if the saudis ( not that i'm dissing the saudis..they have their own rocks and hard places to deal with)...try to sell their sour heavy crude that is their "supply cushion" to no takers..and then say , "look, the market is oversupplied!
June 22 (Bloomberg) -- Saudi Arabia MAY raise its oil production beyond a planned 200,000 barrel-a-day increase in July if the oil market requires extra supply, Saudi Oil Minister Ali al-Naimi told consumers at a summit in Jeddah.
I get the feeling that the Saudis are taking rhetoric lessons from Ben Bernanke for the fine art of weasel words. Every press release they give (2-3 per week)offers up different numbers with weasel words like "may" "could" and "possible."
15 million takes the prize. A bit of verbal price manipulation going on here, me thinks.
I have three questions ... (well more than three actually, but three will do!)
Even if KSA offer an 200,000 extra barrels-a-day, at what price will they offer it, and to whom?
Just because KSA is prepared to produce more, why assume the world's exporters won't still export less?
How do we know that supply and demand will be balanced at or below today's price even with this alleged extra supply?
Question:
If the Saudi's actually get a barrel of oil down to $100 (even if just by jawboning), and reduce the price of gas by 25% (say, US$3.20 a gallon), wouldn't that increase the use of oil/gas and make it necessary for them and others to eventually pump even more oil over the 10-12 million bpd? Are the Saudi's smart enough to realize this (yes, of course), and if so, what possible pressures are being put on them, or are they putting on themselves, so that they feel led to promise increasing output?
Logically, it doesn't make sense, so there has to be some kind of tangential reasoning going on here. You can only delay the inevitable, unless of course they really do believe there is plenty of oil out there (wherever there is).
Perhaps the Suadis are acutely aware that all around them is an American military force, controlled by a country that does not want to hear that tribute from a troublesome client state is no longer as easy to dig up as it used to be.
The whole exercise this weekend by the Saudis has a whiff of panic about it, attempting to soothe disgruntled customers and divert attention from themselves. It think we will see plenty more of these hurriedly arranged meetings this year and bit by bit MSM might just start to ask better questions each time the meetings fail to deliver anything.
Zuluf and Safaniyah are both heavy sour crude of the sort that the world can unlikely refine - so that is 1.6 mmbpd that will likely be of little use until new refineries are built or existing refineries are upgraded. Maybe some refinery upgrading work is coming through making this grade of crude more marketable?
An additional 300,000 bpd from Berri seems optimistic - this is an old and substantially depleted field. Khurais and Shaybah expansions are in the pipeline.
A growing proportion of Saudi production is NGL - which in Saudi is dominated by ethane.
Hello Euan,
Looking on your SA forecast it looks as their ability to increase crude production (at best) is limited.
But how do we know the exact production for SA?
SA production figures are (as I understand it) derived from counting tanker loads.
Looking on EIA data their production is exact 100’s or 50’s, and even their NGL numbers stay constant throughout the whole year.
This tells me that some qualified guesswork is involved in finding SA production figures.
Why all this focus on SA? Many countries are in steep declines and if SA should increase their production for some time and from whatever source(s) this could offset the collective decline from some countries for some time.
THEN WHAT?
This focus on SA (though an important oil producer) takes attention away from the BIG PICTURE.
.
The focus is on KSA today because the OECD + others have gone there cap in hand begging for more oil to combat global warming. It seems they have actually come away with nothing - re-affirmation of recent announcements and a bit of tweaking on the timing of new projects.
I agree that declines in Russia and Nigeria beginning to fall apart faster than ever are all important points in the big picture.
The message must begin to sink in with OECD governments that we are well and truly f*cked - and that their inaction for the last decade is turning an energy crisis into an emergency - hey a good topic for a post!
Euan,
Sadly I think your comment is spot on. This seems more like a roadshow scrambled together in an effort to convince consumers that soon things will be BAU.
This seems like a SNAFU.
The interesting part of it is the seemingly lack of political will and talent to do anything about demand/consumption.
Euan, your comment;
….that we are well and truly f@kced-“ is that like in FUBAR? ;-)
.
"The focus is on KSA today because the OECD + others have gone there cap in hand begging for more oil to combat global warming."
Brilliant example of how our politicians speak in forked tongues and act at cross purposes
That has to be Quote of the Year.
Brilliant one, Euan!
Does anyone know where I can locate information about planned new refineries and upgrades to refineries so that they will be able to handle heavy sour crudes?
David
Its an interesting project for someone who has time to pursue. Al I know is that Total have a JV in Saudi to build either 1 or 2 new refineries to refine this heavy sour crude - 400 to 800,000 bpd - others here will know more about this than I.
The new Reliance refinery in Jamnagar India is expressly designed to process heavy sour crude from KSA. When operational later this year, it will be the worlds largest refinery.
Highly significant. This will allow Saudi to raise production - and help solve the energy crisis in India.
http://en.wikipedia.org/wiki/Jamnagar_Refinery
Installing 600,000 bpd new capacity ready to go 2008.
Well, the BP refinery in Whiting, Indiana (400,000 bpd)is starting a project to enable them to handle heavy crudes. Estimated project completion is 3 to 4 years out.
Kind of leaning towards 'circle-jerk ' here, lol. Another lame attempt to keep a lid on things by repeating old time-worn rhetoric...
Difficult to make diesel with NGL!
But not from methane. Shell pride themselves in their clean and friendly GTL technology, turning Qatari natural gas into a clean environmentally friendly designer diesel fuel.
And once this natural gas has been used to make GTL, it is recycled for export to Abu Dhabi - who would you believe are short of nat gas - and then it gets used again, turned into LNG for use in Europe - where it gets turned into electricity and used to heat damp, drafty homes. One of natures miracles. Re-usable Qatari nat gas.
Has this process been patented yet?$$$$$$$$$$$$$
Recycled (?)
http://en.wikipedia.org/wiki/Fischer-Tropsch_process
It looks like methane may be a byproduct of the process, but the process itself consumes vast quantities of methane. Do you have some numbers for methane input, versus synthetic fuel output + methane?
At an industry meeting a couple of years ago, during a Q&A, I asked the president of ExxonMobil Production his opinion of GTL versus LNG, and he said he favored LNG, because of net energy considerations.
Stage 1: 15(CH4) ------- C15H32 + 14(H2)
Stage 2: C15H32 + 23(O2) ----- 15(CO2) + 16(H2O) (this is the clever Audi turbo diesel part)
Stage 3: 2(H2O) + CO2 + pixie dust -------- CH4 + 2(O2)
Stage 4: 15(CH4) etc
The only pollutants are O2 and H2 which can be combusted to make pixie dust + water used for irrigation which lowers the need for energy used in desal plants.
All this energy crisis stuff is just made up. Folks just don't understand the fundamentals.
Oh. I shall return to tending my herd of unicorns.
Prices on Viagra just went through the roof.;-)