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96 comments on IEA WEO 2008 - World Oil Forecasts using Wikipedia Megaprojects, Dec 2008

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ace on December 1, 2008 - 6:51am Permalink | Subthread | Parent | Comments top

Euan,

How can you be sure that the "Dog Leg Up" from 2003 to 2005, caused by ramping to capacity, is sustainable?

Perhaps the "Dog Leg Up" was temporary, made possible by Aramco's increased use of smart wells/multiple branched horizontal maximum reservoir contact(MRC) wells, creating "intelligent fields".
http://www.saudiaramco.com/irj/go/km/docs/SaudiAramcoPublic/ExternalFile...

These smart wells/MRC wells probably increased the production rate by temporarily increasing the extraction rate of the fields. Once this temporary period of high extraction rates is over, the predicted URR for C+C+NGL could possibly be closer to that indicated by the blue line in your first chart, about 180 Gb.

Saudi Arabia includes condensate production and excludes ethane in their NGL production numbers, probably because condensate production is not subject to OPEC quotas as stated in page 33 of http://www.saudiaramco.com/irj/go/km/docs/SaudiAramcoPublic/FactsAndFigu...

Consequently, the EIA also reports Saudi condensate as part of Saudi NGL, but includes ethane.

My assumed URR of 185 Gb is for crude only, excluding condensate. You have 63 Gb remaining for my estimate in your second chart. My estimated remaining crude URR as of Dec 2008 is 68 Gb.

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Euan Mearns on December 1, 2008 - 9:47am Permalink | Subthread | Parent | Comments top

Tony - it seems quite clear that each time Saudi cuts production it is in response to global over supply and that the ramping up is to meet supply shortfall.

The crude - condensate thing is a bit more complex - I'm using BP C+C+NGL - which as you point put includes a healthy slug of ethane.

I still think its poor practice to regress data that we know are affected by political production cuts. And you (and I) need to add in the DUD fraction not embedded in the production data.

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memmel on December 1, 2008 - 12:17pm Permalink | Subthread | Parent | Comments top

On the flip side Saudi Arabia is claiming a 7.2% increase in internal consumption. I doubt this is physically possible esp in a country where half the population is not allowed to drive.

http://www.theoildrum.com/node/4764#comment-435327

A more realistic 3-4% growth rate in consumption with a 3-4% real decline rate makes a lot more sense.
At 7.2% using any reasonable metric for oil use to economic growth results in a growth rate like 20-30%.

Of course this means that KSA's total production numbers are not trustworthy.

In fact there reported numbers are quite flat while production was controlled by the US Saudi production went up and down by about 1mbd on a month on month basis.

GIGO.

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ace on December 1, 2008 - 6:50pm Permalink | Subthread | Parent | Comments top

Euan,

What about the "Dog Leg"?

Surely, there is a possibility that this "Dog Leg" could be the result of increased extraction rates by using "super straw" MRC wells. The oil is sucked out faster but the corresponding production rates would falsely overestimate the HL URR prediction.

I know that the HL method only gives a rough URR indication but it's still a useful tool. I carefully selected monthly data points which indicated realistic production rates for Saudi Arabia's fields which were close to capacity. For example, the Apr 2003 data point was used because it represented a high production rate, with little surplus capacity, during the invasion of Iraq. Also note that the monthly HL line goes through the months of Jun 2004 to Aug 2006 which many analysts believe that Saudi had little spare capacity.

Here is an annual crude only HL plot showing a "Dog Leg" starting in 2003. If this "Dog Leg" is sustainable, then the HL URR would be about 185 Gb. To this, another say 25 Gb could be added for discovered undeveloped fields, yet to find oil and possible enhanced oil recovery methods.

However, I believe there is a strong possibility that this "Dog Leg" is only temporary. In this case the data points for 2009 and 2010 could fall back to the HL URR 160 Gb trend line. This would imply that the HL URR for existing producing fields is 160 Gb, adding another 25 Gb gives 185 Gb.

click to enlarge

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Phil Hart on December 2, 2008 - 3:51am Permalink | Subthread | Parent | Comments top

hey Tony

great stuff. i love what you and sam have done with the megaprojects analysis.

on Saudi, i have to agree with euan (which is not always the case :-)

We know that Saudi Arabia have been conservative in the pace of development of their resources, so HL must under-estimate URR. It's not just about choosing years when they were at 'capacity', because that still ignores the fields which lay dormant (undeveloped) at the time. Given the low-angle extrapolation HL is trying to make from such limited data, tiny changes in production over the last few years make an enormous difference to the x-intercept (much different than just adding 25 billion after doing HL).

24 Saudi fields as assessed by western oil companies were reported in the Carmalt and St John paper and totalled 220 billion barrels. The 1979 Senate Committee hauled the US companies in and they said URR around 212 billion barrels at the time. These estimates are from diligent oil company geologists/engineers just doing their job. Stuart/Euan/Joules all agree Ghawar has more potential than as assessed pre-1980 and Euan also the same for Abqaiq. It's still very rough, but that suggests a URR well over 220 billion barrels (but still ridiculously short of Saudi claims!!).

I did a lot my own HL analysis a while back, but for Saudi Arabia I came to the conclusion that it was almost meaningless. Tiny changes in recent years production, possible under a whole host of scenarios, completely change the answer (especially so because of the low-angle of the intercept). I don't believe that extrapolating a handful of dots on a production graph provides a better case than the reserves analysis (eg Oil Reserves: Where Ghawar goes, the rest of OPEC follows). But then I would say that :-)

I think you've put a lot of great work into the megaprojects wiki and your model, but for my two cents worth, I think it would be more robust if you took other Saudi reserves evidence into hand.

All of this just confirms that what we desperately need is some transparency. We shouldn't have to debate plus/minus 100 billion barrels of oil for any country. How did we get ourselves into this mess!?

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ace on December 2, 2008 - 7:00am Permalink | Subthread | Parent | Comments top

Until there is some more consensus from geologists and consulting companies about Saudi field URRs, I'm going to be stubborn and assume URR 185 Gb for crude only, excluding condensate and NGLs. It's not that I don't think that Saudi URR crude could be more say 200 Gb, there still remains little consensus among experts. Laherreres Saudi HL indicated 180 Gb URR crude oil.

Your Table 1 from your well referenced story gives 221 Gb for 24 Saudi fields. First, I presume that this 221 Gb is URR for crude only, based on the Carmalt and St John 1986 study.
http://anz.theoildrum.com/node/4033

This 2007 article published in the Oil and Gas Journal by M Horn listed URR of some of the world's largest fields by "linking estimates of ultimate recoverable oil and gas made by industry experts over the last 60 years with current data on 945 giant fields".
http://www.searchanddiscovery.net/documents/2007/07032horn/images/horn.pdf

Guess what Ghawar URR is from Horn's paper? 66 Gb. Since then I've emailed him and he's revised it up to 75 Gb. Do I think it's higher? Probably but Horn doesn't.

Horn's estimate for Safaniya is URR 21 Gb.

If these two numbers are substituted into your Table 1 then the 221 Gb is reduced down to URR 199 Gb.

Here are some Wood Mackenzie (WM) URRs from Laherrere's paper
http://www.peak-oil-crisis.com/Laherrere_PeakOilReportMay2005.pdf

WM 2005 URRs

Manifa 4 Gb
Berri, 8 Gb

If these numbers are also substituted into your Table 1 then the 221 Gb becomes 184 Gb. There are some 75 other fields in Saudi Arabia so that should increase Saudi URR.

WM 2004 URR for Saudi was 236 Gb but with Ghawar at 108 Gb. Horn's estimate is 75 Gb. If that's substituted for WM's Ghawar URR then WM 2004 URR is revised down to 203 Gb.

Next year, perhaps I'll think about increasing my assumption for Saudi crude only URR to 200 Gb. The approximate potential effect of this 15 Gb URR increase in the forecasting model is that the world forecast in Fig 8 would be revised upward to about 67 mbd in Dec 2012 from the current 65.5 mbd. The annual production decline rate would be revised downwards from 3% to about 2.5%, from now until Dec 2012. The forecast in Fig 9 would also be revised upwards to about 81 mbd in Dec 2012. The forecast in Fig 10 would change slightly as it incorporates the Fig 8 forecast.

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dcoyne78 on December 2, 2008 - 4:46pm Permalink | Subthread | Parent | Comments top

Photobucket

This chart is for C+C only and uses initial cumulative production at the end of 1959 from the opec website and uses EIA data from 1960 to the present (August 2008 being the most recent data point.) The result is a URR of 198 GB with a 95 % confidence interval of 179 to 218 GB. I think it is best to use all the monthly data from 1991 on. Using monthly rather than annual data gives a tighter confidence interval.

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Phil Hart on December 3, 2008 - 2:37am Permalink | Subthread | Parent | Comments top

Nice response Tony.. sounds fair enough. I'd concentrate on referencing the field size estimates as the basis for your estimate rather than HL (but that's just my view).

Agree that it doesn't make a big difference in the global picture and that what we must have is better data!

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96 comments on IEA WEO 2008 - World Oil Forecasts using Wikipedia Megaprojects, Dec 2008

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