A Different Approach to Calculating Saudi Arabia's Oil Reserves
Posted by Robert Rapier on December 16, 2006 - 9:44pm
I decided to try a different approach to see what I came up with, and I came across an interesting statistic regarding U.S. reserves. In 1982, Saudi Arabia stopped allowing their oil and gas data to be scrutinized. Prior to that, outsiders had some access to information on their reserves. When that accessibility was shut down, Saudi proven oil reserves were estimated to be 164.60 billion barrels. I have yet to find a challenge to this number. It seems to be accepted that this number does represent their reserves in 1982. However, in 1990 they mysteriously raised their reserve estimate by 90 billion barrels. Since the data are now hidden from public view, there is obviously a great deal of skepticism regarding this new estimate.
So, I started with the assumption that the 1982 estimate of 164.60 billion barrels was correct, and then I just subtracted Saudi production since then. I calculated their total production since 1982 as 69 billion barrels, leaving 95 billion barrels of reserves. This approach would imply either that their 1982 reserves were overstated, or that the models showing Saudi Arabia at 70 billion barrels remaining are in error. (If anyone can find a challenge to the 1982 number, I would appreciate the reference).
But, we know that reserves sometimes legitimately grow, and new discoveries take place. So, I decided to check this approach against what happened in the U.S. over the same time period. I examined U.S. reserves and production from 1982 to 2006. The following data are all pulled from:
U.S. Crude Oil Proved Reserves, Reserves Changes, and Production
In 1982, U.S. reserves were 27.858 billion barrels. In 2005, U.S. reserves were 21.757 billion barrels. So the U.S. drew down reserves by 6 billion barrels. I then looked at cumulative production over that 24-year time period. What would you guess the cumulative production was, given that reserves were drawn down by 6 billion barrels? It may come as a surprise, but oil production from these reserves since 1982 totals 56.9 billion barrels. Thus, in the past 24 years the U.S. has produced 57 billion barrels of oil and pulled reserves down by only 6 billion barrels. The reason is that there were discoveries that took place over the past 24 years.
The method I tried to apply to Saudi reserves may be conservative, considering what happened with U.S. reserves since 1982. So I still don't have a clue as to how much oil Saudi Arabia actually has. If their reserves followed similar behavior to U.S. reserves, then they could still be sitting on more than 150 billion barrels. But I think it is tough to make a case that their reserves are much lower than 100 billion barrels.
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I have no intention to be disrespectful, I'm just criticizing your work not you as a person.
I find this post quite naïve, especially coming from someone who posts at and reads TOD regularly. Both the US and Saudi Arabia are well documented cases of ill reporting practices, under-reporting for the first, over-reporting for the former. How can the evolution of declared reserves from these two countries be compared?
If you're not acquitted with this subject please read this post wrote by Chris (and the attached article by Roger Bentley).
Just as an illustration I leave you one of Jean Laherrère's many priceless graphs:
The case with the Saudis, though, stems from them dramatically raising their reserves in 1990. That's why they have a reputation for over-reporting their reserves. The key question is: Were they suspected of doing this in 1982, when their reserves were more transparent? I haven't been able to find any information on this, but if anyone has some I would like the reference. If they had been suspected of over-reporting the 1982 number, then you have a point. Otherwise, 1982 may be the last "good" number we have from them, which is the reason I tried to estimate today's reserves based on just depleting what was there in 1982.
You also have to consider the lag of almost 40 years between the peak of discovery in the US and that of KSA.
I am traveling, and only time for a quick reply. Based on your comments here, as well as those I got via e-mail over this article, I think people are misunderstanding my point. You wrote "for your argument to stand.."
I have two conclusions. One, is that if Saudi's reserves were accurately reported in 1982, and all one did was subtract out their production since that time, you get a (modestly) higher number than the HL indicates. That's one, and it's accurate as far as I can see. If I tried to argue for a higher number, then you could say that comparing the U.S. to Saudi may be inaccurate. But I am merely saying that unless we have reasons to suspect their reserves were overestimated in 1982, the remaining reserves should be at a minimum of what I calculated them to be.
However, my other point is that one can't really argue that their reserves are higher than that, because as shown when I applied it to the U.S., it gave me an answer that was grossly in error.
The final item was that it was surprising to me how much oil the U.S. has produced in the past 24 years from their reserves there. No implications toward Saudi there; I just thought the U.S. statistic was interesting.
NOTE: For readers who may wonder why there are comments prior to the publication of this essay, these comments took place while the article was still in the queue.
Note the understatement of US reserves versus actual production.
Then consider that using only data from before the US peak that Khebab accurately predicted US production up to the present within 99%.
Who was wrong here? The reports of US reserves were wrong and the HL method predicted more production that we would have expected from the reserve reports. And the HL method was right.
Note again that Russia fits the plot for production early 1980s to present from data that terminates in the early 1980s. Yet that HL prediction is 95% on the mark.
The known HL plots against KSA do not suggest there are 150 billion barrels left. In fact those plots indicate 70 billion barrels. Your 95 billion barrel would be above the HL plot for KSA.
Now, you can try to construct some other view and you are certainly free to do so but you cannot ignore that HL plots of US and Russia were so accurate. You must explain why KSA is an exception to the rule and you haven't done that. Instead you suggest a similarity to the US so therefore we should expect something similar. Yet the HL plots don't suggest that at all. Stuart covered the HL plot for KSA here. This is why we argue there are 70 billion barrels left in KSA. Because the HL plot says so and the HL plot has been correct about US and Russian production post-peak to such an extraordinary degree that it is incumbent on anyone disputing this number to demonstrate why the HL plot is wrong.
Isn't that EXACTLY what WT has been stating all along? That KSA will follow the same pattern that Texas, the Lower 48 etc have followed? If we saw US reserves drop 6 Gb after pumping more then 60 Gb, shouldn't the same trend hold true for KSA?
If it doesn't then, you just debunked WTs own argument for RR. Congratulations :)
Surely we all heartily agree with him!
The real numbers from 1982 to 2005 is that the US was pumping 8.6 million barrels a day in 82 and in 2005 is now pumping 5.1 million, that's a decline of 40%. It doesn't matter how much reserves the Sauds say they have, what matters is production numbers and even those are debatable right now.
So time will tell if they can ramp up, keep up, or start going down. But I think to explain to people how reserves numbers work or don't this post is somewhat irresponsible.
So the intelligent thing to do is to shift transportation from oil to coal? Cool! Let the mountaintop removals accelerate!
No, not the practice. The amount. That was the surprise.
What some of you are forgetting is that during my career I have been a Downstream guy and an R&D guy. I am learning some new things just like some of the people who e-mailed and told me that this was news to them. I am not an expert on Upstream operations, but this is the area I will be in when I go to Scotland. So, that is part of my motivation for getting involved in these upstream discussions. But don't expect me to be an expert in upstream. Others on this board know far more about upstream than I do. For now. :-)
I continue to be baffled by responses like this. First, I never "played" an expert. I am trying to learn about Saudi reserves, and tried to do a different calculation to verify the HL. It didn't work, but I found out the surprising information about U.S. production and reserves. Again, the "discovery" was not about how reserves work. It was that we had produced 10 times what we have drawn down over 24 years. That may not be news to you, but it was news to a lot of people, including me.
As far as the editors "allowing" this, one of the site owners specifically asked me to post this information here. Take into consideration that others may value the information more than you do, and your opinion is not particularly relevant to me when others got something from the information.
please
I am truly baffled.
Please indeed. Instead of the over the top personal attacks, why don't you build your case that I have presented myself as an upstream expert? Downstream? Sure, I know my stuff quite well there. I don't know everything, but I am quite knowledgeable. Ditto biofuels.
I am truly baffled.
Consider the fact that your opinion may simply be in error. It is not my intention, nor is it possible to please everyone all the time. In fact, the very fact that I work for an oil company means that it is impossible to ever please some people. Based on some of your historical comments and hostility toward me, I tend to think you belong in that latter category.
Now, you put up on a post information that anyone who has looked into a limited about how reserve numbers are kept knows it not to be any surprise at all. So why don't you try fessing up instead of people saying they're attacking you personally.
I've learned a lot of things on this site and its a very important issue, people deserve to be able get the best information possible and not "listen to me I'm oil company employee," and you do that all the time.
The oil industry has a lot of different areas. Most Upstream types won't know too much about refining, and vice-versa. I am a refining guy about to transition into an upstream job. So, part of what I am doing right now is trying to learn as much as I can about Upstream operations. The way I view this site, and the reason I started posting here in the first place, is that it is a place to share knowledge and to learn. However, you took the opportunity not to say "I disagree", but instead to belittle me personally. Why you felt the need to do that from your anonymous perch is something I simply can't know.
I agreed with your numbers on ethanol and took, and still do vehement exception to how you say oil "markets," which you continually argued not with public facts, but saying you had inside information
What I was doing was a favor to you. You would probably acknowledge that I do know some things that a layman would not know about the oil industry. Yet when I tried to help you answer a question - and I did have first hand information on some of this - you simply chose to disregard it and blow me off. That's your problem, but I won't ever try to answer another of your inquiries.
Now, you put up on a post information that anyone who has looked into a limited about how reserve numbers are kept knows it not to be any surprise at all. So why don't you try fessing up instead of people saying they're attacking you personally.
Why then, do you think some people even in this thread are saying "Those numbers can't be right." For me, the numbers were surprising. Just like an upstream guy might be surprised at how much energy it takes to refine a barrel of oil. However, if he did express surprise, I certainly would not feel the need to belittle him or suggest that this is common knowledge. The fact is, those numbers surprised quite a few people. You can see that someone expressed surprise in my blog. You can see surprise expressed in this thread. Surprise has been expressed in e-mails. So, your comments about this being pretty common knowledge ring pretty hollow with me. The thread has also generated a pretty good discussion, which sad to say you have not contributed substantively to.
I've learned a lot of things on this site and its a very important issue, people deserve to be able get the best information possible and not "listen to me I'm oil company employee," and you do that all the time.
I am starting to think you don't have an honest bone in your body. Show me a single example of where I have done that. Please link to the discussion, or admit that you are being dishonest. I went out of my way once to try to find out some information for you, and this is the thanks I get. But just know that you will never get even the most basic information from me ever again.
Since I believe you understand math pretty well, let me present a thought experiment based on a fairly simple premise.
The premise is that, say starting from right now, i.e. Time=0, we will find a growth in reserves that goes like 1/(Time+k), where "k" is some small number to keep the starting number finite. Let's say that this reserve growth falls in the provable category to indicate that we can extract it.
Three interesting results spring from this premise.
- The amount of reserve left from now until eternity is infinite. This is a property of integrating a hyperbola (1/Time) over all time. Essentially we get a URR of infinity.
- If production is rate proportional to the current reserves (the classic "greed is good" assumption which explains man's and the free market's capitalistic instincts), the position of peak won't change too much. This has everything to do with rate considerations. The rate of reserve growth cannot match consumption rates, and new discoveries are clearly dwindling.
And most importantly, the one thing that explains your puzzlement.3. The draw-down from reserves can become vanishingly small in this scenario. Taking finite production from an infinite pool leads to the conundrum that we are extracting an infinitesimal fraction of that eventually available.
This argument is subtle, but if interpreted incorrectly, it gives ammunition to the cornucopians, who can assert that huge reserves lay in wait. However, in reality, since rate extraction is proportional to current reserves, all we see is the classic effect of "diminishing returns". Of course this has real ramifications for a continuously growing energy-based global GDP economy, but the cornucupians will not spin it that way. They instead point to a continuously finite reserve that doesn't get drawn down by as much as one's expectations can intuit.
Having to face and account for this argument, a cornucopian would have to propose a reserve growth rate that will keep pushing the peak into the future. Unfortunately, this would have to be a growth even more aggresive that the 1/Time variant, which already has an infinite URR ! Fortunately, anyone actually proposing such a growth rate puts themselves in a situation that they can be endlessly mocked.
We have to continue to do question the numbers because otherwise we fall into the logical conundrum B.S. traps that politicians and corporations and scam artists have historically used to try to separate us from our money. Simple thought experiments like I have shown here remain one of the few options that we have to eliminate the rhetorical arguments from the public discourse.
As a recent and complementary example of where people have gotten hoodwinked in this fashion, google the "infinite horizon" argument to escalating Social Security costs. Bush's people have actually suggested huge future costs of S.S. based solely on a hidden assumption of an "infinite horizon". It takes time for the economists to dig this stuff out of the rhetorical arguments, but by that time the damage is done and people get a completely misleading impression. I remember hearing Al Franken debunk this argument quite effectively by saying that, "yes we may have a huge SS deficit, but will have infinite time to pay it off, so it looks like our current funding is no problem". Touche.
This was a first rate response, encompassing much of the peak oil debate. It also neatly points a spotlight on the Global warming and finite resources debates intertwinned with Peak oil.
If you don't mind I think I will "borrow" this example the next time I have a discussion with people who are overly optomistic about resource availability.
But lets get it on.
Isn't that EXACTLY what WT has been stating all along? That KSA will follow the same pattern that Texas, the Lower 48 etc have followed? If we saw US reserves drop 6 Gb after pumping more then 60 Gb, shouldn't the same trend hold true for KSA?
Westexas has been saying that based on the HL method the KSA should peak at the same point as the lower 48. In the lower 48 you had the Texas Railroad commission, in KSA you have OPEC.
The argument being debated here is that Rapier says that the reserve growth in the US might be mirrored in the KSA. Other counter the argument by saying that in the US reserves were intentionally underestimated, but that the opposite holds true for OPEC.
That misunderstanding has led to a lot of the comments in this thread. That was not my argument. I just checked US reserves growth to see how applicable such a method might be. As I said, it wasn't very accurate. However, it is possible that Saudi has had some reserves growth. We just can't know, and as I said we can't afford to risk that.
Why not ?
The region is well explored they have large reserves no real reason to assume any reserve growth came from fresh discoveries instead of better estimates for current fields.
Or probably more realistic different estimates of URR for current fields.
KSA has not announced large new discoveries.
And URR growth in existing developed fields has to my knowledge never lead to increased production rates ever.
Your argument holds no water, and WTs own arguments are undermining your position.
His argument is not RR's argument at all. WT's argument is that because KSA resembles the lower 48 IN THE HL PLOT that KSA is now set for irreversible declines.
Your ignorance is either astounding or deliberate. Which is it, Hothgor? Are you ignorant beyond belief or a deliberate troll? No other option fits after all these months of telling you the same thing over and over and over again.
One more time, Hothgor...
- The HL method correctly predicted US production from 1970 to 2006 using only data up to 1970!!!!
- Applying the same HL method to KSA says they are on the verge of irreversible declines.
Do you understand this yet? This is the heart of WT's argument. This is what I just explained to RR.http://www.econbrowser.com/archives/2006/07/saudi_prod_rigs.jpg
Unfortunatly, production in KSA now starts to decline, alltough being presented as production cuts, cause "the market is over-supplied"
Right.., hense the low prices these days.
Red Ferret says we have 29 years:
So nothing to worry about! </sarcasm off>
Is there any similar KSA chart like the US chart posted above?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
No one has debated the 1982 number of KSA reserves. Mainly because of the almost obvious political boost later.
But how good is the 1982 number ?I know that in the recent past major oil companies have had to do major write downs of their reserves.
Can we really trust this number ?
I don't know either way but as far as I know its never been discussed either way.
I think its worth looking into.
I'm sure glad I'm not being held to account for my comments when I was in my 20's! The I Ching, my favorite spiritual book says that prisons are meant to be temporary dwelling places only. Let's put him on parole!
THIS is what I envision/wish/pray for in whatever community/local governemnt evolves around me as time goes by.
If you step back and look at it all (TOD), it's pretty amazing. Sorry for getting gushy...perhaps it's the holidays. Anyways, oilmanbob's comments got me thinking about it all.
I have trademark, copyright and trade secret rights in the concept. </fooling around>
That said, I have a question for the Grapholigists here at TOD (i.e. Kehab, westexas, RR, etc.) I posted the question in a nearby thread. Here is the link to my whole post.
Here is the question alone:
For sa, there has been no sec to worry about since sa bought out the wstern companies. The reserves they reported prior to that time might have been conservative, but there is no reason to think that any reserve number put out by sa since then means anything.
0. Falsifiability (can your argument be falsified in theory? If not, revise until it can)
1. Arguments in standard argument format:
- Since premise (1)
.
.
.
- since premise (n)
- and rebuttal premise,
- Therefor, conclusion
This makes it so much easier to understand what the person is REALLY trying to argument.
2. Fallibility (we may ALL be wrong on a particular argument)
3. Truth (search for the truth, not evidence to your position)
4. Clarity (use simple, plain language, preferably in standard argumentation form as in 1.)
5. Proof (if you state a claim, back it up with proof)
6. Charity (try to argument against the strongest version of somebody else's argument, not against a straw man or against a single typo or other mistake. If you don't understand the argument, ask for clarification)
7. Relevancy (let's stick to the arguments, NO ad hominems)
8. Acceptable (use acceptable logic shared by all)
9. Rebuttal (try to rebut your own premises)
10. Resolution (if one position is defended with accepted premises/logic, that is then accepted, otherwise judgement is suspended, until new data/reasoning is found. No need to rehash same old stuff over and over again. No need to name call, just because we disagree on an argument)
I think it would make our shared understanding here develop MUCH faster and hopefully lead to less misunderstanding and useless flamefests :)
Naive? Come on. There have been only 18 posts so far, but no one has questioned his accuracy that US reserves have been reduced by 6 Billion barrels since 1982, yet production was 57 billion barrels.
That is a huge contribution, and in no way should be ridiculed. I for one am a daily reader, but infrequent poster. I don't post because there are more knowledgeable contributors, such as RR and West Texas.
I for one agree with RR that KSA reserves are the key to when we reach peak oil. In fact, I think it is the most important piece of information in the puzzle of peak oil. It's apparent to me that KSA production is going to determine when our collective lives begin to change. Once we have this number, we can correctly report to the world a timeline for peak oil.
I think the reason people are attacking RR is because they don't believe that KSA reserves can grow the way US reserves have grown. Personally, I don't think KSA reserves have grown, but this correlation should give us pause. If they've had any growth at all in reserves, then they could have one last gasp, and increase production as they have promised.
Is West Texas right about KSA already at Peak? My gut says that he is right. I don't think KSA reserves have grown, and are somewhere around 100 Billion. But, like the rest of you, it is only a hunch.
Thanks RR.
Expecting it to play out the same way for Saudi Arabia is probably not realistic. They aren't subject to U.S. taxes, and they have other reasons to inflate their reported reserves (the OPEC quota).
Another thing Deffeyes wrote (I don't have the book at hand so this is from memory), was that Hubbert noticed that oil companies, for tax reasons, would claim discoveries made in the US in the thirties, when the oil wasn't needed, as new discoveries some twenty years later. And this was giving people the false impression that new oil was being found all the time.
What do you mean false?
Of course new oil is being created all the time. I have it from a solid authoratative source that this whole Peak Oil thing is a scam, a hustle.
Oh ... <sarcasm off>
I believe the estimates were off so far because of 1.advances in recovery technology and 2. higher prices extending the productive life of fields3. advances in the science of engineering reserves and 4. human error.
I can't see that erroneous calculations in the past mean we now have erroneous calculations. Just because Deffyes was right about the result-a lot more oil was produced than was shown in the reserves-doesn't mean he was right with his ex post facto reasoning. I have great respect for him and believe he is generally correct. But he blew it on the taxes reason.
Again, it was not the growth that was a surprise. If we had produced 10 billion barrels and pulled our reserves down by 6 billion barrels, I would not have been surprised. It was the amount that was the surprise.
And, as I said above, I have been a Downstream and R&D guy during my career. Just because I am in the oil business, you should not expect me to be an expert on Upstream operations. I have to become one, because my new position in Scotland will demand it. But I am just beginning. Discussions like this help me to learn, but at the same time I have to put up with many gratuitous insults during the process.
Has this been taken into account in the 1982 estimate?
Cheers,
Davidyson
Doesn't anyone else see a huge red flag here...
6 billion = 57 billion
Come on, that is a factor of almost 10 x. Some thing is very, very wrong with these numbers.
My guess is that it still doesn't matter. We have increased our imports and are still in domestic decline.
Now you are talking. You are displaying the exact same kind of surprise that I displayed when I saw the numbers. That's why I shared them. It didn't seem that they could possibly be correct, but they apparently are.
I guess that I wonder if the debate is worth the effort. More extraction for the US hasn't helped. We import what @60% of our oil vrs @30% with the first oil crisis of the 70's. We are still in decline. If HL fits and was predictive then perhaps it is the best tool available to estimate future oil production.
From what I have read nat. gas shortages may screw us first.
I wish CERA was correct, or any of these other overly optimistic forcasts.
I just found this small pool of oil. Since my company is publicly traded I am subject to SEC regulation. If my mule dies before I can pull all the OIIP out of the ground then I can go to my investors and explain that I bought a dud mule. They will be understanding and I am in the clear with the SEC.
On the other hand, if I pull in investors on the basis of 500 million bbls and for some wacky geologic reason, I only pull 5 million out of the ground, then I can expect my investors to be all over me and the SEC to be investigating me for securities fraud (why should my investors pay huge legal fees when they can file an SEC complaint and get the state to investigate on their behalf?). No oil, big lawsuits, a criminal investigation, and one dead mule. What's a poor wildcatter gonna do?
First smart thing is to underplay my hand a bit. What I think I got, and what I tell my investors, are two different things. If I over estimate and over promise, I can be in a world of hurt. If I under estimate and under promise, then nothing bad happens.
This approach has an added advantage. My investors want to see that I know my stuff and see my company constantly growing its reserves, its production, and its income. People pay good money for a positive earnings trendline so that is what I aim to deliver. Every year I can add a bit more OIIP onto the balance sheet. Every year I book more OIIP as proven reserves. Every year production goes up. Remember that this is taking place 40 or 50 years ago when the notion of frontloading the production profile to maximize the IRR (not the URR the IRR) was not a common technique. Financial wizardry had not yet hit the patch.
There is another advantage to this approach. If I tell you folks where my little 500 million bbl pool is situated then under the laws of capture there is nothing to stop oilmanbob from coming along with his rickety rig and his sick mule and bidding up the lease rights. Nothing stops him from trying to drill into my little pool. So shucks, maybe I got some oil then again maybe I got nothing but a lot of expensive dusters and one dead mule. Move along, nothing to see here.
It is hard to prove it with graphs but I think you can sense the existence of a series of systemic biases which promote conservative estimates and under reporting. Note that these systemic biases would be specific to a certain time frame and certain jurisdiction; they would not have application to a foreign jurisdiction such as KSA. However, the OPEC nations may have their own form of systemic bias in that the greater the claimed reserve figure, the higher the production quota they would be assigned.
It may also be useful to note that a proven reserve may be securitized and used as the basis for loans to the state. It would not be surprising if the OPEC nation reserve increases were immediately followed by a significant increase in foreign debt.
Looking at the present situation in KSA it is interesting that a graph presented recently on TOD showed they had paid off foreign debt and were now in surplus. Bankers are not all that dumb and they can read Simmons too.
The other main reason for reserve growth is that Geologists and Petroleum Engineers are very conservative personality types and don't make unsupported assertions very often. I'm not talking about politics, but rather that they are old fashioned conservatives and a great balance to overenthusiastic landmen and speculators. Therefore, they tend to err on the side of conservatism about reserves
In 1971 what did HL say the US reserves were? What geographic region did that encompass? Did it include offshore? Were we pumping oil from the gulf at that point?
HL is a great tool for predicting eventual reserves in a given geographical area.
If we started pumping like crazy just offshore of the West Coast of Florida, the URR for the US would change, right? (I realize not by that much, but it would change the slope of the tail slightly, right?
HOw does the HL look for Saudi Arabia if you calculate only with numbers up to 1982?
And lastly, what is the effect on HL of "throttled back" production?
Garth
Try reading the prior work done by Khebab and Westexas that compares HL predicted oil output versus actual using only data up to the US peak (1970). When a model gives a 99% fit against the US and a 95% fit against Russia, then the model has to be taken seriously.
Is that true? Would an HL through 1982 have predicted those reserves? I don't know. It would be interesting to see. I will look into this when I get back to civilization.
Robert consider this scenario. The 1982 estimates were inflated. And the KSA did experience some reserve growth but again provided inflated numbers. So at no point in time where reasonable realistic reserve estimates available from KSA.
This leaves HL as the best estimate we have of actual reserves. The fact that Kuwait has gone very quite on their real reserve speak I think for itself.
The safest assumption you can make for the ME is to ignore reserve estimate and trust HL.
At best the 1975 estimates which are quite out of date are about the only number we have that might be trustworthy.
http://www.peakoil.ie/newsletters/448
As far at the HL method itself goes. Most of KSA fields have been in production for a long time so we have a good production history. HL is very dependent on production history. What one would do to provide that the HL model is converging would be to take hl plots year by year and show that HL is both converging and its error term is decreasing.
So if your concerned about the stability of the HL analysis this sort of forward propagation would be really useful.
The median if this analysis would then be consider the estimate.
I'm far more troubled by the fact that in the US we continue to report high reserve numbers even as production rate falls.
I mean if the remaining reserves will take 100 years to produce with stripper wells its not all that useful.
I'm puzzled by two things:
First, the tendency to treat reserves as some measure in the sense of a large quantity of oil from which the owner of said reserves can simply pump oil at will. Given the propensity to treat dubious resources such as so-called 'oil-shale' and various forms of bitumen as crude reserves, I would tend to treat any statement of reserves as interesting, but not necessarily indicative of what said country might produce or how fast they might produce it. Hence, I can plainly see the value of the HL method because it totally ignores the confusing quagmire that is reserve reporting.
Secondly: "But we simply can't take that risk."
Well... I have to agree with Louis here, you seem mightily naive. What the hell else are we supposed to do? Take over SA (before or after we do Iran?)?? Once more, this seems amazingly naive.
I have tremendous respect for your knowledge, and the information you have shared has been very instructive to me, so please don't take this criticism as a put-down.
What are we supposed to do? Stop assuming that Saudi oil will be available for the next 10 years. That's what I mean by "we can't take the risk." We have to presume that Saudi won't be able to supply us with the oil we want, and we need to prepare ourselves for that. I see nothing naive about that.
No, you are seriously confusing my position. On the one hand, we have to be careful yelling "Saudi has peaked", because if they haven't and start producing more oil in the future, we will have a serious loss of credibility.
HOWEVER, I have never disputed that we can't afford to take the chance that Saudi is telling the truth. This is more than even a national security issue. So, on the one hand I can easily argue that we don't know if Saudi has peaked, and on the other argue that whether they have peaked is irrelevant because we can't afford to trust them. This argument is aimed at those (like Lynch) who would argue that there is plenty of oil left in Saudi. OK, but what if you are wrong? What are the consequences?
No, you are seriously confusing my position. On the one hand, we have to be careful yelling "Saudi has peaked", because if they haven't and start producing more oil in the future, we will have a serious loss of credibility.
HOWEVER, I have never disputed that we can't afford to take the chance that Saudi is telling the truth. This is more than even a national security issue. So, on the one hand I can easily argue that we don't know if Saudi has peaked, and on the other argue that whether they have peaked is irrelevant because we can't afford to trust them. This argument is aimed at those (like Lynch) who would argue that there is plenty of oil left in Saudi. OK, but what if you are wrong? What are the consequences?
The quibbling about angels on pinheads is oh so fascinating, but in truth, the fact of peak is indisputable. The only real question is do we act now while there is x amount of cheap energy available, or do we act later when there is x-y?
You people are being too hard on each other. Just agree that the stuff is about to hit the fan. I am curious about the purpose of pinning down the "actual" peak date - future or rear view mirror. What will be your recommendation? If it is out in the future, will you recommend business as usual? I would be surprised if not disappointed. If it is in the past, then what?
In other words, the answer is always the same. We need to act now with all due haste.
- We need to lower the population. That means more funding for population control, condoms, information, media instruction to shape public opinion, creation of international treaties. I would also suggest that this means socialized medicine. Countries with socialized health care have lower birth rates.
- We need to develop non-growth based economies. You can find many great suggestions for this style of economy:
http://mondediplo.com/2004/11/14latouchehttp://dieoff.org/page88.htm
http://www.eartheconomics.org/ussee2005/documents/workshops/USSEE2005_Scale_Workshop.pdf
- We need to restructure the tax system in order to reward steady-state economics and penalize growth economics.
- Zoning laws must be nationalized. We cannot let sprawl continue.
- The entire United States's land and water resources must be examined for its feasibility for localized gardening. NOT INDUSTRIAL FARMING.
- The public school system must include permaculture, sustainable ecology, practical non-petroleum based, localized manufacture, and any other skills that will be needed either in the transition from the current system or in the post-oil era.
- We need to redevelop a decent rail system.
- The first world must share its resources with other countries. In our case, we must work with Mexico and the Caribbean to bring a non-authoritarian locally oriented government much like the government we will have instituted in our own country. In other words, local people need local control that does not hurt other locally controlled areas. The national government will serve as a facilitator, coordinator, and resource, not a crypto-fascist monster serving the rich.
- We must consider how to deal with huge refugee populations streaming out of the Southwest. Where will we put these people?
- We need to know how we will be able to feed the coasts which must import their daily bread.
- We need to rebuild our manufacturing base. We are truly the luckiest industrialized country in the world. We will not have to tear out our disfunctional, poisonous industries. We did that with globalization. Let the Chinese drown in the poison. We can build local industries built on economies not of scale but of need. By using the techniques found in the book, "Cradle to Cradle: Remaking the Way We Make Things," By William McDonough & Michael Braungart, we can create truly non-poisonous industries.
- To facilitate the adoption of these techniques, we need to use our currently unassailable standing as the most ridiculously consumerist nation on the planet and demand that those who do not also adopt these techniques can no longer participate in our economy. (I know, I know. All hell will break loose. You can't do that cause they won't go for it, blah blah blah. Well, just let the world keep going with business as usual and see how that goes.)
- Repatriate corporations. In order for any corporation to do business in the United States, it must pay full on corporate taxes. No more off-shoring of profits.
- Base corporate compensation on indices other than profits. No one should be paid more than 15 times the lowest paid worker's salary. Stocks must be held for ten years (this will play well with the idea of long-term steady-state economics.)
- Bring other suggestions to the table no matter how small. To learn from others will be the future. Demanding a consumerist utopia is the past.
After everyone stops laughing or spewing coffee through their nostrils, because we all know that a rational approach will never happen, let's begin the resources wars, start the balkanization of the US along religious, racial, economic, and familial lines, start the starvation, let's fire up the riots, just accept the facism, lay back and take it like a good peon, open the camps, gear up the riot police, tap the telephones, and issue our travel papers.Just thought I'd throw out this little bon mot of holiday entertainment for the hardest working nitpickers in the business, my good friends at TOD.
Namaste!!!
Sometimes you have to go with your gut feeling.
Mine is that we have so many potential problems coming our way economic resource population global warming etc etc. The chances one cripples our society is approaching 99% we can argue till its too late which one is the killer but the answer is the same we need to move to a renewable sustainable way of life.
Waiting won't change the answer at best it will change the cause of our demise.
I couldn't agree more and have posted similar things to the point I've just about ceased doing it both here, on another forum and personally talking to people. As I posted the other day, the information is all there for anyone who is interested. Hell, it's gone beyond the handwriting on the wall to giant billboards besides the road.
Whether it's in the genes or a societal meme is unimportant in the long run. Bad things are coming. And, further, it is, IMO, naive to believe that TPTB are going to come forward, tell the truth and lead the way as many people appear to belive. The reality is that the consumer-capitalist society is unsustainable and people need to get that through their heads and take personal responsibility for thier future.
Todd
Shock? Incredulity?
It appears that only very recently has Robert Rapier spent some time getting to know the data for US oil production and reserves.
It's these kinds of articles that seriously undermine the credibility of some of the people writing for TOD.
Why are we stuck with amateurs like this? (Stuart and some others excepted, of course).
We need commentators/analysts that fucking know their stuff. Not a bunch of know-it-all greenhorns and used-up geezers that don't have a clue about what it means to get to know data intimately.
I have to say, I've learned a few things from people like RR and Jeffrey Brown and Dave Cohen. But I've also concluded that they are simply out of their depths as serious analysts. They really need to go to school.
We need professional analysis. (And we do get a taste now and then). But this whole peak oil issue is attracting nothing like the high end talent you find dealing with climate change for instance. And it shows.
--- A Cranky TOD fan
My views are close to Staniford's. Far from doomerish.
First of all, note that this was merely a short essay. It was in no way intended to be a full-blown analysis. It was an attempt to calculate Saudi reserves based on a different method than the HL. What I was trying to do was actually to corroborate the HL calculation. I did this calculation as just a back of the envelope on my blog, and I was asked to post it here. (Incidentally, I note that you had no actual substantive comments on the essay).
Second, I was aware of current U.S. reserves and current U.S. production. That we had drawn our reserves down by only 6 billion barrels while producing 59 billion was certainly news to me (and probably to you as well). In fact, when I posted this to my blog, I got several e-mails expressing surprise at this number. So, whether you appreciated it is really of no concern to me when others did. It was worth sharing. The purpose of TOD is to learn a little, teach a little, and foster discussion. I have learned a lot here, and even if I have to put up with the occasional irrational attack, I am still going to keep writing and keep posting.
Finally, you managed to insult Jeffrey, Dave, and me all in one swoop above. We have all spent many, many hours writing about and debating these issues. What is your contribution, Mr. Armchair Critic? Others recognize that we do know our stuff. We may sometimes be wrong. We may sometimes make mistakes. But to suggest that we are a bunch of amateurs who don't know our stuff is really an indication that you don't know what "stuff" actually is.
What I would really like to see is a substantive challenge to Saudi's 1982 reserves claim. If I see one, I can conclude that that HL might still be correct. And that's what I was after. So instead of personal attacks, how about giving us something worth discussing?
I thought it was a good contribution.
Thanks
By no means. My understanding was that this phenomenon had been observed elsewhere in the world. And that it actually was the reason for some people's optimism. I'm just an amateur shocked that the experts are shocked.
But, more generally, there is a basic distinction between analysis and advocacy. And you, sir, are an advocate.
Which is great. Advocates and educators are sorely needed. And you guys do a pretty good job at it.
But when it comes to serious research and analysis..... it's very uneven. Probably from a lack of peer review and basic research standards.
However, there are signs, in your work too, that things will get better.
Apologies for losing my cool.
Why did you drag me into this? What part of my work does not represent "serious research and analysis"? I hear from people who do "serious" research all the time telling me they appreciate my analyses. Others are critical and I appreciate their thoughtful critiques of my work. Invariably, I learn from those.
What gives you the right to take an unsubstantiated swipe at my work on this website? If you think something I did was in error or amateurish, you may comment to that effect or write me an e-mail. It is easy to get in touch with me. As I said, some of my best information has come from such exchanges.
I find your views very worthwhile and appreciate them greatly.
I think you are extremely professional and a very good communicator as well as a very good debater.
Stay with it. Stay the course. Stick to your findings and support them until others convince you otherwise. This is what we should be doing and I appreciate all the contributors and editors at this site as well as the owners and developers.
Without what I have learned here I would still be at a loss as to the timing of events that are of absolute importance and the proofs that are needed to make wise decisons.
Best regards,
airdale-- enjoy your travels
By the way, I am 20 miles and 4000 vertical feet from the nearest town, but still have an off and on Internet connection. :-)
I suppose reserve numbers, in all their internationally differentiated glory, are still considered the sine-qua-non of future production prediction. If peak-oil comes as soon as it might (like last year) this position will begin to fray badly along with the general denial of peak oil plied by the more cornucopian of prognosticators.
Here is to you Mr. Armchair General....
You, who could solve the Middle East Piece Process if only they would do what is so obvious to you.
You, who could write Nobel Prize winning Physics Thesis if only you could stop watching reruns of "Married with Children"
Here is to you. What would the holidays be without contribution around the old Yule log? You can hold forth on on Social Security and what do with all those "darn immigrants". Your enlightend discussion and restraint from personal attacks in debate make us long for drunk Uncle Dave to wake up and take his pants off in the front yard again.
Remember Mr. Arm Chair General... real solutiuon take real sweat... but talking about them in a vaccum only require some air to fill your lungs.
So breath deep and have a Bud. This Buds for you!
Robert has no credibility gap. If everyone on this list knew as much about the oil business as Robert, we would indeed be a panel of experts.
I think it is possible to disagree with a person without demeaning him. How about a little courtesy? There is simply no excuse for rudeness, ever. (Though I must admit I sometimes fail and find myself being rude. And I am always ashamed when I realize that failure in myself.)
Ron Patterson
I echo your call for a little courtesy. I don't have a problem with people disagreeing with me. I will argue my position to the best of my ability. But name-calling has no place here in a public forum in which we are all just trying to make sense of certain pieces of data.
As far as credentialing-who the heck is brutus to ask? There never is credentialing at the begining of any scientific theory. Einstein was a post office clerk, for crying out loud. Hubbert a geologist, not a mathematician, Darwin a rich amatuer. As far as I'm concerned Brutus can go commit an anatomical improbability with himself. If he's so worried about credentials, then I'd like to see his. And his license from the international peak oil agency.
*If anyone can find a challenge to the 1982 number, I would appreciate the reference
Yes, see Twilight in the Desert, Appendix C, pg 383. See 110B, not 164B.
I am citing the last paragraph on page 383:
--------------------------------------------
In one of the report's clearest statements, the remaining proven reserves in Saudi Arabia were put at 110 billion barrels, not the 160-billion barrel level that the kingdom would soon claim as "official proven reserves". And the 160 billion was a far cry from the 260 billion that would become the new proven level by the late 1980s. The report warned that major new oil finds seemed unlikely, and this pessimistic outlook would not be contradicted by exploration results into the early years of the twenty-first century when I was conducting my research.
--------------------------------------------------
93rd Congress, 2nd Session of Multinational Petroleum Companies and Foreign Policy [committee hearings]; Multinational Corporations and United States Foreign Policy: Hearings . . . 1974
and
96th Congress, 1st Session; The Future of Saudi Arabian Oil Production, A staff report to the Subcommittee on International Economic Policy of the Committee on Foreign Relations, April 1979.
"While internal documentation from skilled technicians had stated that fields like North Ghawar and Abqaiq were in danger of being overproduced, most senior managers called as witnesses denied this was true. . . .
The genuinely damaging documents, in my opinion, were written by a senior Chevron executive, Mr. William Messick, chief resevior engineer. Messick was thought to have the greatest expertise on the real state of Saudi Arabia's key oil fields. His reports were written to alert the Aramco owners that the reservoir pressures in the four great Arabian oilfields were in danger of falling below bubble point. . . .
In one of the report's clearest statements, the remaining proven reserves in Saudi Arabia were put at 110 billion barrels, not the 160-billion level that the Kingdom would soon claim as "official proven reserves." And the 160 billion was a far cry from the 260 billion that would become the new proven level by the late 1980s. . . . The notion that Saudi Arabian oil reserves could be produced at 10, 12 or 15 million barrels a day for 50 or more years was utterly dismissed by the subpoinaied papers that formed the basis of this staff report." pg 380-384
In 1982 SA picked a new number as their reserves, about 260 bn bbl. That number must have fitted with something. Here are a number of possibilities:
Quota fitting. They simply looked at how much oil quota they wanted under the new quota regime and derived a reserved figure to match.
Capacity fitting. They looked at their production capacity with or without planned capex and adjusted their reserves to fit.
Geology fitting. This is a catch all where they simply revised their estimate based upon better data on the fields. They either upped OIIP or the recovery factor to give a new URR. Proved reserves are always OIIP * some recovery factor or should that be OIIP * ? = ?. EOR can vary ? by a factor of two or more.
Quotas jumps by other OPEC producers may have prompted the rise in reserves, but SA would not have felt a need to lie about their reserves at the time. I don't believe they did, and I don't believe the various conspiracy theories either.
There was a one off jump in reserves which have remained the same since (now 262bn). I'm inclined to believe it and subtract production since giving a URR of approx. 200 bn bbl from all known fields.
SA's fields are on-shore or in shallow seas close to shore. It doesn't get much better or cheaper than that and they continue to drill in a stable above ground environment. This means that URR will come out at the top end of estimates.
Just apply an estimated recovery factor to OIIP and you can reasonably vary SA reserves between:
(OIIP 750 * 30% recovery) - 100 produced = 125 bn
and
(OIIP 850 * 60% recovery) - 100 produced = 410 bn
Er, so what! The discovery at TOD has been that production matters, not reserves, and the export land model matters most. EOR will tend to flatten the HL tail to an asymptote.
What about SA production? They are in the process of expanding capacity to 12.5 mbpd. I believe Dr. Bahktiari on this. He was very comfortable with that figure and the capex is happening now. So 12.5 mbpd will be their maximum production figure of all time if they ever produce flat out. They will never produce at 25 mbpd as some people hope.
I'm not in the oil business but I worked in SA from 1982 to 1988 and shared an office with 4 Saudis during that time. Got on fine. My impression was that they were honest in their beliefs so the conspiracy theories are unlikely.
Tony
Anyway, the main point I wanted to get across if that changing the recovery factor can vary URR by such a large amount that trying to work out reserves to 2 decimal places is pointless. Production is what matters. The production curve is a demand curve before peak and a supply curve after peak.
Having done it in 10yrs, we can assume Reserve Growth (including discoveries) is running at more than 2%.
This is verified in my own URR studies. Over the last 50 years, URR has grown at 3.3%. Because it's a world model, it can be templated to some of the larger geographic regions (not countries) as they are indeed the components.
Don't be fooled by today's stats by OGJ, World Oil, Petroconsultants (IHS) or BP. They have been backdated. Jean Laherrere has published their original figures from the 50's thru 80's many times. Incredibly low stuff. Many years are now double or triple original estimates.
IEA printed the Hubbert Graph in their WEO and basically called it misleading. Misleading 'cuz it assumes one knows the oil-in-place and URR. Hubbert certainly didn't. His theory is correct. I have shown several times that Campell's conv oil figures can be mined to show April 2005 as the Hubbert half-way point of consumption. And TOD crunchers are saying the production peak was July 2005. Pretty impressive.
But Hubbert's call on the MBD peak rate was well off 'cuz he didn't know the URR (for usa or world).
ExxonMobil have upwardly revised their oil-in-place (all liquids) to 15-Tb (from 14). If true, a 3-Tb URR gives us a 20% Recovery rate mixing conv & non-conv. Pretty fricken impressive; and that's the meat of all the optimism among the oilco players these days. Due to EOR etc, discovery rates are higher, production per new well is higher, and cost/barrel is going down to compete with the ME.
In short, if we look at some of the Reserve estimate providers, we will note over the last fifteen years that they go up every year. But with production averaging 28-Gb/yr, instead of going down by that much, it is increasing three to five fold that figure per annum (169-Gb/yr since Y2K).
This is why Peakist are always revising up their numbers. Their methodology prevents the background corrections necessitated by URR growth. Mike Lynch has said that for years...
And the HL math guyz are finding this out too. Rather than bottom-upping, Laherrere and IFP are finding troubling nuances in their Linearizations of all liquids. Since Y2K, the gradient of the slopes has changed.
We are in the new paradigm. And if u got your calculator handy, the best is yet to come! We can easily now insert 31.1-Gb divided by 1074-Gb for 2006. I predict that JL's new 2007 Outlook will show that his indicated URR has moved from 3.1-Tb to 4-Tb, thus catching him up to the six other Outlooks that are already in the 4-Tb to 5.2-Tb domain. And if he is honest with himself, the gradient may point to 5-Tb!!
Hubbert, Laherrere and Campbell must be thanked for forcing the sector to think outside the box. To reconcile production with URR. But one must not be mired in their old numbers that indicated imminent Peak in 1996 (Hubbert, Campbell).
Theory right. Numbers wrong.
More stuff at http://uk.theoildrum.com/comments/2006/11/30/8324/0934/191#191
Your quote: "Due to EOR etc, discovery rates are higher, production per new well is higher, and cost/barrel is going down to compete with the ME."
Do you have any data and charts to back these claims up?
I can see how EOR can extend the downslope tail, but I have a very difficult time seeing how this can vastly increase production to offset depletion levels occuring now. Law of Diminishing Returns, etc, etc.
If, in fact, production per new well is higher, but because it is a smaller field/reservoir than the easy giants of the past--it quickly peters out to stripper status.
Cost/barrel decreasing? Such as Jack in GoM being cheaper than any current well in Ghawar? Please illustrate.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Most of the reserve growth is in bitumen from tar sands and kerogen from oil shale. Although these substances can be processed to become synthetic crude, the initial capital investment dwarfs light sweet crude, and the processing costs never seem to mention the cost of burying the left over sand and clay and isolating it from fresh water aquifers. And I guess this is old fashioned, but I don't consider a hydrocarbon oil unless it flows without heating or adding solvents. Oil Shale, Tar Sands and Coal are not oil, even though they can be processed to make oil.
I guess I'm sort of a middle ground fellow. I think its irrefutable that the era of light, sweet,inexpensive oil is ending. I'm sure that the Austin Chalk wells will continue to ooze 5 bbls a day long after I go tromping in to the clear, white light. I'll bet the Barnett Shale wells will continue to produce 5 or 10 bbls/day with their gas long after I'm gone. But the declining production combined with high lifting costs and a steadily increasing demand means that the era of cheap oil is behind us, and probably even affordable oil for transportation.
But don't try to bs me. It costs more to operate a 5 bbl/day stripper than a 1,000 bbl/day flowing well. And taking 4 tons of sticky sand, heating it and washing the sand to get out 1 bbl/ of stuff that has to have natural gas added to make synthetic crude which then must be refined, and then disposing of 4 tons of dirty sand costs more than a stripper oil well. And it costs $500,000 per barrel/day of tar sand synthetic crude just in capital equipment, not considering the production costs, and I understand oil shale is even more expensive.
If you have some other figures please show them to me. I'd love to be proved wrong, I want the whole world to be prosperous, happy, peaceful and free. I have concluded though that everyone needs to conserve and try to transition to renewable energy though, not rely on pie in the sky figures.
I would challenge your statement:
"Most of the reserve growth is in bitumen from tar sands and kerogen from oil shale."
Resource Growth (incl Discoveries & Reserve Growth) rose:
278-Gb in the 60's
254-Gb in the 70's
325-Gb in the 80's
431-GB in the 90's
997-Gb since Y2K
... for a total of 3008-Gb URR (incl 1043-Gb of past consumption)
Statements at TOD about tar and OPEC and costume malfunctions unduly affecting Resouce Growth are plainly silly. These red herrings get lost in the numbers and appear as mere blips on a graph. The softness in recent Discoveries proposed by ASPO is similarly misguided.
These are staggering numbers for anyone that has narrow focus. And it explaine why we are seeing outlooks projecting hundreds of billions of dollars (even trillions) for development to 2030.
Where are you getting those numbers from?
I called you on this crap before.
Your reserve numbers are BS. And Tar and OPEC inflations make up the vast majority of the world's real reserve growth.
And in the end URR doesn't even matter. Its production that counts.
" Rethin on Tuesday December 12, 2006 at 8:54 PM PST Comments top
Let me add, I have no idea what I am talking about.
I'm not debating RR, I'm trying to learn. I am asking him questions to increase my understanding of the issues.
RR is incredibly patient and has taken the time to answer me.
Thank You RR"
But that doesn't change the fact that your reserve numbers look nothing like any published reserve numbers I've been able to find.
Its a simple question really. Where did you get these numbers? You quote them repeatedly but never source them.
who's numbers on the graph do u not like? which one do u think is lying? maybe we can leak this to CNN...
This graph?
Lets start with BP's line, the dark green one.
If I squint hard, I can make out in 2005 a URR of about 2250GB.
But if I look at BP's statistical review it says in 2005 1200GB.
Why does the BP line on your graph show double the number from BP's spreadsheet?
The real reserves are 1,292.936 and 1,119.615 but you have them around 2250.
my son, u should also read the text under the graph that says:
By deducting Past Resource (PR) or Past Consumption from the URR AVG, it can be seen that the Net Remaining or Future Resource (FR) rises slowly from 1957 then remains fairly stable until 1984 when it commences a steady climb to today's 1.934-Tb level. The TrendLines URR AVG is 3.008-Tb. Past Resource totals 1.074-Tb at year-end 2006.
How long have u been with us (and i mean that figuratively cuz i'm not sure u'r with us) and u still cannot comprehend URR vs Reserves?
But that doesn't work because its obvious that (namely ME OPEC) countries are not removing their production from their proven reserves number. And as RR ha shown nor was the US.
I went off half cocked, I apologize.
I still don't understand how you can just add production to proven reserves and get a usable number.
According to Stuart
URR is 2250 ± 260gb.
So again, sorry.
My two graphics have resulted from vast amounts of time and research and a very understanding soul mate.
thanx,
Freddy H>
I thought you were being dishonest.
But the fault lay with my understanding. I was comparing apples to your oranges.
I went back to the BP statistical review and graphed proven reserves vs proven reserves+culm production.
I now understand what you are saying with URR growth.
i do not dispute that 66% recovery of OOIP is possibly for a well managed reservoir ( this would NOT equate to production at maximum rate to "capture" the oil on your land to prevent your neighbor from "capturing" some of your oil followed by waterflooding at a high rate (to maximize your "present worth") and that followed by "tertiary" recovery by c02 injection - or whatever the "new and improved" technology at the time)
some of the fields included in the 6Tb have already been abandoned with way under 66% of OOIP recovered (more like 15 - 20 %)
the 6Tb figure will undoubtedly grow (in fact probably already has) with new discoveries but again at what rate will these deposits be discovered and at what rate will they be produced
http://www.encana.com/investor/news_releases/news_2006/1214.html
But I have to admit to being very confused. With all that oil out there, how come Encana are doing so bad? Might consider selling up Encana and buying Conoco Philipps - but there again why has the market marked their price down so far - they I believe are not buying back stock but are instead investing for the future - you'd think that would send their shares through the roof?
So you got any hot tips for the New Year - I'm pretty shy of political risk these days - any company with reserves more than 75% in the OECD that will grow production by 25% per annum for the next 5 years will do me. I'm even prepared to take on more risk in exchange for higher production growth.
I'll be back with an HL plot for KSA shortly.
Every day can seem pretty much the same as the next here on TOD - one difference right now is that my wife keeps screeching at me that I am wasting my time here - and she may be right.
So here's an HL for Saudi that I posted a few days back. A key feature is the "dog leg up" of the 2003 - 05, leading in this case to infinite possibilities in KSA reserves. This essentailly is diluted in the HL for the world that Freddy posted - and while Laherrere is the God Father on Hubbert (and I only learned about this a few days ago) you don't need to be a genius to work out that the line pointing at 3Gb is based on 2 points and should be viewed with lashings of scepticism.
In the HL shown above, perhaps the two most relevant points are 1991 and 2005 - two years that KSA was probably pumping at capacity, and so IMO right now the red line may give the best estimate for URR of currently developed KSA reserves - 124 Gb remaining. That should be viewed as a minimum figure. Its a lot less than the BP number (1P) of 262Gb.
The 2005 number is almost certainly high from emptying storage tanks. They have enough storage to inflate production figure for 3-6 months. I'm sure you will see a "boost" in production this summer also but I'm equally certain that KSA is now filling storage tanks through the winter to catch the spring summer price run-up.
In my opinion cuts by KSA now have a lot more to do with need to refill storage tanks than price. If they don't they will be caught next year.
And do you know how many hundreds of millions of barrels tank storage KSA has?
Global warming has helped eliminate the fall runup.
The demand runup has shifted to later in winter.
http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/stocks_text.htm #Stocks%20Are%20Seasonal
This is no longer true hence low prices now.
The current string of warm winters and recent economic softening is probably the only thing keeping oil prices in check.
Here is some.
http://www.photius.com/countries/saudi_arabia/economy/saudi_arabia_economy_hydrocarbon_sector_t~1424 .html
Plus they use additional VLCC's for floating storage and they have additional storage at other places in the world.
Quote
http://www.eia.doe.gov/emeu/cabs/saudi.html
Aramco's shipping subsidiary Vela has around 20 VLCC's (very large crude carriers) and 4 ULCC's (ultra large crude carriers), carrying a significant proportion of Saudi oil exports. In September 2004, the Saudis placed a $200 million for two VLCCs from Hyundai Heavy Industry, with delivery expected in 2007. In addition to tankers, Aramco owns or leases oil storage facilities around the world, in places like Rotterdam, Sidi Kerir (the Sumed pipeline terminal on Egypt's Mediterranean coast), South Korea, the Philippines, the Caribbean, and the United States.
In total they have significant storage capacity how much is unknown and also how its used. I believe that any recent production spike were caused by storage draw-downs not pumping.
If I'm right you will see KSA periodically cut production as they refill storage tanks. If I'm right you will find tanker sailing indicating more oil moving then hits the consumer market this oil is going into overseas storage.
Of course any of the tanker tracking outfits can watch how often and where tankers are refilling storage.
If you want to really know the status of KSA's oil industry simply track how they are using their storage tanks.
The information is probably available. The only unkown is the state of tanks inside KSA but you have to assume if they are filling external stores the internal ones follow the same pattern.
Total amount unkown I looked for a number.
http://topics.nytimes.com/top/reference/timestopics/subjects/s/stockpiling/index.html?query=SAUDI%20 ARABIA&field=geo&match=exact
Says 60 million barrels I've seen much larger numbers.
Even at 60 million if they need to give a 2mbpd boost they have that for 30 days. Figuring this out would make a good topic I'm sure they can cover for longer than this.
Gotta go sorry for spelling.
As I previously noted, both Texas and the Lower 48 showed similar inflections right before they peaked. And like the Lower 48 and Texas, Saudi production is now down declining.
Euan :-]
PS - should you not be arguing against Freddy and not me? And have you noticed that the red line on the HL I posted here would put KSA at beyond 50% of Qt by end of 2006? But I would qualify that for developed resources - and as I've said many times - what about all the rest?
Note that we have the same situation regarding the Lower 48 and the North Sea. The Lower 48 has vastly more fields--predominately onshore--versus the smaller number of fields in the exclusively offshore North Sea. Yet, both peaked at 50% of Qt.
In any case, as I predicted, KSA production is now declining. The argument is not when will KSA production decline. The question is why now?.
Well there may be several answers and the one you favour may be correct. But one answer that anyone reading this BLOG should at least consider is the fact that world oil demand growth has been soft this year and that KSA has played the role of swing producer for a couple of decades.
No she is not. You are making a valuable contribution to the discussion. You are moving the community towards a new vision.
(P.S. my wife screeches too. it's part of the female brain structure. they can't help themselves. they see the computer as a competing female for your attention. give her some attention.)
Once linear Hubbert behavior begins (say 1991) in your graph, then the graph must remain substantially linear moving foward on that line if Hubbertinian behavior is persisting (constant technology and greedy market behavior).
If there is a shift to a new slope (your "Dog leg up") that means the producer has shifted to new behavior and the Hubbert model no longer holds true.
Let's say the Suadi's have shifted to rapid water injection in order to meet the promised production rates. That means they are destroying the future productivity of the wells and we will see Non-Hubbertinian decline (rapid decline) moving forward.
The problem with our male-hormone-driven brains is that we get on a one track path chasing after our prey on a fast paced line. Even when our prey has zigged and zagged, we tend to "stay the course". HL is no longer valid once the Saudi's have zigged and zagged. We need a new model. What it is I don't know. Are there any other fields with empirical data showing what happens when there is switch over to horizontal drilling and third generation extraction techniques?
Don't forget. Hubbert is just empiral data collection based on capatilistic non-monopoly market behavior and first generation drilling technolgy in the lower 48. None of that is true for KSA.
This is exactly right. The principal new behaviour for KSA has been ramping to capacity production - relatively rare for them. That capacity is defined by their existing infrastructure.
We need to be very, very careful applying HL to KSA that has a history of political and economic intervention in its production history. But I still think that HL provides the best clue to the future of KSA.
I hear screeeeeching so got to go. But thanks for your comment - I'll put my last polonium pill back in its lead case for another day.
I hear screeeeeching in the background so I'm going to answer Stepping Back then off to siesta.
Then he developed the "other 50% of SA's fields" that are now untouched. His kids needed the money. Get the picture? If u visualize SA as fully developed or as "two countries", then we have greater production.
Back to your graph. Your fault was in being too fair. The green solid line should have a much steeper slope running along the bottom of the green troughs. This intersects the x-axis at 146-Gb. That's one country. The other country is shuttered and would add another 146-Gb for a total of 290-Gb. And what has Aramco been claiming in all their Outlooks? 260 P1 + 32 P2 or 292-Gb!!
As the decade unfolds, u will see a new paridigm in your HL. A new dogleg line pointing to 292-Gb. It's not a optimistic as your IEA forecast indication, but draw a line 'tween the two and u'r fricken close...
To make any difference to global supplies the companies are going to need more than 1mmbpd production - tricky for them to sneak under my radar.
Please let us know when you find this firm. </:-)>
But for new investment while prices are down, I'd sure look at Anadarko, Apache, Devon and XTO. And the service companies aren't going down, so Schlumberger, Baker-Hughes and Corelabs are good buys. All of the above companies have impressive management and great strategies. But blood is on your hands if you give any money to Haliburton. And remember, if they'll steal from their customers (US Gov.) and their employees (ask any Kellog or Brown and Root employee about their pension) why would you think they would treat their investors honestly?
Major oil co's are not doing tha well because the market worries that their reserves are falling. even xom looks bad because they are booking gas from qatar as boe reserves even tho their liquid reserves are falling.
I like best oils ard and gpor, gas gmxr, because all have growing reserves, production, and earnings.
good luck.
Possibly there is no period from which Aramco's reserve figures may safely be used.
"Peak Oil Debate: New stats and figures for the oil enthusiast"
This site is now quoting TOD as a resource ??
http://www.resourceinvestor.com/pebble.asp?relid=27269
Where does EXXON get its data ?? Do they really know what is left ??
Exxon says ....
**Global oil resources: **
- 1.8 trillion barrels
- 2.2 trillion barrels
- 3.1 trillion barrels
***Daily fuel supply and demand in 2030: ****Crude & condensate: 82 million barrels
Oil sands: 5 million barrels
Natural gas liquids: 8 million barrels
Biofuels: 1 million barrels
SOURCE: Exxon Mobil
http://www.dfw.com/mld/dfw/business/16229973.htm
I don't understand why this post was constructed as it was, it seems to take a basic understanding of the oil industry and act if it's a shock and surprise.
" a basic understanding of the oil industry and act if it's a shock and surprise."
I disavow that ANY such thing exists. It is a clown show.
Roger Conner known to you as ThatsItImout
It is one thing for reserves to grow. It is another to produce 10 times what your reserves indicated. And the vast majority of people here, had I quizzed them about this before posting the numbers, would have certainly not come up with a number that high. That is the relevance. When I get people e-mailing me saying "that can't possibly be right", then it is worth sharing.
The oil industry's "expertise" lies too much in the fact that it doesn't allow information public and then makes all sorts of claims about things based on this knowledge it won't share.
Your post would have been much better titled, "The idiocy of how we count reserves" and then explained to people how this system works or doesn't. That you act surprised and put up against the Saud numbers and then drop their number to 150, but place it against the 27 of the US, would give the impression to many uninitiated, despite your claim, that the Saud's reserves might as well be unlimited. It comes off as amateur propaganda, whether that's your intention or not.
Earlier in the thread you questioned what production HL would make for KSA given data only up to 1982. Why not do a TOD post based on that and test it, Robert? We already know that the US and Russia both fit their production profiles accurately based HL plots using only on pre-peak data. Try it for KSA and see what you get. I don't know that 1982 was the KSA peak, which is the date that Khebab and WT used for selecting "pre-peak" data for the US and Russia but it can't hurt to try it.
The point about both countries is that they are way, way past their respective 50% marks.
KSA is only slightly past its 50% mark, but Khebab could take the P/Q intercept and use it to predict the post-1990 cumulative production versus the actual post-1990 cumulative production, since it looks like KSA started showing a linear progression around 1990.
Does anyone hear when one lone poster, some several months ago, did a string of posts insisting that the danger was not "peak oil" per se, which if it is known, can be planned for and mitagation steps taken, and our technical forces can be turned to alternatives/conservation methods (witness the "big valley" in the early 1980's.
The great danger is that the developed world is running so completely in the blind about oil and gas production and remaining reserves that it makes planning, investment, and mobilizing action all but impossible.
We are left with NO CHOICE but to accept the possibility of the worst scenario, but still plan for the possibility of the best, in other words, choose a price point and reserve/production assumption at each interval from just a above $10 dollars per barrel all the way to hundreds per barrel, and assume that ANY of those numbers are possible and must be planned for with equal certainty.
It is of course sheer madness. There is now no rational price setting mechanism, and thus, no way to plan for the future. The blindness issue IS THE ISSUE.
Several people involved in peak oil research have made the case that a few months at most of work would end the peak oil debate once and for all IF the major producers would allow outside auditing and third party confirmation of the numbers involving oil production and water injection tables of the major oil fields of the world. This is a practice accepted as the ONLY DECENT STANDARD of business in every other industry in the world, and considered the mimimum standard of conduct by any civilized organization.
However, the very commodity that our very existance depends on is exempt from any such minimal standard.
How this situation has been allowed to develop is not easily explained, but the course of action and policy is obvious:
(a)repeated ongoing pressure at all levels upon the major companies AND nations that are the oil/gas producers. This should be relentless pressure....you want a loan, open up, you want fighter planes, open up, you want promises of military protection, OPEN UP. You want to be considered a civilized operation, OPEN UP.
(b) Use of intelligence services and all espionage tools which are normally used in military practice to get the numbers through your own efforts. There is no need to feel guilty. A sudden cut off of oil or gas could be as destructive to your nation as a missile strike. The opponent has brought this on themselves by engaging in an unacceptably decietful and barbaric way. Use all the spying methods you can bring to bear. We must also be willing to threaten with taxes, with oversight sight, with limits to access to America's forums, and with possibly viralent press attacks if this is needed. We must let the oil and gas companies that we are willing to side with their enemies, and willing to fund and promote ANY alternative to them to release ourselves from slavery. They must know that the poeple of the world have finally realized this is a POWER STRUGGLE and agreed to join the fight. Even if it costs us money to go to alternatives, WE SHOULD AND WE MUST. Any attempt at liberation is always expensive.
(c) "Case hardening" your society. The oil and gas consuming nations must plan for a cutoff of oil and gas, and plan for a flood of it. Either, with no warning and no way to know when it is coming could be extremely distructive. Alternative energy planning and conservation efforts can be destroyed by a flood of cheap oil/gas. A cutoff with no warning could leave citizens in danger of loss of life without needed heat, services, etc. "Case hardening" is the policy of energy diversity, distributed generation, alternatives and massive reduction of waste. It is a way to be able to move on a dime. Remember, we are blind, and have NO WAY to know what direction we must move in or how fast. The best metaphor for the sitaution is surfing, assuming the next wave may be of any size and come from any direction. It is a MUCH MORE daunting challenge than peak oil would be. Peak oil is a one directional threat, easily dealt with compared to the environment we are now in. And remember, we owe the producers of oil and gas who refuse to be open and reveal nothing more or less than the truth NOTHING. We owe them no sympathy, no respect. We must and should bring every tool to bear on them. This is the ultimate power struggle we are are talking about.
RR is right. We frankly have NO IDEA about Saudi, OPEC or World reserses. We are being lent no cooperation, no humanity, no civility from the oil producing nations or companies. We are nearing the fight of our lives, whether peak oil is upon us, or decades away. It really doesn't matter. We are in a struggle for human dignity, for our freedom, and our right to self determination. If we continue importing energy and buying from those who have demonstrated the utmost hostility to us, we are serfs, and on a declining path to being animals, in bondage and servitude, whether the oil is there or not.
Information IS FREEDOM. We demand only what every other industry, every organization (with the exception of juntas, gangs and cults) are expected to accept as a standard of decency and civility. OPEN INFORMATION.
THIS, MORE BY FAR THAN PEAK, WILL DECIDE OUR DESTINY.
Thank you. Roger Conner known to you as ThatsItImout
I am afraid you will never be satisfied in your quest for accurate data. It is simply not in the KSA's (and other major producers) best interest to furnish it. That is why Aramco stopped 25 years ago.
If the whole world knew for a fact that oil production would diminish in X years then consumption and other economic behavior would be altered globally to fit that knowledge. Price manipulation would also become impossible without severe repercussions from oil-dependent user nations, particularly those that possess large militaries.
Example: if peak production were known for a fact to occur in 5 years hence and logical conclusions were reached about prices and geopolitical ramifications, people would demand a new energy regime - indeed a whole new socio-economic one. Consumption of everything would come down sharply and in the current environment of huge debt, free capital movement and economic globalization the world would be plunged in a severe depression. Oil prices would collapse, too, and if producers tried to cut back to boost revenues they would be attacked; they would be seen as holding the whole world hostage as it tries to transit to a new energy regime (eg use oil to build solar cells).
No, we will not get the data. However, we do not need them. Actions speak much louder than words. For that I present Iraq, Afghanistan, Chechnya, Ukraine, Somalia, Spratly Islands, et al. Actions there and elsewhere speak loudly to the fact that oil depletion is near. Near enough to make armies move and die.
Regards
Good points - I think you're spot on.
Is there a way to encourage it to be in their best interest?
Therefore, I strongly suspect that the CIA and other intelligence agencies know quite a bit more about the status of oil reserves in Saudi Arabia and other major oil producing countries than has been made public. I also doubt whether Congress is privy to all this information.
One could speculate endlessly about what the CIA knows, when they knew it, and what effect it has had on recent US foreign policy (particularly regarding out decision to invade and occupy Iraq). Nor is it hard to understand why such information would be kept under wraps. The government (especially the current Bush regime) is so intertwined with Big Oil that it is sometimes hard to tell where one starts and the other leaves off.
It is analogous to a large company that is planning a major downsizing. The last thing they want to do is to announce it at an early stage because that would enable their employees to respond in a way not to the company's benefit (such as bad morale, lower productivity, and finding another job before their services are no longer needed). Thus, the common modus operandi is to spring the bad news at the last practical moment.
With regard to what the true reserves are, I don't think one can go too far wrong in assuming not an outright worst case, but rather a realistic pessimistic case.
ARabian AMerican COmpany
It would be unrealistic to suppose that the very top oilmen and executive branch politicians don't know what is going on.
OTOH Russian oil is different. I think CIA knows much less there.
Regards
In the partly fiction movie they elected to 'eleminate' on of the Saudi princes who was too forward looking for them.
I believe in the ineptness of our security organizations.
Consider their performances of late. Pretty shabby.
Actually at least if you look at public numbers our security agencies do well with data collection and analysis. Its the political spin at the top thats been the real problem.
Note that the internet was supposed to be a vast library of information and freely obtained and thus would be a huge invention for the betterment of mankind.
Look what it has turned into. The congress can't even control the spawning of spam.
You do a google for say a method to fix something or perhaps a recipe. What do you get? Hundreds of hits from merchants and offers on cookbooks. Finding the worthy information is getting harder and harder because now everyone in their basement wants to hit you with their merchandising , which is questionable to say the least.
The net has not fullfilled its promises and they are mostly broken promises.
On has to always be on guard for those who would put virus and trojans on you website or PC. The list of problems goes on and on such that normal folks find it harder and harder to use the internet.
As to oil and energy? Lies and false information. Your right and our politicians should be protecting the system but they just buy into it instead and promote this idioticy.
We need to hold their feet to the fire but that will never happen. Our way of life has been put in danger. We are marching into the unknown and are government is in collusion with those who practice these obfuscations.
Will it ever change?
My buddy, Oil CEO, got banned from TOD about a week ago.
Super G said he was going to reinstate his license after 7 days. He didn't.
Wanna kinda smooth that over?
He uses nasty language all the time. Leanan points out that this gets TOD banned from school.s
TOD is the #1 site for understanding PO and the more the message gets pushed out the better. I really appreciate the time and effort that people put in, and the quality of the posts by those who contribute.
Is an energy crisis inevitable? No.
Will an energy crisis happen? Yes.
Why? Bad data.
But since he's announced it...yes, Oil CEO got suspended. For a month, not a week.
But he is not going to say these things at this time. He realizes that Dragonfly is one of his biggest assets, but will not refrain from torturing him at the flick of a switch at any time.
Oil CEO wonders how two bobble heads like ourselves can ever really meet.
I wish you and your wife and your kids a very Merry X-mas, and a Happy New Year.
And Oil CEO wishes that to everyone. For all time. Oil CEO really means that.
But once we get back to oil time. Hey we're on.
Course. After you cross over, hey you never know, man ...
Dang I depended on his posts maying mine look well though out and reasonable :(
We. I think is the key word. Finally taking credit. Thought you were not reading my posts. It took me much longer than usual. But I did it. You were easy. Didn't even know what you look like. But on spec, fast, I'm the best. I'm starting to float again. Where shall we meet? Nirvana. Pink Floyd Concert. Star Trek convention? Think Not.
Think AK-47 convention.
Seat G36C.
If you can't play by the rules, I suggest you find another site.
So as I said yesterday Bob I don't have time to cross reference all poster's comments but I have to concede that you seem to be a poster who is prepared to modify his view in light of new information that becomes available.
The thing that strikes me most about this thread is that it is almost totally devoid of humour and things more important than that (self censorship applied here) - though I'm working my way down to Westexas and Khebab to try and work out whether they agree with each other or not.
He may have been banned for language, but meanwhile a lot of sarcasm is directed at posters.
The situation is being discussed. I think the general consensus is that a lot of "his" posts are very worthwhile. But then you get a string that almost seem as if they are coming from a completely different person. I am personally concerned about the site getting filtered from schools because of profanity. If you could pass that on to him, perhaps he could understand the concerns of some of the TOD staff.
As far as the duration of the suspension, I think that needs to be worked out via e-mail with the site owners. Perhaps he could promise not to post a lot of profanity? I have personally enjoyed many of his posts, but found others very puzzling.
I Think Oil CEO knows who his friends are. I know who his friends are.
He told me.
Sincerely,
Margaret Thatcher
Luckily, we are "rational" beings and therefore we can never guess who you are.
Where do I sign up for my free Citgo gas card?
His behaviour has deteriorated in the last year.
I wonder what happend to him?
I hope he is allright..... it does'nt look good to me.
Tony
In terms of Freddy's continued attacks on the HL approach- they are entirely dishonest. The green 1970-1980s line has the slope it has because of the 2 ME oil shocks.The latest tickup in 2003-05 is th ramping up of OPEC and FSU output, which we all know had plateaued since mid-2005. So to track this slope to total output of 4-5,000 Gb really degrades my opinion of Freddy's position in the debate- he has sunk again to troll-level. I'm still waiting for the tremendous new oil to start flowing as predicted by Freddy/CERA and see if it can match the 7mb/day increase that happened between 2002-2004.
Finally, in terms of knowledge, after participating in 2 Australian Senate Inquiries in the past year, we on TOD are about a millenium ahead of the knowledge level of our parliamentarians. This is something to be really worried about!
The HL approach will never work because reserves are unknown, and Freddy's infinite growth model will never work because NOC's control the majority of said resources.
What does make since however is using an approach similar to Skrebowski's and ASPO Netherlands.
I think Skrebowski is too optimistic in both. His estimates of the decline rates are based on historical declines, and for various reasons, they are likely steeper now. And expecting new production to come online on schedule is just not realistic. Projects are delayed far more often than they are unexpectedly sped up. (See Thunder Horse.) Bad weather, labor trouble, technical difficulties, political unrest...all these factors tend to create unexpected delays, and all will likely be worse rather than better as oil is extracted from increasingly hostile areas (geologically and politically), and as workers and locals are emboldened by high prices.
I do believe however, that doing analysis from this viewpoint entails fewer assumptions than the HL model. Nearly 2/3's of the world's reserve base is not open to public scrutiny. The HL model will only be as good as the data that it is analyzing. How many times does this model have to fail before people realize that it cannot be accurate unless we know what the current reserve base is - which btw will be moving target year to year?
I also don't believe the HL model works well with the types of liquids that are becoming an increasing part of the overall picture (heavy oils, GTL's, etc).
Taking a project approach does involve some assumptions, but they are more visible, as well as predictable in my opinion.
True - but Hubert had a clear picture of the current time reserve base to apply that model to - and the model has failed miserably since.
Whether this is because someone other than Hubert is applying it, or the model just doesn't fit well into the present situation (tar sands, GTL's, lack of accurate reserve #'3, etc) - who knows. Maybe both....
Anyways, I believe all of these models have some issues regarding assumptions - including those of the optimists which assume NOC's will pump their resource out of the ground as fast as geologically possible.
Deffeyes ain't wrong yet. And even if you take all liquids instead of C+C, he's within a year. So far, anyway.
I think plus or minus five years is the best we can hope for, as far as accuracy goes.
The HL champions (example: Campbell) have been forecasting peaks for a couple of decades now. And for a couple of decades now, they have had to revamp their numbers repeatedly because the peaks never happened.
Myself, I'm not a great HL fan, but the method certainly does better than the alternatives.
Ah, frustration of the current reality setting in eh?
"got it a little wrong"
The first forecast of a peak by Campbell was 1989 I believe. Little wrong? Guess that's debateable.
I must admit a caveat in most of the Outlooks. After the 2010-2015 era, they are based on demand forcings, not bottom-up field analysis and flow rates. Projected global GDP is the main determinant. But the past is not the future if we change horses. And that is what happens after 2012. Dependence on non-conv for increased supply additions.
I can, and I completely agree with your points. Skreboski's approach is based on something that can be predicted - how many additional barrels per day a new project will bring to market. Assumptions in this case include depletion rates and project timelines. Both of these should be very easy to estimate based on past previous years (you would want to use recent years for accuracy on current trends).
Part of the problem is that we have giants like Cantarell that have recently peaked. Their decline rates could be very steep...but historically, there's no decline at all.
If Ghawar has also peaked, that's a lot of error in the estimated decline rates.
And as for your URR drivel, it has the same probative value as a guy claiming he will definitely win next week's lottery because he's planned what he will spend the money on.
We are all saved - oh, wait, did he scratch Thunderhorse out from his older predictions? Hmmm. Does he keep track of all the delayed/disappointing projects, so as to derive a certain correction factor - there should be enough data at this point to actually see how often production amounts/start times are accurate.
As for decline rates - 3%-7% seems quite, um, 'optimistic,' for Pemex and its Cantarell complex.
And we are all waiting for the North Sea to surge - except for those who actually look at the numbers, and find that at best, the North Sea will not decline as fast in the next 12 months as in the preceding.
Projects get delayed, but oil depletion is ongoing.
Get used to it, it will be the new market paradigm for the next decade and on - this time, things will actually be a bit different than in living human memory.
The HL method is used to predict reserves. If reserves were known, then there would be no need for the HL method at all because everything being searched for would already be known.
The Hubbert method uses two knowns to predict a third unknown, no different from most other mathematical problems. Known is total past production and annual production rate. From these two known factors a third unknown is predicted, total recoverable reserves.
Of course it is not an exact predictor, but in all cases where a producer has been producing flat out for at least a decade, the system is remarkably accurate.
Ron Patterson
Well, we know this is not the case with many countries because of one reason or the other. I believe SA falls into this category. Furthermore, their resources are being developed at a much slower pace than the US, UK, were in the past. What this results in is a slower rise to the peak, and a longer plateau before declining.
Hey, whatever guys - I understand that you guys really like this model - I just see some flaws in it.
but in all cases where a producer has been producing flat out for at least a decade, the system is remarkably accurate
Austex replied:
No, they do not fall into that catagory. Saudi produced flat out from 1991 until October of 2006 with only three years in between where they deliberately cut back, 1999, 2001 and 2002.
What ever gave you that idea? Saudi has been trying desperately during the last fifteen years to raise production. They have been drilling horizontal christmas tree wells as if there were no tomorrow. They have developed one field deep into the Empty Quarter that, because of its deep remoteness, was not considered economical earlier.
Saudi is the perfect cantidate for the HL method of reserve estimation.
Ron Patterson
Look guys, believe what you will. I'm not going to give a basic economics lesson today. They have an ass load of fields sitting undeveloped that our IOC's would give their left nut for. Why? Because they cost north of 1.50 per barrel to develop and until recently, the need to develop these fields hasn't been there.
If you guys think that SA is producing to it's full geological capability - so be it. IMO, SA will be on a plateau for decades if they make it a priority. If they do decline significantly soon (within the next decade) it will be for political reasons.
I see a peak something next decade, but I'm betting that it won't be because SA ran out of geological capability to sustain 11 million barrels per day.
Have a good rest of the weekend....here are couple of decent articles to read if you have the time:
http://www.aramcoexpats.com/Content.aspx?ContentID=700
http://www.saudi-american-forum.org/Newsletters2004/SAF_Item_Of_Interest_2004_05_27.htm
This is quite similar to the prevailing conventional wisdom in Texas in 1973, when Texas started its long term production decline.
Oh sorry. I forgot. We have been "voluntarily" cutting production for 33 years.
dQ/dt = Q*(1-Q)
Where Q is the fraction of resource that has already been consumed.
It is a reasonable first-order assumption which has cartain range of validity. It appears to work very well where unfettered production has occurred and Q is > 0.4.
In every case I've seen when Q > 0.6, production has declined.
Mathematically, the equation implies production will decline at Q=0.5.
Kehbahb's loglet analysis is far more sophisticated in that it allows a number of such sources to come into play. If I had to bet on what the total world production of conventional crude and condensate would be in X years time, I'd use Kehbab's loglet analysis.
Only 1074-Gb of oil has been consumed. Thus we'd see peak at 2148-Gb. Unfortunately, none of the 18 URR estimates is below 2148-Gb. But HL is only a guide. It is an awesome tool for URR. Useless for micro analysis of annual supply.
Laherrere's last HL was a tad over 3-Tb and he alerted the sector that ihho the globe seems to have entered a new upward phase since Y2K. My work shows that AVG URR of all 18 Estimates is 3.0008-Tb. Your insinuation that 2006's marker will be down due to plateauing is hogwash. 2006 supply is up 1-mbd over last year. The "dogleg" has been capture by several HL practitioners. It ain't rocket science. And it is consistent with reports coming from Skrebowski, CERA, Campbell, Koppelaar, ExxonMobil & IEA ... the bottom-up analysts. Each month this year i received their upwardly revised figures for the medium term (2010-2015). Only the mega optimists on long term came down.
I have challenged the denialist camp at TOD to put forth one name of a number cruncher that has not resolved that Peak is postponed to at least 2010. None has come forward. Except for the anecdotal-inspired or agenda driven blowhards...
There is no merit to your comments. None.
Dishonesty is Freddy's modus operandi.
Practical, people's oxen get gored around here all the time.
I'm really glad that we have corn farmers and that the prices are going up for you because of ethanol manufacture. They used to make MBTE around the Houston Ship Channel, and I'm really scared about what the residual pollution is going to do to my friends and neighbors. I also think the more quickly that the US gets from importing 70% of our fossil fuels to renewable resources the better off the whole world will be. That doesn't mean I think ethanol is going to be a cheap, non-polluting substitute for cheap oil, because EROEI is a good measurement critemium.
As fossil fuels deplete, the importance of this argument will finally sink in. If we ever get a fossil fuel tax, you will understand the importance of this argument. Under either of these scenarios, low EROEI producers will go out of business. Today, you can take cheap and dirty coal and use it to make ethanol. True, you can do this even with a low EROEI. But 1). It is not very environmentally sound; and 2). Coal will become more expensive as we increasingly turn to it as oil supplies are depleted. Then you will certainly be singing a different EROEI tune.
EROI is important long term. Ethanol is put forward as a way to continue in some fashion our current way of life. The EROI shows that this is probably not feasible.
Next it becomes important even today since it adds and extra depletion term onto the geologic depletion. So your real net energy value is lower today than is suggested by looking at production levels alone. Its actually quite similar to WT export land model but in this case the country is the oil companies internal oil and NG consumption. This is consumption that is not used to produce real wealth.
And this is just the tip of the iceberg for rate limiting logistic effects they are numerous some of course unpredictable such as political crisis except that they occur routinely.
If you summed all these effects you probably will find that they lower total world production by about 10% from what the highest possible production could be.
Ignoring these effects and postulating high possible production numbers is actually the main approach taken by CERA to claim peak oil is not yet here.
On the other hand once you consider all these effects its reasonable to assume that HL or other methods may also over estimate the real oil production curves over the next few years.
Next modern extraction methods have only shown that they are capable of two things. Higher production rates on the front side of the field life followed by steep declines and low production rates from played out fields. What they have not done is show that they can maintain steady production from a field for say 90% of its production life.
And the final issue is the fact that old super giants still contribute a lot of our oil supply again any estimate about production from these fields will probably overestimate future production.
Only two positive factors are at play. High oil prices result in more fields becoming producible and these field can produce initially at high flow rates using modern methods. And of course infield drilling is able to keep production rates up using the same methods. The cost is of course shorter lifetimes for the fields at high flow rates and steep declines.
We are now on this treadmill which looks good at first but requires us to run even faster to keep up over the next few years.
And despite all this talk of URR etc the only thing that matters is the first time oil production declines by even 2%
at that point the great game unravels. Worldwide production estimates even 5 years post peak are not that interesting.
URR claims since the late 80's makes the assumption that the remaining oil will be produced at rates similar to whats been done in the past we have no reason to assume this is true therefore URR estimates that don't include new virgin fields are not that helpful regardless of how great the look.
So for KSA some of the URR growth is from new fields and new drilling in existing fields that proved larger. And of course modern methods will enhance production rates over the short term but most of the current modern URR estimates applies to oil that would be extracted at high cost and much lower flow rates then we have today. This is exactly what is happening in the US. Sure we still produce a lot of oil but its at ever declining production rates and increased cost.
So how much easy oil is left by any estimate not much.
The pratical engineering approach says you go with the tools that are working.
Its amazing how many old oil fields were found by surface expression. The highs gave indications of where to wildcat, and you can actually see the productive area on the surface. I guess its a weird form of tourism, but I enjoy looking at old oil fields and have studied enough surface geology to where I can visualise a lot of the subsurface.Its how a lot of the early, self-trained geologists worked. Look at old topo maps and compare them with the productive area of the giant fields found between 1900-1930 in the US and you'll see what I'm talking about.
It's because 1P reserves for the US were always grossely underestimated as you can see on the chart below. The red curve is what "true reserves" should look like. Reserve numbers in 1982 should have been around 135.42 Gb and not 28 Gb. In 2005, the logistic reserve is about 61.45 Gb which means that reserves have declined by 74 Gb and we have consumed nearly 72.77 Gb (CO+NGL) in the same time.
If you look at Luis chart on top of that thread or the one below, you'll see that the R/P ratio has been nearly constant for the past 50 years around 10 years. Ten years is about the time necessary for oil company to plan and implement new oil projects.
I don't think the use of the HL on SA is reliable at all. The production profile from SA does not fit the minimum requirements for the use of the HL. Besides, the confidence interval for the URR estimation on SA is quite significant.
I believe that the HL should be used mainly on countries with a mature production that we know have peaked or are about to peak. The predictive power of the HL is good in some limited cases (Norway, the US).
You're probably right about SA reserves, if you take out the 1990 reserve jump, you get the following curve:
if we assume that 179 Gb is the correct reserve estimate, we get 110.8+179 = 290 Gb for the URR (Crude Oil + Condensate). The ASPO estimate is 270Gb, and the PFL is also saying that 270-280 Gb is likely (see figure below). SA has probably produced bwteen 41-48% of its URR (CO only).
Published on 24 May 2006 by GraphOilogy. Archived on 25 May 2006.
Texas and US Lower 48 oil production as a model for Saudi Arabia and the world
by Jeffrey J. Brown & "Khebab"
A few days ago, I asked Khebab how I should refer to the conclusions in the captioned article, as "mine" or "ours." Khebab did the graphs that I suggested. I wrote the text. He replied that he now had some doubts about the HL estimate of KSA's recoverable reserves.
However, I would point out that two HL graphs, done independently, one by Laherrere and one by Khebab, basically came up with the same result--a Qt in the 180 to 190 Gb range.
There doesn't appear to be much doubt about what the HL plots are showing. The problem seems to be that the number is so scary, and so contrary to conventional wisdom, that people are assuming that the HL estimate is wrong.
However, KSA's production is following the predicted downward production profile in the captioned article, and KSA is declining at the same point that Texas started declining. So at this point in time, the HL method gives remaining recoverable reserves of about 75 Gb, and as I predicted in the captioned article, using Khebab's graphs, KSA's production is declining--and declining rapidly.
However, as I have said before, this is also true of the Lower 48 and the North Sea, but the North Sea and the Lower 48 peaked at the same point, right around 50% of Qt (crude + condensate).
KSA, like Texas, had long periods when the fields were produced at less than the maximum rate, i.e., these were the two swing producers.
If two vastly different regions like the Lower 48 and the North Sea peaked at about 50% of Qt, why wouldn't two vastly different regions like Texas and KSA peak at around the 57% point? And as predicted, KSA is now following the "Texas Decline" path.
They would. But that's the problem with this approach - SA hasn't produced 57% of their reserves.
As I noted up the thread, that was the prevailing opinion in Texas in the Early Seventies, i.e., we weren't close to a peak.
Note that we are now discussing "why" Saudi production is falling and not "if" Saudi production will fall.
In any case as I predicted, Saudi production is now falling.
What was your prediction for Saudi production in 2006?
If the economy keeps booming, which it looks like it may....OPEC may have to open the taps back up by the middle of the year is stocks keep dropping. Only then do we see what SA really has in reserves. IMO, they do have the 2 million barrels they claim they do - most of which is heavy however.
I applaud you guys for trying to extrapolate this data, and I know it gets irritating for people trying to poke holes in your reasoning - but I just don't know how much can really be predicted considering how non-transparent their current situation is.
The EIA is already showing KSA's average crude + condensate production so far in 2006 to be down by 4% over last year.
OPEC sources are putting Saudi production as "somewhere" below 9 mbpd. Assuming it's 8.9, KSA is showing a 7% decline from 12/05 to 12/06. And as time goes forward, the Saudis are reportedly unilaterally cutting some crude deliveries to Asia from a 5% cutback in December to an 8% cutback in January. In other words, Asian refiners are saying "We want this much oil." The Saudis are saying you only get 95% of what you agreed to buy in December, and you only get 92% of what you agreed to buy for January.
All the while, the IEA reports that IEA countries were drawing down their inventories by 1.3 mbpd in October, with worse to come.
http://nwitimes.com/articles/2006/12/16/business/business/53000d5bfd74876c8625724400786907.txt
This is a link to Stuart's second post on the HL method. I think that this is the one in which he named the method "Hubbert Linearization." I suggest that you take a look at the HL plots in this post, as well as the HL plots in the Energy Bulletin article.
Stuart asked an interesting question in this post, to-wit, are there any examples of large producing regions showing non-linear behavior after entering the linear phase?
Insofar as I know, once large (predominantly) onshore regions have entered a linear progression with a P/Q intercept in the 5% to 10% range, the answer is no. Russia was complex, but Khebab showed how the post-50% cumulative production was as predicted by the HL model.
So, do we have an example that would support the "conventional wisdom" expectation that the Saudi HL plot is about to show up to a 40% increase in Qt? Not insofar as I know.
In other words, insofar as I know, the conventional wisdom prediction for KSA is a prediction of that which we have before never seen, all while KSA production is acting as predicted based on the HL model.
You mentionned a Qt in the 180 to 190 Gb range for KSA.
Anyone as an idea of the cumulative production of CO in whole USA through 2006?
A rough number would be enough, just to make clear which region has the greatest pool of oil in the ground.
This link has a total US plot showing remaining recoverable reserves--I think crude + condensate--of about 50 Gb for the US (including Alaska).
Obviously, the Middle East as a whole is bigger. Off the top of my head, using the HL estimates I think that KSA, Iran and Kuwait would be about 400 Gb (URR), with remaining recoverable reserves of about 180 Gb--about 55% depleted. Note that all three countries are showing lower production.
I have a little theory since a while: if oil was created 100+ mio. years ago, and if we can assume that the most oil sits under places where the most prolific vegetation were (at these times)(i.e. on the equator circle, ancien rainforests), we can figure out, taken into account the continental driftings, which regions are the best endowed with oil.
What do you think about that?
For instance, if it appears that the north pole was right in the place of the actual Bresil, there may be some chances that it contains a lot of oil.
On the contrary, if the Artic circle has not barely moved, we can exclude bigs finds there.
BTW, one key point that no one, insofar as I know, disputes: There is only one conventional super giant (one mbpd plus) field on the horizon, the Kashagan Field, that won't hit peak production at best until 2020.
Meanwhile, it's near certainty that the four current super giants are all in decline or crashing.
Oil is not derived from vegetation, but aquatic organisms.
To be honest, I would leave oil exploration to the experts. ;)
If you want to understand current theory about how oil formations occur, I suggest reading both of Deffeyes books. Regardless of whether you agree with his discussion about the Hubbert Curve, his academic explanations of how oil is formed and the conditions needed for it to form are very illuminating.
In fact, it was just a suggestion, a track for further reflexion. I am perfectly aware that I'm not, by far, an expert in that particular field!
I agree completely. That is why Saudi Arabia is the perfect cantidate for the Hubbert Linerization method of reserve estimation. Saudi Arabia has been producing oil for well over half a century. They peaked in 1980 before the Iran-Iraq war and the resulting "Tanker Wars" dramatically cut their production. Then in in 1991 they began to produce flat out. And except for 1999, 2001 and 2002 they have produced flat every year since 1991.
No better cantidate for the HL method could possibly be found than Saudi Arabia. That is why it is so strange that you should say that the HL method should be used mainly on countries with mature production, that we know have peaked or about to peak. That is an absolute perfect description of Saudi Arabia.
Ron Patterson
Another absolutely critical point the effect that the ongoing decline/crash at Ghawar (IMO) is having on overall Saudi production. In Texas, the analogue field to Ghawar, the East Texas Field, only accounted for about 7% of total production at peak, while Ghawar accounted for more than 50% Saudi production at one point.
When the water hits the horizontal wells, it's over. There are no more tricks to pull out of the bag, at least none that will maintain very high production rates. They can, and will, go back and drill pockets of bypassed oil, but these are just attempts to exploit small pockets of bypassed oil.
The Saudis may not have even been truly lying about recent production forecasts. Shell was expanding their surface production facilities at Yibal to handle an expected flood of new oil--when they got a flood of water as the horizontal wells watered out. Ghawar is now at about the same stage of depletion at which Yibal crashed.
Don't they rework the christmas tree wells to cut off sections that are watered out ?
What I mean is that production might not crash with the latest well technology but it will be quite variable until a watered out Christmas tree well is reconfigured to shutoff the break through regions.
I bring this up because I suspect the 3mbd drop reported may have been extrapolated from wells watering out before they where reworked. I'd assume that reworking the wells resulted in production coming back up for most of these wells but at a lower rate.
It would be nice to learn more about how modern christmas tree horizontal wells are produced as they water out.
My guess is that they allow production rates to drop at lower rates as branches or regions that water out are shutoff. In effect they are used to extract bypassed oil without extensive re-drilling.
This scenario would fit with the increased rig count in KSA.
I happen to believe the report genuine but I think KSA was able to rework the wells to lower water cut one more time.
I actually have a lot of faith in KSA's ability to extract the last drop of oil out of Ghawar I just think if you look at how they are producing it that they are reaching the point soon that production will fall of a cliff.
Next considering I think that they are "cutting" production now to refill storage for next year my best guess is that KSA will show significant production drops in 2008 that they can't hide. So we have 6 months to a year before we start to see unstable oil prices and shortages. Assuming KSA can pull off one more swing producer play from storage next summer.
So, as they continue flowing the oil at high rates from the rapidly thinning oil column, it becomes easier for the gas and water to bypass the oil. This is especially true when the gas and water hit one of the Super K zones, which act as "Express Trains" for the water and gas.
In any case, a "best case" water cut of 35%, in a field that has already been redeveloped with horizontal wells is not a stable situation.
No but I think they may have been able to keep production from crashing short term by blocking of break through areas.
I just saying from my admitidly limited knowledge I think that it will basically decline in two stages. Stage one is break through on the horizonatl wells with water hitting certain sections. Here you rework the well and can contine with lets say a 10% ? production drop. Sometime after this probably a year or less your looking at 25% or more declines.
Also its my understanding you can rest the field to allow preassuer to build up agian.
In any case their seems to be a number of methods to arrest the decline of a field for a short period of time following the initial production drop when water starts to hit the horizontal well. All in all it seems your basically moving over to get what would be bypassed oil in conventional production. The point is I think for ghawar you would see a intial decline that not so steep < 10% followd by a 10-20% or more decline a bit later. I'm of course guessing but I think the smart wells help for a time after intial watar break through. This is also one reason that Canterells decline rate is hard to predict since a lot of if it has to do with how long they can manage break through before things get really bad.
In any case and expert opinion here would be very informative.
I found this article my interpetation is they are seriously looking at water breathrough problems ghawar.
PLEASE COMMENT !!!
Sorry for the caps but this may be important.
http://www.blackwell-synergy.com/doi/full/10.1111/j.1365-2478.2004.00473.x
They have a table that says the water cut is 67% at the flood front and 14% for wells that are still dry.
It looked to me that less than 30% of the wells were in the dry region. But I'm not the one to interpret the paper.
In any case I think its safe to say that today Ghawar's water cut varies from 70% to about 14% according to the paper.
Now compare that paper with what KSA is saying politically.
http://www.saudi-us-relations.org/energy/saudi-energy-saleri.html
I also found this its a bit dated but informative
http://www.slb.com/media/services/resources/mewr/wer16/rel_pub_mewer16_1.pdf
http://gswindell.com/horizogj.htm
I have no oilfield expertise--therefore I won't comment, but big thxs for the links so I could learn. Terrific illustrations and corresponding writeups!
Bob Shaw in Phx,Az
I don't have my copy of "Twilight," but my understanding is that the Aramco estimate in the Seventies, that Simmons cited, of about 170 Gb was for URR.
That is correct. Also the Association of American Petroleum Geologists report by M.K.HORN in 2004 show Ghawar having depleted 79,322 billion barrels with 17,776 billion left, so assuming just under 100 billion recoverable they are well past 50% depletion
Also in many parts of the field the original oil column of 1300' is now below 150' thick. The water injection is now up to 9.5 million barrels per day in the northern part and the Saudi's themselves have siad this costs a minimum of $32 per barrel to produce. The link is
below, see Table 9 http://www.searchanddiscovery.net/documents/2004/horn/index.htm
I sincerely hope you are wrong otherwise SA may be in terminal decline!
Let's imagine a height versus distance plot of a commercial airline flight, especially as the plane starts descending. The initial descent is quite rapid, then the plane turns on to the final approach and flies along a precise glideslope to the landing point at the end of the runway. If the plane falls below the glideslope, the pilot pulls the nose up. If the plane climbs above the glideslope, the pilot pushes the nose down.
This glideslope is a good analogy for the linear phase on a HL plot. Empirically, these large regions that have entered the linear phase, generally with a P/Q intercept between 5% and 10% (except for exclusively offshore regions), have proceeded along the "glideslope." When the regions fell above or below the "glideslope" additional data points corrected for the deviation.
Mathematically, the HL method gives one a mathematical estimate of the area under a production rate versus time curve, which is Ultimate Recoverable Reserves, what Deffeyes calls Qt. When predominantly onshore regions start showing a linear progression with a P/Q intercept between 5% and 10%, we tend to get a good idea of the Qt for a region.
As several people have noted, the HL method was quite accurate in predicting the post-50% of Qt cumulative production for both the Lower 48 and Russia. Both the North Sea and Mexico started showing lower production after crossing the 50% of Qt mark.
The world is now at the same point at which the Lower 48 started declining, the world is now showing lower oil production by every measure, relative to 2005, according to the EIA.
Saudi Arabia (KSA) is now at the same stage at which the prior swing producer, Texas, started declining, and KSA's production is declining (by at least 7% from 12/05 to 12/06).
Reserve Estimates
IMO, what Robert has demonstrated, using the US case history, is that the HL method is far better at predicting the URR for a region than traditional methods are. So, IMO this supports my contention that the HL estimate of remaining KSA recoverable reserves is probably the most accurate, and as I predicted (using Khebab's HL work), KSA production is down relative to 2005.
Two Warning Beacons Burning Brightly in the Night Sky
One of the many repetitive points that I have made is that Ghawar (in KSA) and Cantarell (in Mexico), which at one time accounted for a combined 10% of world crude + condensate production, are sending huge warning signals. These are the two largest producing fields in the world. Both are high quality carbonate reservoirs with rapidly thinning oil columns between rising water legs and expanding gas caps.
Pemex has admitted to the Cantarell decline/crash.
Saudi Aramco has not admitted to the Ghawar decline/crash. However, because their vertical wells were quickly watering out, they resorted to the same horizontal program that (briefly) worked in the Yibal Field. The problem is that once you redrill the field with horizontal wells, what do you do when the water hits the horizontal wells? What you do is watch the oil production fall and the water production skyrocket. Note that Ghawar still had a 35% water cut (at best) after the horizontal wells. In physics, they call this a metastable situation.
Richard Heinberg quoted what he described as a reliable source as saying that Ghawar was already down to 3 mbpd. Assuming that this is accurate, a key point is that we don't know from what recent production level that Ghawar fell to 3 mbpd. What if they had been losing about 100,000 bpd per month and had been surging their other fields and depleting inventories trying to make up for the production shortfall? In any case, OPEC sources put KSA production in December at "somewhere below 9 mbpd."
Pemex has reported a decline in net exports of 12% from 10/05 to 10/06. I estimate, assuming a KSA production rate of 8.9 mbpd (C+C), that KSA's net exports are down by 13% from 12/05 to 12/06.
In other words, the two regions that I earlier described as having fields that were "Warning Beacons" are now experiencing double digit declines in net exports.
Here in the US, we have been drawing down our product inventories at a ferocious rate, and the IEA reported that IEA countries, in October, were drawing down their crude oil inventories at a rate of about 1.3 mbpd. Apparently, November looks worse.
A Personal Observation
Last night, the first gasoline station I stopped at was closed, out of gas. The second I stopped at was out of regular unleaded. This morning, both were back up and running with all grades. However, this is the first time that I have seen spot shortages of gasoline in the North Dallas area since the hurricanes.
IMO, another sign of things to come.
I think that we are in the very early stages of a ferocious Net Export crisis. IMO, the very lifeblood of most importing industrialized countries--world net oil (and product) capacity--is draining away in front of our very eyes.
Another source of violence were the people who would go to restaurants to warm up AND to charge a cell phone at a nearby electrical plug. There were fights over who got to be near a plug.
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import. html
And this could be ramped up ofcourse if needed.
Being wrong does not disqualify anyone from having valuable input be well-regarded. Einstein was wrong about several things. Do we devalue his contributions to physics? Asking questions which you already believe have been answered should be well tolerated as any assumption may be open to re-examination.
Leanan's post stating that the confidence interval within which we can predict the peak is limited regardless of method is most valuable because there are so many uncertainties. It is worth remembering in all of these discussions. From my readings in TOD, it does appear that the best data for assessing peak is production. RR's main point as I understand it is that taking KSA statements of reserves at face value is very risky when making energy policy for any nation. IE, policy makers appear to take too much comfort in these statements and make too little preparation for negative scenarios.
I must acknowledge my own limitations as a poster and reader of the TOD. I have no background in the energy industry; I am a psychologist. I am very interested in data, scientific reasoning and hypothesis testing, and like everyone else here, I have a stake in the outcomes of many of the things this site addresses. Some, like Khebab, Dave Cohen, RR, WT and others, are much closer to the data than I and have more valuable things to say regarding the details of reserves and production than I ever could and I certainly want to hear their positions. If I could see a valuable role for myself in posting on these threads, it might be to summarize arguments and identify common themes (psychologists are frequently good at that).
I am most convinced that what will bolster the credibility of this site more than anything else is if it becomes increasingly known as a forum for scientific reasoning, respectful debate, presentation of available summaries of relevant data (a graph is a data summary), and toleration of reasoned opposing views. Snide comments, demeaning attacks, and strident presentation of views do nothing to bolster credibility.
In my opinion, TOD is one of the best sites in the world in addressing questions of peak oil. It's why I read it so frequently. Is it a peer-reviewed forum? Only loosely so as others with experience and knowledge do comment on each other's work. I am arguing for humility and respect in the face of addressing very complex questions in a relatively open forum. It is no shame to acknowledge limitations as individuals or even as a site, because despite whatever limitations we have, the contributions of many are quite valuable. I appreciated the fact that RR acknowledge his own limitations as he asked his questions and expressed surprise about the extent to which the reserve data appreciated despite high production. For others, who may in fact have more knowledge about the topic than RR, to do anything more than say why you believe differently is a disservice to readers and posters alike. Arrogance and certainty are the enemies of both truth and credibility. And it seems that the best posters on this site are truth-seekers of a high order.
To some extent, what you are seeing with the RR versus WT debate is deductive reasoning versus inductive reasoning.
I frequently have to make very expensive decisions based on very limited data, and I am frequently wrong, which is perhaps why it is the geologists--and generally not engineers--that are out front with fearless predictions (e.g., Deffeyes regarding the world, my contribution regarding Saudi Arabia).
One of my favorite responses to RR's post (regarding our debate) was one that suggested that RR was motivated by envy at my creativity regarding my Export Land Model (disclosure: I was largely inspired by Matt Simmons' earlier work).
In any case, this poster pointed out a serious and growing problem at major oil companies--groups of middle aged engineers who are envious of their geoscientist colleagues' creativity.
I have heard reports of support groups of engineers, where they get together and commiserate over their mistake in not becoming geoscientists. They can frequently be seen emerging from their encounter sessions, misty eyed with their pocket protectors wet from crying. (Humor alert)
Which reminds me of something Albert Einstein said:
"The secret to creativity is knowing how to hide your sources."
The difference between Peak Oil and Peak Exports, IMO, is that exports are falling much faster than overall world production is falling.
As I said elsewhere, I think that we headed for real trouble in 2007. With the virtual certainty that the top four fields are in decline or crashing, and with exploding domestic demand in most exporting countries, I just don't see any case for stable, let alone rising exports.
IMO, Peak Oil and Peak Exports will be too big to ignore next year as we see, again IMO, confirmed production declines in both Saudi Arabia and Russia.
Perceptions and expectations can turn on a dime.
If there is no economic downturn in the U.S. and other oil importing countries during 2007 and if oil exports continue to decline, then I think it is likely that prices and expectations of future price changes will rise substantially and abruptly during 2007.
When the mainstream media will read the handwriting on the wall is questionable, because excuses can always be found for decreased output--bad weather, war, lack of demand, temporary shortage of drilling rigs, whatever. However, I think that if prices go up a lot (say 50% to 100%) in 2007, then Peak Oil and Peak Exports will be on the front page. In the absence of a large and abrupt increase in prices, I think the media will follow the pundits at CERA.
It seems we are entering a economic recession that will probably cover the world in time. I still don't have a good handle on how that will effect consumption. I guess it will be wait and see.
You are correct that to some extent the debate between you and Robert was inductive (your) reasoning versus deductive (Robert's) logic. But I think Robert nailed it when he said that the difference was mainly about interpretation of data. Robert looks at your data and comes to a different conclusion based on an explanation (both inductive and deductive) different from yours.
BTW, I think both your evidence and logic are solid; those who complain about the quality of your data are, IMO unrealistically asking for too much. However I would like more data before I come to any conclusion as to whose interpretation is correct. As you have indicated elsewhere on this thread, we are likely to get some very interesting data in 2007--information that will likely settle the debate one way or another. In my gut, I think you are right. On the other hand, every time I've disagreed with Robert I've been wrong.
I must admit that I was taken aback at some of the personal attacks in this thread. I never mind arguing and defending my point, but the animosity displayed here wasn't about defending my point. There were a lot of insults and just belittling statements. I get those by e-mail sometimes (some people will insult me for no other reason than I work for an oil company) but I had never seen anything like what transpired in this thread. I think the first post set the tone by calling the point naive. Others seemed to use that as a jumping off point for harsher comments.
Anyway, I appreciate your comments. I have gotten several e-mails of support that help offset the negativity of all of the personal attacks.
I did enjoy your post and IMO some people hated it because it suggested what they thought was fact might not be. Maybe next time you post something you won't put something up so controversial so we can have a civilized debate :=)
I am disappointed, even shocked by the reaction of some readers of TOD about your open question on SA oil reserves. Some people at TOD seem to be as stubborn as the people who don't want to understand the problem of peak oil. It's weird how we can quickly create a "new religion", create stereotypes of the mind, shortcuts of thinking and refuse to address new questions and new points of views that could threaten our beliefs.
I can't help you in your search of information, as I have a lot more to learn on TOD than to contribute. Even as a contributor, you have the right to ask for the help of TOD community without being insulted. After all, you were looking for their help to substantiate another approach of a well-debated issues. TOD readers cannot expect to take advantage from your open-mind, general curiosity and search to solve issues by different means and at the same time blame you for the exactly same features, as if they were weaknesses.
I feel sorry for the nasty comments you got and thank you for your general interest in PO issues and its collateral question and for sharing them with us at TOD
First you assume the role of the 'Great Pacifier' which I am sure you recognize as a role playing game when in any situation disagreement arises. I think you are playing that role. You are taking the 'high ground' and posing as 'above it all' which psychologically(sp?) tends to be a put down.
Second if the owners ,editors and others at this site state that they would not engage(lack of time,etc) in moderation,speaking of what they have stated or has been stated in the past and not what has happened recently with Oil Ceo, then that being the case when some poster appears whose goal it seems is disruption then it behooves the rest of the members to express their views in ways to draw attention to that disrupter's activity so the owners can judge themselves as well as others.
I agree that name calling is not conducive but sometimes the sheer arrogance and inanity of the disrupting poster is enough to cause tempers to fray. This is a form of self-governing activity and takes place all over the net where chastening is required by those who are offended. This to me is simple human nature. If peer pressure doesn't work then stronger measures are indeed called for.
Recently moderation activity occurred. This is not a stated policy anywhere that I have read. Perhaps its changing or needs to be changed. That is up to the owners. Yet when the owners elect not to then one must assume that they are leaving it up to the readership.
Most folks here I tend to respect but it bothers me to see bandwidth wasted, and I am on a slow dialup at that, just so some person can snip and rag someone over and over and make off the wall comments with language full of very odious words and phrases and continue to do so with increasing frequency.
Ok. I had my say. I think I was polite but you may take it as offensive. You choice. Mine as well. How you react to offenses is up to you but I don't think you should preach to others in the same situation.
I have been running forums, putting up websites and engaging in them as long as they have existed. This is one of the better I have found and I hope it continues to be so. However without members expressing themselves as regards disruption then you are just being an 'enabler' for the one who is guilty and no penalty, peer or otherwise is incurred.
The worst offense is making ridiculous statements with intent to smear the one you comment upon. If you do NOT counter the rubbish then it tends to sometimes be accepted as factual when it is just rubbish.
A lot of this occcurs because the offender simply did not read the thread leading up to that point. They just wish to create 'their' views no matter how incorrect or wrong it is. They do not care to debate the issue and then leave when the responder calls them on it.
I am not posing as an expert. I am just offering my views and opinions. Same as you did. It would help if those who are trolls disrupters at least said they were offering an opinion or view instead of making flat out statements like they sat at the Right Hand of God. If your an oil geologist then you have the right to make far more statements with at least more veracity and conviction than those who are not in the field but are posing as would be experts since this site is concerned with the subject of oil.
Recently those who are in that field and post here as well as create many of the essays here, were very vexed due to disruptive behaviour by some here. Perhaps that is why some are not intent on giving them very much free rein. Mhhhh?
We have just seen such an example today and on this thread. Completely uncalled for behaviour. Are members here expected to do or say nothing? Not comment on it? Just 'enable' it and keep quiet? Is that the way psychology works?
To me this site is far too valuable to do otherwise.
One of the really dangerous ones is Groupthink, which can occur when only reinforcing opinions are heard and when those holding alternative evidence are silenced, either due actions of the group or by themselves because of actions of the group or some of its members.
A recent book discussing thia new paradigm for social information processing and the problems associated with it is Cass Sunstein's, U Chicago School of Law, book Infotopia, 2006 (Amazon)
Some reviews of Infotopia or author's comments:
(WorldChanging, 12/5/06)
(my heart's in accra, 11/30/06) - Ethan Zuckerman
Deliberation and Infotopia, C. Sunstein (Oxford Press blog)
Ethan Zuckerman reviews Infotopia and discusess social decision-making
(Resilience Science, 12/8/06)
The book is based on his academic paper "Group Judgments: Deliberation, Statistical Means, and Information Markets, 8/04 (U Chicago Law Olin ppr 219, Public Law ppr 72 SSRN)
If you do I think your on to something here about groupthink.
Now let me give my views. Consider some friction taking place between me and Leanan over the Amish. She seems to state some aspects of Amish behaviour that I myself do NOT observe. Is her posting this anecdotal or perhaps something she read? In either case it would be second hand information and if it was what she read in MSM then its veracity is dubious to say the least. Being she posts all the news items on Drumbeat I suspect that she is a close follower of news and as say regards the Amish then it could be very slanted.
Now. If it was her direct observation then I would access it with more merit. Therefore the value of the internet, and blogs and forums and the rest, is..the value is...personal observations and experiences. This I highly value.
I value it because the net is primarily a grassroots entity. It allows us instant communciatiions with each other and around the world. Value indeed. Yet what clogs it and tends to diminish it is the ability of others to trash it with meaningless jabber and badly formed data as well as with their own agenda of destruction or points of view that are outright lies.
Therefore I take the view that those who post seriously can be graded by the rest as to their veracity and we must continually make our own value judgements.
Though I am anonymous I do post quite a bit about myself and my surroundings and therefore my experiences, both as a programmer and a landowner and farmer.
BTW I use anonymity because in the past evil people have used the internet and some have taken revenge upon those they dislike. In fact I have been threatened and therefore protect my privacy. I also have had my email and websites trashed by those whom I have spoken against or who dislike my views. My email is basically unusable because a member plastered it to all the spammers and I now receive hundreds of spam each several days. All because I ran a forum/website that he opposed. BTW he was also a paid shill and was exposed as such by other members.
So in summary I am positive on usage of the internet but leery of what others can and will do. I look for personal experiences more than news items. I look for the truth and the value of those who present the truth as they experience it. I bypass the bullshit and posts that are worthless.
I do not like moderation except by the membership or subscribers. They after all are the audience and if they wish the site to be sucessful it is up to them to make it so. Self government I suppose.
Groupthink? Have to read and study on it.
Thanks for your comments.
airdale
Robert, in the UK, which is shortly going to be graced by your presence, we have a children's progarm called Blue Peter, which amongst other things normally has a cookery section where they pull out a cake and say "here's one I prepared yesterday".
Now, I think I have a pretty clear understanding of what this chart shows apart from one thing. (The data are from the 2006 BP stat review, C+C+NGLs. Reserves are proven reserves, i.e 1P.)
So it may be very confusing to some that back in 1980 (when the bp reserves data starts) that 1P reserves were around 8Gbs - and yet the UK has gone on to produce 24 Gbs to date.
The one thing I don't fully understand about this data, which I hope you might answer, is with 4Gb's in the tank in 2005 should we not now expect the UK to go on to produce around another 12Gb's (12 is to 4 what 24 is to 8)?
This is a very serious question. If the answer is no, why not?
I hope you get some windows of wifi connectivity to answer.
I don't know. Do you recall what the HL predicts?
My connectivity is terrible right now. I am only connected for about 1 minute out of every 5.
My total North Sea (C+C) shows 60 Gb.
The sort of thing that Freddy Hutter and Micahael Lynch - who are scpetics by the way, and I am not, will point to is the deep water Atlantic Margin of the UK - what is known of the source rock potential and burial history of that area?
Why will the tail of the UK HL not get smeared out to say 35Gbs?
Further reading for passive observers:
http://europe.theoildrum.com/story/2006/11/19/135819/75
http://europe.theoildrum.com/story/2006/10/6/8530/55650
As I said before, I found it very odd that Lynch uses the UK as an example of where the HL method doesn't work, i.e., he uses the example of a region in terminal decline to rebut a Peak Oil argument. Rather odd. . .
http://europe.theoildrum.com/story/2006/11/25/125137/18
A while ago I posted the Attanasi & Root USGS reserve growth data here:
http://www.peakoil.com/fortopic16568-45.html
It leads to this statistical fractional growth rate over time:
Whether the reserve growth rate comes out from corporate collusion or some real self-limiting physical processes such as describe here, I can't say :
http://mobjectivist.blogspot.com/2006/01/self-limiting-parabolic-growth.html
Actually I don't even think that it needs a self-limiting component, as I mentioned elsewhere in this thread. But I do think that given the amount of statistics (including creaming curves) that we have gathered over the years, we surely can stamp a conservative growth estimate on top of every discovery that comes on line. I know this is in total violation against all the SEC regulations preventing speculative predictions, but we aren't the oil industry (I would hope not). With this data, we should be able to understand USA inside and out, and then try to crack the nut of Saudi Arabia.
Does anyone else have a reserve growth rate model that is comparable to the HL method as an analytic aid? I think this is a huge hole and it makes us look like we are blowing smoke to people like Lynch.
And
Does anyone else have a reserve growth rate model that is comparable to the HL method as an analytic aid? I think this is a huge hole and it makes us look like we are blowing smoke to people like Lynch
---------------------------------------------------------
On the first point, I completely agree. On the second point, it is Lynch etc. who are blowing smoke. 4 trillion barrels? How, exactly, do these reserves growth estimates translate into incremental production that postpones the peak? Whenever you look at the analyses themselves, the reserves always include unconventional sources like oil shales, tar sands or other immature kerogens (including Orinoco), CTL, GTL, etc.
For conventional oil, estimating reserves remains a black art and while growth does obviously occur as oil fields are better delineated -- or utterly exhausted using stripper wells, as we scrape the "bottom of the barrel" in the U.S. -- it seems clear what this means in the bigger context. Does this reserves growth ever affect peak production once this has occurred? Outside immature upstream development, as in Angola, the answer is "no" in all cases where we have good data. The failure of Lynch and others to give anything but magical answers -- that ignore geology, economics & technology -- to how their reserves estimates translate to increased production flows is the key to understanding peak oil. This has been called the rate of conversion by Keith Skipper, a petroleum geologist who is Managing Director, NorthStar Energy Pty Limited in Sydney, Australia. The irony is that we are accused of ignoring economics, et. al. Nothing could be further from the truth.
I will keep on repeating this point -- and not worry much about reserves estimates -- until it finally sinks in.
If you look closely at the graphs that I posted, you will notice that these are all due to conventional oil reserves in the USA.
OK, you just admitted it is a "black art". Note the parabolic growth rate I showed in the comment. This exact temporal growth happens during oxide buildup for a microelectronics process.
Now if we were stupid semiconductor neophytes living in the 1950's and thought that the oxide growth could only be "guessed" at via black art, then we would never have been able to advance through the microelectronics revolution and process unpredictability would have killed us. We would still be working with crystal radio sets. None of the multi-million gate circuits would have ever gotten made!
But the fact was that material scientists and engineers like Andy Grove were able to characterize the phenomena within a few years time (mid to late 1960's) and get their process down to a gnat's eyelash speaks volumes about the difference between process engineers and the geologists who believe in and are happy with the black art of reserve growth.
If done correctly, reserve growth would transform from magic to a measure of extractability over time. And this is all I have been saying on how crudely the estimates have been made in the past. And where things differ because of geological structures, you let the science of statistics take over.
You work on that measure of extractability over time, WHT. Let us know when you are done.
I think my point is, WHT, that I don't care about it if the incremental production does not rise as some function of the estimated reserves.
All the points you raise are interesting, nonetheless.
My next remark is not directed at you:
There are not enough minutes in the day to cover all the confusions on this website about Hubbert modeling.
IOW, it will continue to be a tough slog. Keep marching.
How long have we used gravity calculations and we still don't really understand it?
Its only problem is it works darn near every time - too bad we can't derive it from something more fundamental.
About gravity, there is an interesting dimensionality to this. In Physics 101, the student quickly learns that gravity is constant for relative distances smaller than the distance between the two bodies. So the derivation is there from something much more fundamental.
On the other hand, where does H.L. derive from something more fundamental?
I was just commenting on the fact that many times we learn about relationships empirically through observation and measurement, then apply them elsewhere and continue to study them till we understand why they work that way.
The gravity equation is just the same - it has been observed and quantified but is still not understood. This is description, not the same as fundamental understanding of why or how it behaves in this way.
In the same way, if we can understand when HL works and when it doesn't, and with what errors, we can use it even if we don't understand why. That's my only point. I have apprecated your comments on this thread, by the way.
.... And don't forget that "they" have huge sums of money for lawyers to protect their intellectual property.
LOL. Isn't that the test for the nonobviousness of an innovation? Namely, there was a long felt problem and nobody (not even "they" with all their money and talent) came up with a good solution?
Then again, that kind of logic might be old hat given that ours is The Dawning of the Age of "Gobbledygook" Enlightenment thanks to a brilliant US Supreme Court judge who's identity shall remain forever shrouded in a large Italian fog (a big a mist). Oh what the heck, it's "Bah fangoo" Magoo, oops I meant to say "hatchoo" and gezunt'height. Sorry.
"Old Magoo, you've done it again"
(Click here and here and here for more pictures of Oil Man Magoo choosing "the way forward" when faced with the edge of the ledge.)
I suspect as a physicist that the Hubber Hypothesis is a kind of statistical emergent property combined with some 'cartoon' facts about typical engineering and geology of conventional oil.
I even thought that there was a 'simple' freshman-physics type model of oil under some pressure, and if you solved the equation the production versus reserves looked similar to Hubbert curves.
It was pointed out here somehwere (pointing to a blog) but I can't remember where it is. Can anybody help?
Perhaps there needs to be some blog/page maintained about reasonable physical/economic models which motivate Hubbert-like phenomena, so it can't be entirely dismissed as arbitrary curve-fitting mumbo jumbo.
http://arxiv.org/PS_cache/cond-mat/pdf/0305/0305067.pdf
the intrinsic origin of 1/f noise is a Brownian fluctuations of the interevent time of the signal pulses
I know you are a physicist Matt; it would truly be interesting if we could come up with something better than H.L.
I did the analysis of the freshman physics paper that Khebab pointed out here:
http://mobjectivist.blogspot.com/2006/11/no-cigar.html
Underneath all the Maple crap, you can tell the guy was trying to force it to fit to a pre-ordained Logistic curve. Actually quite sad that he didn't call attention to this fact more strongly.
And of course, the model I like is the oil shock model which is a stochastic rate analysis.
If you were a scientist you would put the cat in a box.
I have read a few books on this such as Simmons' so maybe I should know the answer to this, but I don't recall having read an answer to the following question:
If an entity (government, company, whatever) owns oil property, is there an accepted standard for calculating the reserves on that property based on the available geological data?
Obviously, if there is such a standard, there is nothing that forces the owner of the oil property to publish reserves estimates based on that standard.
But, if there is no such standard, then it seems like "reserves" are an even more ill-defined concept.
One reason I wonder is that I recently have started investing in stock of small gold exploration companies, and in the gold business there is a prevalent standard that comes from Canada called National Instruments 43-101 which defines a standard for the calculation of gold resources based on the assay results from the samples obtained by drilling the gold property.
Which makes me wonder to what extent there is something analogous in the oil business.
(I'm not sure what the standard in the gold business is for defining reserves, as opposed to resources, but my impression is that there are pretty firm standards for how those are calculated as well).