The Oil Drum

According to Matt Simmons, a retired Aramco executive said that Ghawar would never make more than 70 Gb (41% recovery).  Matt also said that the world record recovery factor for this type of reservoir was 45%.   I think that Ghawar is getting close to 60 Gb (35% of OOIP).  

Note that depletion starts when the first barrel is produced and it never stops until the last barrel is produced.  During this time period, a field can show rising production, stable production or falling production (some rate of decline), but regardless of whether production is increasing, flat or declining, depletion marches on.

Note that Shell was expanding their surface facilities at Yibal (same reservoir as Ghawar, also redeveloped with horizontal wells , just like Ghawar) to handle a projected increase in production, when the field started declining sharply, as the water hit the horizontal wells.   If memory serves, the final decline at Yibal hit when the field had produced about 35% of OOIP.

Stuart had a post about reserves a while back (http://www.theoildrum.com/story/2006/4/26/18109/8251).  Supposedly non-OPEC reserves have grown from ~240 GB in 1990 to ~300 GB in 2004.  This is despite the facts that a) over that period non-OPEC production was ~220 GB, and b)discovery rates are below production levels.

How can this be?  The usual explanations for reserve growth (besides new discoveries) are price and technology.  But the sense I get from TOD is that technology (like max. reservoir contact wells) tends to sustain higher production rates, but not to enhance overall recovery.  And from the early-90's to around 2001 or so, the price of oil stayed relatively low (~$20/barrel).  How is it possible that reserves didn't drop significantly, let alone increase?  Am I missing something?

Hadn't seen this posted...

http://www.americanenergysecurity.org/studyrelease.html

The Southern States Energy Board (SSEB), comprised of governors and state legislators from 16 southern states and two territories,  released a study (July 2006) advocating elimination of US oil imports by 2030.  

The plan? CTL, oil shale, biomass, enhanced oil recovery and transportation efficiency (which in 'merica only means cars - sorry Alan).

Quick take: dawning realization that there's a problem across the geopolitical spectrum. Still strong belief that the "American way of life is non-negotiable."

If URR is the amount economically extractible with today's technology, it seems logical that it should be possible to suck harder on the straw or accept higher water cuts when the price of oil doubles. I suppose this assumes that the industry actually incorporates the doubled price into its plans.

Is it the case, then, that the URR is limited more by today's technology than yesterday's price? Put another way, does the oil pumped diminish so quickly as URR is approached that rising price doesn't provide access to a meaningfully increased amount?  

I am in agreement with this statement. It matters much less to the world whether it is two trillion bbls or four which is ultimately recovered than it does whether the rate of production in ten years time is 105 mb/d or 65 mb/d. The former is of passing interest, the latter is of profound significance.

It is my opinion that our ability to extract oil from the earth at ever greater rates is geologically bound right now. The world is producing pretty much flat out. If things go wrong, which they have a tendency to do from time to time this will further impede production.

As producing oilfields become smaller and more remote the EROEI will become less and less. Many of the methods which are employed in depleted fields here in the US will not be viable in many areas. Thus the rate at which we are producing in the short-term could be negatively affected. This does not mean that at some point this oil will not be recovered, it merely means that production declines in the near term could be more substantial than is currently believed to be the case in some circles.

However today's sophisticated equipment allows a much better judgment of the potential size of the field before much drilling has occurred. Those initial estimates are often made before drilling has fully outlined the field, but can lead to overly optimistic predictions. These subsequently meet the reality of borehole data, and the initial well touted estimates have then, often less publicly, to be reduced.

Michael Lynch has one complaint about Colin Campbell that I have always thought was actually a fair criticism.  He says that Campbell complains about the lack of back dating when reserves growth occurs for an old oil discovery but doesn't recognize that today's discoveries will also experience reserve growth in the future.  In other words, even if we only find 6 billion barrels of oil in 2006, by 2026 we may be tabulating these same discoveries as 12 or 15 billion barrels. Still not enough to keep up with the oil we burn, but enough to delay the peak significantly.  I'm now wondering, however, if we'll see reserve growth of today's discoveries over the next few decades or is the reserve growth of yesterday's fields just an artifact of imperfect oil surveying methods in the past.  I thought it had to do with oil companies wanting to be able to spread out the reporting of discoveries to hide bad exploration years.

Additions to reserves
Needing to find almost 4% of its oil reserves each year seems a daunting prospect for the global oil industry, hence the pessimism of the casual observer of the oil scene. However, all is not what it seems — things are not as bad as they might appear at first sight. Relaxing the assumption that the world has to contend with an immutably fixed stock of crude oil makes all the difference; where there was gloom there is now the possibility of a happier outcome. A simple relationship says it all. The rate of change of proven oil reserves depends on the rate of gross additions to reserves less the rate of oil production (see below). Gross additions to reserves, in turn, comprise new discoveries, oilfield extensions and revisions.

Now that I've stopped laughing, I'm ready to make a serious comment. I agree that once one drops the assumption that oil is a finite resource, it does make all the difference... I'm feeling happier already, the gloom is lifting...

OK, that wasn't serious yet. Sorry. Someone

1. guesses the OOIP for field F
2. guesses the recovery rate R
3. guesses the URR for F  =  OOIP * R

Does EOR/IOR improve R and thus the URR? There is no general case. Sometimes yes, sometimes no. The day you are happiest, like the US lower-48 in 1970, may be your finest hour. You will never be that happy again. The declines may be steep. Against this psychological uncertainty, the mind has an array of defenses. As Hamlet said

To revise, or not to revise: that is the question:
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by revising end them?

Maybe all these games with recoverable reserves don't really matter too much here is the scenario.

First advanced recovery methods are touted for increasing the amount of recoverable oil and allowing recovery from fields that are not otherwise producible. The second case adds to the overall world supply for sure. The effect of the first condition increasing recovery is in my opinion not so important.  Consider in general your going to get 50% of the oil out of a field ( probably high ) if you put the increased recovery amount on two sides of the curve and more important add in the fact that these methods increase the depletion rate or basically enhance the production rate and what we have is this.

We can assume on the front side that at best 50% of the increase over the normal recovery rate will happen before the field declines. The rest will occur during the decline side of the field.

My position is its not proven in the least that more oil is actually extracted before the field starts into decline only the rate of extraction is enhanced. The 50% increase in URR is suspect at best for delaying the decline of the field.
Basically the increase in depletion swamps any increase in recovered oil before decline by a huge margin say 100:1.

Now I don't disagree that later or in a field that on its down slope these methods cannot increase the ultimate recovered reserves but the important point is that this final recovery will be at extraction rates far far below the peak and probably still have steep decline rates.

In a sense this is where I see a step function happening on the decline side. Drilling in fields past there peak causes a brief increase in production measured in years not decades then a steep decline followed by more aggressive methods that stabilize the field at a much lower level then down again.

Splitting out these effects is important since the Western Oil companies have become experts at wringing a field dry.
Sure they obtain more oil but whats important is its oil extracted at vastly lower production rates then when the field was pre-peak.  Now overall its debatable if they change the real extraction rate all that much since some fields will get boosted and some will crash as advanced methods such as co2 injection end and the field goes offline. Also these methods take a lot more infrastructure to implement causing significant cost/delays. My position is we will never attempt them for the vast majority of fields since overall the amount of oil will be falling and decline will fundamentally change the oil based economy.

So I'm comfortable with ignoring any of these reserve increases touted from advanced recovery methods and just assuming that what they do is bring the peak production earlier and more important cause a steep initial post peak decline before more aggressive methods are used to arrest the decline.

To finish off.

Advanced methods should cause the rate of production to increase and cause field to approach there peak production earlier in time. The downside is a initial significant drop in the production rate will almost always happen since when the wells water out you have extracted past 50% URR.

There is a delay before additional more aggressive methods can be used if economical to arrest the decline but the new production rates are always significantly less then the old.
In the chaos of a post peak world its not clear how much of this oil will ever be produced.

The shape of decline post peak is important because this is what we have to deal with during the transition from a world that's not peak oil aware to one that knows every year there will be less oil. My position is that we have a plateau then a big drop then some improvement. But what is important is the overall extraction or back side of the worlds production curve is not really all that relevant since at this point the whole society has changed in recognition that oil resources will decline every year.

In closing even though URR estimates are basically bogus
we are confident that given the known production we can estimate using Hubbert linearization. This approach does not match reality i.e it does not give us the date of the peak or the extraction rates correctly if advance methods are used. But all they do is increase production on the front side of the peak and cause a larger drop on the backside making the pre peak data more optimistic. Next its to optimistic since it assumes more oil can be produced pre peak then is the case from inflated URR's estimates. A lot of this oil will actually be produced from fattening of the tail of production and it won't be produced at any where near the rates that were possible pre-peak.

Once your a few years post peak all this is really not that important since external perception of oil has changed completely. Before the world peaks the oil gained from enhanced recovery certainly helps but post world peak its not relevant since the declines swamp the gains from depleted fields.

Now are there other scenarios that result in a plateau without a steep decline post peak ? The only answer here is that new fields are comming online and reworking of older fields is happening at such a rate that any significant deline is covered. If this is the case then we will indeed not see the cliff but a slow decline of say 1-3%.

But how do you prove this trend will continue say for a decade given that world wide there are two factors that will cause significant depleation events. The huge fields will eventually go into major decline most of these fields are already post peak so they will decline for the most part together or within a few years of each other. &