The Oil Drum

Angola is one of the few oil producing countries with a bright future ahead. Decades of war prevented the country from developing it's energy resources properly, but is now becoming one of the largest world oil exporters in a period of rampant prices. Just as if Fortune decided to compensate Angola for its misfortunes during the XX century. Becoming an OPEC member just recently, Angola is set to build one of the strongest economies in Africa, with its GDP growing over 30% 15% annually (numbers here), one of the highest rates in the world. Hopefully Oil will be just the trigger of a golden era in a country that possesses other important natural resources.

World Oil Exports model as of November 2006. Click to enlarge.

Rising North Sea oil production was a significant factor in keeping oil prices under control in the 1970s, 80s and 90s. Production peaked at 6.4 million barrels per day in 2000 and since then, declining North Sea Oil production is one significant reason that oil prices are now rising exponentially.

The January 2008 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.6 MB, 21 pp).

Figure 1 - World Liquids Fuel Production January 2002 - December 2007

A summary and latest graphics below the fold.

The December edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.6 MB, 21 pp).

Figure 1 - World Liquids Fuel Production January 2002 - November 2007
A summary and latest graphics below the fold.

OECD European gas production looks set to peak in 2008. After that, falling production combined with rising demand will see OECD European gas imports wanting to rise from current 197 BCM per annum to 442 BCM per annum by 2020. Where will this gas come from and how will rising European imports affect N America and the rest of the world?

Figure 1 OECD Europe gas production and conceptual forecast. Click all charts to enlarge

The November edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.5 MB, 21 pp). At the time of writing the latest IEA oil market report had not yet been published which has therefore not been incorporated in the PDF, but it is included in the figures and charts below.

Latest Developments (these include the IEA report which has not been published):

1) Crude Oil - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 706,000 b/d from July to August. Total production in August was estimated at 72.51 million b/d, which is 1.79 million b/d lower than the all time high crude oil production of 74.30 million b/d reached in May 2005.

2) Total liquids - In October world production of total liquids increased by 1.4 million barrels per day from September according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 86.5 million b/d, which is the all time high maximum liquids production.

The pace of information that comes at you during the ASPO meetings is so intense, and immediate that it is sometimes hard to capture all the information, particularly where it is tabulated data on a slide that is on the screen for only a short time. The organizers have, however, taken pity on the ineptitude of your humble scrivener, and from sometime in the morning (i.e. Saturday) they will have the Powerpoints up on their website . For the full power of the debate you will still, however, have to buy the DVD’s.

I had left you at the end of my earlier post with George Baker reviewing the situation in Mexico. We have seen Cantarell dramatically decline from the point that it was providing more oil than Mexico exported to the United States, to the current position where it produces significantly less. I asked George later about whether, given the choice between reneging on their contracts, and dropping internal use, which they would select. In contrast to Westexas views that countries will always look out for the internal demands first, he expected that they would fulfill their contracts. He was also curious as to why Pemex had installed an FPSO at the Ku Maloob Zaap field, since there is existing infrastructure that should have handled all the product. Mexican deepwater production is likely to come on in 2013, but the issue of cross-border fields has not been addressed.

The October edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.48 MB, 21 pp).

Latest Developments:

1) Crude oil - Latest available figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates increased by 455,000 b/d from June to July. Total production in July was estimated at 73.28 million b/d, which is 1.01 million b/d lower than the all time high crude oil production of 74.30 million b/d reached in May 2005.

2) Total liquids - In September world production of total liquids increased by 450,000 barrels per day from August according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 85.10 million b/d, which is 1.03 million b/d lower than the all time maximum liquids production of 86.13 million b/d reached in July 2006.

3) Status of the production plateau - Both the International Energy Agency (IEA) and Energy Information Administration (EIA) figures show that global liquids production has been on a plateau since 2005. The IEA figures result in an average global production in 2007 up to September of 85.03 million b/d, almost to the same as the average 2006 production of 85.00 million b/d and higher than the average 2005 production of 84.10 million b/d. The EIA puts the average global 2007 production up to July at 84.40 million b/d, slightly lower than the average 2006 production of 84.60 million b/d and the average 2005 production of 84.63 million b/d.

The following analysis is based on a chart from Frederik Robelius (see Figure 2 below) from which I retrieved the production profile for Ghawar from 1950 to 2003 (xls file). Using the Hubbert Linearization method to fit a logistic curve, we get a size estimate for Ghawar close to what other TOD contributors (Stuart and Euan) derived using advanced analysis. A possible decline of Ghawar is happening in a context of record oil rig counts, record domestic consumption and record oil prices.


Fig. 1 Sources: oil supply from the EIA (crude oil + condensate); proven reserves, oil prices and domestic consumption from BP statistical review (2007); population from the UN; oil discoveries from IHS; the major currencies index from the Federal Reserve; Ghawar decline based on a logistic fit. Click To Enlarge.

Executive Summary:

• The fitting of a logistic curve (Hubbert Linearization) on Ghawar production produces an URR around 100.59 ± 8.59 Gb with a possible decline rate around 2.6%/year (asymptotic decline at 7.41%/year).
• The fitting of a logistic curve on non Ghawar production (crude oil + condensate) produces an URR around 60.13 ± 12.78 Gb.
• The Hubbert Linearization on total crude oil + condensate production gives an URR at 200 ± 24 Gb which is 20-40 Gb higher than the sum of the two above components.
• If Ghawar is in terminal decline, supply growth from other fields has to be at least 2% a year in order to maintain a flat production and 4% a year in order to maintain flat exports.