The Tech Talks of the last few months have followed a path of looking in a relatively realistic manner at crude oil production with emphasis on that coming from the United States and Russia, as well as Saudi Arabia, the current focus of my weekly pieces. An earlier piece looked at a Citigroup report of considerable optimism, and the post explained why, in reality, it is impractical to anticipate much increase in US production this decade. Since then, after reviewing the production from Russia, several posts have shown why the current lead in Russian daily crude oil production is likely to be soon over and then decline, as the oil companies are not bringing new fields on line as fast as the old ones are running out. Saudi Arabia, as the current posts are in the process of explaining, is unlikely to increase production much beyond 10 mbd, since Ghawar, the major field on which its current production level is built, is reaching the end of its major contribution, though it will continue to produce at a lower rate into the future. The bottom line, at least to date, is that there is no evidence from the top three producers that their production will be even close, in total, to current levels by the end of the decade.

So, (h/t Leanan) there now comes an Energy Study from Harvard which boldly states that this is rubbish - that by 2020, global production will be at 110.6 mbd and these concerns that most of us have at The Oil Drum (inter alia) are chimeras of the imagination.

In the past few weeks I have been looking at the potential for sustainability in oil and gas production in Russia, now at a predicted recent peak of 10.36 mbd, when condensate is included. But the question increasingly becomes whether or not Russia can sustain these levels through this decade, as has been assumed by those suggesting there will be no supply problems in the near future.

In order to sustain this level of production against falling volumes from the current major sources in Western Siberia (estimated as 300 kbd in 2010), Russia is (so far) relying on bringing new fields into production in Eastern Siberia and Timan-Pechora, as well as having some increase in condensate as natural gas production continues to increase. However, as a broad generalization, these developing fields are at a size of about 500 mb each, with an anticipated maximum individual production level of around 150 kbd. Prirazlomnoye for example, which is coming on line has 526 million barrels in reserves, and will be producing at 132 kbd.

Since the high flow rates will likely not be sustained for long intervals, and declining production in Western Siberia will continue, Russia will need to continue major programs of development to find further fields to bring on line later in the decade and beyond. In addition, the declining production in other fields (which might increase overall decline in existing production to 5% or more, i.e. above 500 kbd) will add further pressure to sustain current levels, particularly given the criticality of oil and gas income to the Russian Government.

With much of the land already surveyed, the potential for large fields lies mainly offshore, and particularly in the various national continental shelves and the disputed underwater territory between them in the Arctic. This is a region where there are multi-national concerns and involvement, with the USGS having previously estimated that it is home to about one-fifth of the world’s undiscovered yet recoverable oil and natural gas resources, an estimate at the time of 44 billion barrels of oil and 1,670 Tcf of natural gas.

In the last post on the oil and gas fields of the Northern Caucasus, I commented that one of the reasons that these older oil and gas fields were being further developed was due to the introduction of advanced Western techniques. As John Grace points out in “Russian Oil Supply, another reason that there are fields left to develop is due to the philosophy by which the Soviet government marshalled resources to keep the Union supplied with oil for domestic and export use. Because of its centralized nature, as the resources in one region declined, so the financial support and technical equipment were removed and taken to other parts of the country, where a more plentiful supply source was available. This frequently left smaller fields behind, and removed the incentive for further exploration in the older regions.

The first region to see that removal of support was around Baku, and then the North Caucasus, as more plentiful resources became evident up in the region around Almetyevsk, in what is now the Republic of Tatarstan. The region lies considerably north of Volgograd (Stalingrad) and further east, though it still lies on the banks of the Volga, though also just to the West of the Ural Mountains, and thus the more popular and general description is the Volga-Ural Basin.

The Volga-Urals Basin is now recognized to be extensive with the USGS estimating that there remain some 1.5 billion barrels of oil, and 2.3 Tcf of natural gas (at the mean) left to be discovered and produced.

“The Prize”, an award-winning history of oil written by Daniel Yergin, covers the growth of the oil industry around the world, beginning with the start of the industry in the United States. But right behind those early chapters comes the story of Russian oil. This is not surprising since between 1898 and 1901, Russia and America roughly split global production of around 500,000 bd between them, with Russia out-producing the United States on occasion (as it does again now). That Russian oil is Russian no longer, since the early oilfields were found on and off the Aspheron Peninsula in what is now Azerbaijan (annexed by Russia initially in 1813 by Alexander I). The first well was drilled in 1847, after decades of recovering the oil from hand-dug pits, with ongoing activity there ever since. By 1904 the Baku region was producing 73 million barrels a year, although production began to decline after that. And with the loss of much of its male population during the revolution, it took a long time to recover. Yet it had rebounded to be strong enough that this oil from the Baku reservoirs was considered a critical factor in governing many battles of the Eastern Front in the Second World War.

Azerbaijan sits in a region of states along the southern Russian border that show the promise of holding some of the last large deposits of fossil fuel yet to be fully developed.

The first fields to be developed were the onshore Balakhany, Sabunchi and Ramany in 1871, with the coastal field of Bibi-Eybat being developed in 1873. Such was the nature of prospecting at the time, and the multiplicity of oil-bearing layers in the ground, this oil still remains to be found and recovered. It has been estimated that the fields initially held around 8 billion barrels of oil (John Grace), but while a billion of this was within range of early technology, the rest waited for the more advanced western technologies to arrive, though sometimes these didn’t.