Articles in topic "Supply/Production"
Under the desert in eastern Saudi Arabia lies Ghawar, the largest oil field in the world. It has been famously productive, with a per-well flow rate of thousands of barrels per day, owing to a combination of efficient water injection, good rock permeability, and other factors. At its best, it set the standard for easy oil. The first wells were drilled with rather rudimentary equipment hauled across the desert sands, and the oil would flow out at ten thousand barrels per day. It was, in a sense, a giant udder. And the world milked it hard for awhile.
However, this article isn't just about a metaphor; it is also about cows, the Holsteins of Haradh. But in the end, I will circle back to the present and future of Saudi oil production.
The International Energy Agency has taken its share of abuse from The Oil Drum over the years for its rather optimistic forecasts. But it deserves a hearty shout-out for an invaluable resource it has on its web site: Interactive Sankey Diagrams for the World.
Sankey Diagram showing world energy flows (Click for larger view)
Posted by Heading Out on August 31, 2013 - 11:47pm
Tags: biofuel, brazil, deepwater resources, exxonmobil, gulf of mexico, kyle, micawber, ngl, opec, the oil drum [list all tags]
Back in March 2005, I posted my first offering to the new site that Kyle and I had agreed to call “The Oil Drum.” Now, some eight years later, this will be my final Tech Talk to appear on the site, and it is perhaps appropriate to go back to that first post and make a couple of comments on how it panned out. It read as follows:
When I was young I was fascinated by a small china statuette that my grandparents had of Mr Micawber. He is a character, and a sympathetic one, in Charles Dickens's book "David Copperfield", in the course of which he goes into debt. His explanation of his financial condition can be compared to the coming world experience as we now live through Hubbert's Peak. You might, in today's phraseology, call this the Money quote:
'My other piece of advice, Copperfield,' said Mr. Micawber, 'you know. Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and - and in short you are for ever floored. As I am!'.
In this case, consider that our expenses, i.e. the world use of oil, went up last year to around 83 million barrels every day (mbd). (A barrel is 42 gallons). Now as long as our supplies (income) can match this outlay then we are in happiness. This was, in relative terms, where we ended last year.
However this year our expenses are going to go up. It is a little difficult to predict exactly how much but current predictions are for this to be around 2 mbd. Let us equate this to the old English sixpence (which was back then worth about a dime. Twenty pounds being worth about $100).
If we follow the Micawber example - if our income, world oil supply is equal to or greater than our expenses, then we can stay happy. But here is the rub:
When world oil production is just about as high as it can be (non-OPEC countries are now producing just about as fast as they can) and OPEC spare capacity is down to around an additional 1.3 mbd, then our income this year will likely not be much above 85 mbd, if it gets there. (In a later post I will explain why it probably won't).
So we are at the point where, within the next few months, income and expenditures will be in balance (Micawber's twenty pounds). Except that the industry being a big one there are always things going wrong. In the latter part of last year for example we had:
• the hurricanes in the Gulf that closed down about 0.5 mbd of production for several months
• oil production in Iraq, which should be around 3 mbd, but because of pipeline bombings etc dropped below 2 mbd
• there were frequent threatened strikes on the oil platforms in Nigeria
• and Russian production declined more drastically than had been anticipated
|This is a guest post from WebHubbleTelescope. Here he provides a simplified explanation of his Oil Shock Model as applied to oil production from the Bakken formation. Previous contributions to THe Oil Drum from WHT can be found here and here.|
My premise for participating was that I wanted to see how far I could get in understanding our fossil fuel predicament by applying the mathematics of probability and statistics. There were enough like-minded individuals that it turned out to be a productive exercise, and I found that even the contrarian and cornucopian viewpoints could add value.
This was an ongoing process and I documented my progress with occasional posts on TOD and regular posts on my blog http://mobjectivist.blogspot.com. I treated the process as an experiment and as I collected more pieces of the puzzle, I realized that I had collected enough information to aggregate it into a more comprehensive format.
This work eventually went into an online book, which is available via Google Books at the link below, which you can also download as a PDF for a Kindle: http://books.google.com/books/about/The_Oil_Conundrum.html?id=oY2ZPn5EOTQC
After I finished the book (which incidentally I titled The Oil ConunDRUM as a nod to The Oil Drum) the mobjectivist blog went dormant. I essentially treated that bog as a lab notebook, and I considered that notebook was complete and finished as a historical record of what went into the book. So everyone that mourns the closing of The Oil Drum has to remember that progress marches on, and something else will spring from the analysis and research that went on here.
In passing, and as a short note to what one can do with some of the research that went into The Oil Conundrum book, I thought to consider explaining how we can apply the Oil Shock Model to projecting future Bakken formation production rates.
The popular peak oil blog The Oil Drum (TOD) began in early 2005. I joined as a contributor in mid 2005, later becoming an editor, and I left the site in early 2008. TOD continued in the meantime, at least up until now when the current editors have decided to transition to an archival format. They don't feel the quality and quantity of post submissions justify continuing. They asked a number of us old-timers to comment on the significance of TOD, and these are my reflections.
This is a final guest post of Kris de Decker, founder and writer at Low-tech Magazine, an internet publication highlighting the need for elegant yet simple sustainable energy technologies. We published a number of most interesting in-depth energy articles before from Kris about a-typical energy topics including 1) Endless Rope Drives, 2) Small urban wind turbine performance, 3) Heating and Cooling cities without fossil fuels, 4) Fossil Fuel Use in pre-industrial times, 5) solar powered factories for industrial production, 6) Trolley Canal Boats, and 7) The extensive history of windmills. Kris has been sad to hear that The Oil Drum will end its journey, and provides his final contribution on hydropower as a mechanical form of energy, as opposed to hydro-power as a conversion from kinetic to electrical energy, which shapes our conception today when discussing this energy source.
All hydropower plants today produce electricity. Transforming energy to electricity seems to be the only way to harness water power, but it is not. For almost two thousand years, water wheels powered machines directly via mechanical transmission.
Some small direct hydro powered systems in South America present a strong case for combining the use of modern materials with old fashioned methods of water power mechanization.
The higher efficiency of this approach means that less water is needed to produce a given amount of energy. This lowers the cost of hydropower and enables power to be produced by the use of very small streams.
Posted by Heading Out on August 25, 2013 - 5:04am
Tags: alaska, bakken, colombia, kazakhstan, malaysia, non-opec production, north dakota, oil production, oman, opec, russia, saudi arabia, south sudan, sudan [list all tags]
The news that Saudi Arabia is planning to employ 200 drilling rigs next year (up from 20 back in 2005) suggests that there is a recognition that future reserves may not measure up to the planned volumes needed. Plans now include exploration of the shale deposits in the country, looking primarily for natural gas. There are estimates that this resource could run as high as 600 trillion cubic ft. Current plans are to drill seven exploratory wells in the Red Sea, off Tabuk.
This is across the country from the major oil fields currently in use, which lie more along the Persian Gulf coast, centered perhaps around Damman. It therefore suggests that they are looking for extensions of the Israeli and Egyptian fields into northern KSA. (Minister Al-Naimi said that they still “had to find them.”)
In discussing the venture Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi also noted that, choosing to look for – and presumably finding - natural gas, would take the pressure off the country to maintain its oil reserve.
Al-Naimi said that prospects for global production of shale gas and oil – including in China, Ukraine, Poland and Saudi Arabia – were so promising that the Kingdom might not need to continue with its decades-long policy of maintaining an oil-output cushion for use in global supply disruptions. “It is not a question whether Saudi Arabia has spare (oil) capacity. It is a question of whether we need to spend billions maintaining it at all,” Al-Naimi said.
I often find myself wondering where my life would be today had I not stumbled across The Oil Drum in 2005. I don’t know that I would still be writing today were it not for my early experiences with TOD readers. As TOD winds down, I thought I’d share my story, which I have not told before.
In 2005 I was a chemical engineer at the ConocoPhillips Refinery in Billings, Montana. I worked in the group that among other things did refinery economics. We optimized the refinery for which crude slates to run and how the refinery should be run, depending on the crude slate as well as whether margins were higher for diesel or for gasoline. We could shift production about 5% one way or the other. We often joked about the fact that my boss was the Director of Optimization, Process, and Economics (the “DOPE”).
At that time the Montana government was in the midst of trying to implement an ethanol mandate for the state, and the refinery manager knew I had some background with ethanol from my graduate school days at Texas A&M University. So whereas other refineries in the state were sending their plant managers to testify, I was asked to go to the Montana State Legislature to provide testimony on this bill. As I was preparing for my testimony, I wanted to be sure I also emphasized the dangers of being overly dependent on a depleting resource like petroleum. I wanted the legislators to know that my testimony was not to maintain the status quo, but that instead we needed a different model. In the course of preparing my testimony, I read The Long Emergency and Twilight in the Desert – both books that had a big impact on my thinking -- and I began to frequent The Oil Drum and make comments.
I had started a little blog I called R-Squared – a play on my initials but also a term frequently used by engineers – to document and archive my findings as I prepared for my testimony at the legislature. I found that there was so much misinformation related to ethanol that I began to write essays debunking these claims. At some point Kyle Saunders, aka Professor Goose, asked me if I would become a contributor and share some of these articles at The Oil Drum as he felt like they could use some people with oil industry experience.
Since 2006, I've been tracking a set of oil production forecasts
and trying to see how they performed over time. Comparing oil supply forecasts
is not an easy task
because of the many different assumptions, baselines, and fuel categories
included. Also, most of them deal with production capacity which is
almost impossible to track as we can only observe delivered supply. Since the 80s, oil
production has pretty much followed population growth;
using a ratio value of 4 barrels/person/year, one can accurately predict
supply level for crude oil plus NGL (C+C+NGL) with an accuracy of +/- 2
Mbpd. This naive model will constitute my Null hypothesis (or model M0)
supply is not being constrained. Consequently, what could constitute a
kind of "peak oil signal" would be a statistically
significant deviation (I would be happy with only 2 sigmas) from the
model M0. As we can see on the figure below, crude oil and NGL has not
deviated significantly from M0. However, if we remove the contribution
from Canadian tar sands and tight oil (shale oil), we can see that the
starts to be statistically significant.
Hypothetical peak oil signal for C+C+NGL. Light gray bands indicate recessions. The dotted black curve is for C+C+NGL, the dotted red curve excludes tight oil and the magenta curve excludes Canadian tar sands. The continuous red line is the statistical significance corresponding to the average peak oil scenario.
Posted by Heading Out on August 18, 2013 - 3:17am
Tags: crude oil, crude oil price, ghawar, manifa, safaniya, saudi arabia, saudi crude production, saudi domestic consumption [list all tags]
From the time that The Oil Drum first began and through the years up to the Recession of 2008-9, there was an increase in the price of oil, and that resumed following the initial period of the recession, and in contrast to the price of natural gas, oil has recovered a lot of the price that it lost.
If one were to draw a straight line on that graph from the low point in 1999 though now, there hasn’t been a huge variation away from the slope of that line for long. That, of course, does not stop folk from pointing to the very short, roughly flat bit at the end and saying that oil prices are going to remain at that level, or are even about to decline.
To address that final point first, I would suggest that those making such a foolish prediction should go away and read the OPEC Monthly Oil Market Reports. Remember that, for just a little while longer, oil is a fungible product. OPEC make no secret of the fact that they continuously examine the global economy and make estimates on how it is going to behave. This month they note that the economies aren’t doing quite as well as expected, and have revised down global growth to 2.9%, though they expect next year to be better, and hold to their estimate of a 3.5% growth rate.