Tuesday, May 27, 2008
The decline of Saudi Arabian oil fields
Jon Claerbout, 8/12/05
All oil fields decline. Saudi Arabian oil fields can be expected to decline in the manner of other well-managed super-giant oil fields. Saudi fields are not publically documented while most others are, so a collapse could come far sooner than is widely recognized.
The figure to the right shows the experience of eight famous giant and super-giant oil fields. [Click to enlarge.] I found this figure in a new book (2005), "Twilight in the Desert: The coming Saudi oil shock and the world economy", by Matthew R. Simmons. Simmons suggests that when oil-fields decline, they do so at a rate of 50% per decade. On each oil field I have sketched a red line with that slope. Please examine Alaska's Prudhoe Bay oil field. It is a textbook case, producing at the maximum safe rate until the rate becomes controlled by nature instead of by man. If you are an American you should know that Prudhoe Bay is the bulk of Alaskan oil. You should notice how far down we have already come. Oseberg and Gullfaks fields are well managed by Norwegians, Brent field by Dutch, Forties field, by British. Russia's Romashkino field is similar. Slaughter is a Texas oil field. Russia's super-giant Samotlor began a catastrophic decline in 1987. (The Soviet Union collapsed three years later, perhaps not coincidentally.) [Notice both axes are scaled differently for each oil field.]
Economists often note that the world's biomass of mice exceeds its biomass of elephants; and something likewise holds for many mineral resources. Simmons expects nothing of this sort in Saudi oil fields. The preponderant volume is in the big fields.
The figure to the left tells the story. [Click to enlarge.] I took this figure from Simmons' book and circled with blue the world's biggest oil field, Saudi Arabia's Ghawar field. The three fields circled in green are also "super-giants" but altogether they produce less than Ghawar. The only sizeable oil field found in Arabia since 1967 is the Hawtah Trend fields which I circled in red. Notice how small the red area is compared to the blue and green.
Failure to find any more oil than the Hawtah Trend since 1967 was not for lack of trying. Saudi ARAMCO has access to ample capital and the world's top talent. Exploration technology has seen major developments since then, but technology does not guarantee results. In 2005 ARAMCO's budget for exploration and development is $2.7 billion. Alaska's Prudhoe Bay is a clear example that while new technology may add something, it cannot keep up with depletion, even with the recent runup in prices.
Of course there is much more to an oil field than its area shown by this map. Simmons' book provides us with much such information that he has distilled from 200 papers published with the Society of Petroleum Engineers. ARAMCO ceased publication of production statistics by oil field when it was nationalized in the late 1970s, but their engineers continue to publish technical papers on problems, successes, and difficulties.
Alarmingly, the development of horizontal drilling has added nothing to reserves while hastening the speed at which they can be drawn down.
Saudi secrecy has led to a world-wide mystique that the Saudi oil fields can easily handle world needs for many decades to come. Simmons discredits this myth of an oil glut. Indeed it irks him. He blames it for two decades of underinvestment. I'd also blame it for two decades of profligacy.
During the 1978 oil crisis, ARAMCO provided the US congress with the information that 93% of its production came from just four oil fields, Ghawar, Safaniya, Abqaiq, and Berri (circled in blue and green). For almost four decades these four fields yielded 80-90% of Saudi oil production while three or four smaller fields made up the remainder. All these fields reached their maximum prudent level of production decades ago. In a crisis they could probably reach these levels again, but such levels could not be sustained and would damage the fields.
Late in the book Simmons recounts many recent SPE papers demonstrating huge amounts of previously ignored reservoir heterogeneity (variation from place to place). Even million-parameter models do not do a satisfactory job of reservoir forcasting. This casts doubt on all predictions, especially those of previous decades.
[Unsaid is where the million-parameter models come from. Either they are figments of someone's imagination, or someone must estimate these parameters from production history and 4-D seismic data. If my graduate students can make a dent here, I see employment for 90 years.]
The life of an oil field is shorter than that of a person.
You'll be better off reading Simmons' book than getting my personal opinion. I am 67 years old, born the year oil was found in Arabia (1938). My prediction for 67 years in the future is that Saudi oil production, as well as world oil production, will be a dim shadow of its present self. Simmons' book should be required reading for anyone teaching high school or college in Saudi Arabia or anywhere in the oil-producing world. Arabians have among them people who lived 67 years ago. What were their lives like? Preparation for oil decline will be a mercy for their grandchildren.
As for the rest of the world, we may not like it, but we can live with greatly reduced amounts of oil and gas. When I was a child we heated our homes with coal. I carried out the ashes. The engine of the train that went past my house also burned coal. Now we have other options for energy including nuclear, wind, and solar. For transportation fuel, we will mine the tar sands of Canada and Venezuela -- and pay a much higher price.
The collapse of oil is inevitable but it might not be precipituous. The world oil economy might not collapse at 50% per decade, nor should Saudi Arabian exports. Both Arabia and the world have many oil fields. Each field has its own appointment with fate, that time when its inexorable decline begins. As prices rise, conservation begins, first among the poor, eventually by everyone.
Executive Summary
1 World total liquids production remains on a peak plateau since 2006 and is forecast to fall off this peak plateau in 2009. Increasing numbers of oil experts are forecasting impending peak production plateaus. According to the International Energy Agency (IEA), the current peak production of 87.2 mbd occurred on January 2008. As long as demand continues increasing then prices will continue increasing.
2. Forecast world crude oil and lease condensate (C&C) production retains its 2005 peak. The forecast to 2100 shows declining C&C production, using a bottom up forecast to 2012. The forecast to 2012 shows a slight decline to 2009, followed by a 3%/yr decline rate to 2012.
3. World oil discovery rates peaked in 1965 and production has exceeded discovery for every year since the mid 1980s. Discoverable reserves in giant fields also peaked during the mid 1960s. The time lag between world peak discovery in 1965 and world peak production in 2005 of 40 years is similar to the time lag of 42 years for the USA Lower 48.
4. World C&C year on year production changes to October 2007 and November 2007 show significant declines for Mexico, North Sea and Saudi Arabia and significant increases for Russia, Azerbaijan and Angola. As Russia is likely to be on a production plateau and Saudi Arabia, Kuwait and the UAE have probably passed peak production, the world C&C production will continue to decline slowly.
5. Saudi Arabia retains its 2005 C&C peak, which is the same as the peak year for world C&C. Saudi Arabia C&C production has dropped to 9.0 mbd which is 0.6 mbd less than its peak in 2005. It is now almost a certainty that Saudi Arabia passed peak C&C production of 9.6 mbd in 2005.
6. Kuwait retains its 2006 minor C&C peak. Kuwait C&C production has now dropped to 2.5 mbd which is less than its peak in 2006. There is a strong likelihood that Kuwait has passed its minor 2006 peak. Kuwait’s major peak was 3.3 mbd in 1972.
7. UAE retains its 2006 C&C peak. UAE C&C production has now dropped to 2.6 mbd, adjusted for maintenance, which is just less than its peak in 2006. There is a reasonable likelihood that UAE passed its 2006 peak.
8. World natural gas plant liquids is forecast to increase due mainly to new OPEC projects. World ethanol and XTL production is forecast to almost double by 2012. World processing gains are forecast to decline slowly to 2012.
info from: http://www.theoildrum.com/tag/update
1 World total liquids production remains on a peak plateau since 2006 and is forecast to fall off this peak plateau in 2009. Increasing numbers of oil experts are forecasting impending peak production plateaus. According to the International Energy Agency (IEA), the current peak production of 87.2 mbd occurred on January 2008. As long as demand continues increasing then prices will continue increasing.
2. Forecast world crude oil and lease condensate (C&C) production retains its 2005 peak. The forecast to 2100 shows declining C&C production, using a bottom up forecast to 2012. The forecast to 2012 shows a slight decline to 2009, followed by a 3%/yr decline rate to 2012.
3. World oil discovery rates peaked in 1965 and production has exceeded discovery for every year since the mid 1980s. Discoverable reserves in giant fields also peaked during the mid 1960s. The time lag between world peak discovery in 1965 and world peak production in 2005 of 40 years is similar to the time lag of 42 years for the USA Lower 48.
4. World C&C year on year production changes to October 2007 and November 2007 show significant declines for Mexico, North Sea and Saudi Arabia and significant increases for Russia, Azerbaijan and Angola. As Russia is likely to be on a production plateau and Saudi Arabia, Kuwait and the UAE have probably passed peak production, the world C&C production will continue to decline slowly.
5. Saudi Arabia retains its 2005 C&C peak, which is the same as the peak year for world C&C. Saudi Arabia C&C production has dropped to 9.0 mbd which is 0.6 mbd less than its peak in 2005. It is now almost a certainty that Saudi Arabia passed peak C&C production of 9.6 mbd in 2005.
6. Kuwait retains its 2006 minor C&C peak. Kuwait C&C production has now dropped to 2.5 mbd which is less than its peak in 2006. There is a strong likelihood that Kuwait has passed its minor 2006 peak. Kuwait’s major peak was 3.3 mbd in 1972.
7. UAE retains its 2006 C&C peak. UAE C&C production has now dropped to 2.6 mbd, adjusted for maintenance, which is just less than its peak in 2006. There is a reasonable likelihood that UAE passed its 2006 peak.
8. World natural gas plant liquids is forecast to increase due mainly to new OPEC projects. World ethanol and XTL production is forecast to almost double by 2012. World processing gains are forecast to decline slowly to 2012.
info from: http://www.theoildrum.com/tag/update
Trouble in the World's Largest Oil Field
Ghawar - SAUDI ARABIA
Monday, 16 August 2004
By G.R. Morton
From: http://home.entouch.net/dmd/ghawar.htm
There are four oil fields in the world which produce over one million barrels per day. Ghawar in Saudi Arabia, which produces 4.5 million barrels per day, Cantarell in Mexico, which produces nearly 2 million barrels per day, Burgan in Kuwait which produces 1 million barrels per day and Da Qing in China which produces 1 million barrels per day. Ghawar is, therefore, extremely (very) important to the world's economy and well being. Today the world produces 82.5 million barrels per day (2004) which means that Ghawar produces 5.5 percent of the world's daily production. Should it decline, there would be major problems. Its production was restricted (limited) during the 1980s but by 1996 with the addition of two other areas to the south of Ghawar brought on production, Hawiyah and Haradh, the production went back up above 5 million per day. In 2001 it was producing around 4.5 million barrels per day. There have been 3400 wells drilled into this reservoir (the pool of oil underground).
Others have noted how the percentage (%) of water brought up with the oil has been growing (increasing) on Ghawar. There are published reports that Ghawar has from 30-55% water cut. This means that about half the fluids brought up the well are water. Today the decline rate is 8%. “At Ghawar, they have to inject water (put in by pressure) into the field to force the oil out. By contrast, Shayba's oil contained only trace (very small amounts) amounts of water. At Ghawar, the engineer said, the 'water cut' was 30%." Most new oilfields produce almost pure oil (almost 100%) or oil mixed with natural gas--with little water. Over time, however, as the oil is drawn (taken) out, operators (company pumping the oil out of the ground) must replace it with water to keep the oil flowing until eventually (finally) what flows is almost pure water and the field is no longer worth operating (it turns into an energy sink, remember EROEI)
Saudi Aramco is injecting (putting into) a staggering 7 million barrels of sea water per day back into Ghawar, the world's largest oilfield, in order to prop up pressure (continue same pressure). It accounts for 30% of Saudi oil reserves and up to 70% of daily output. It seems a growing number of analysts are falling into line (saying the same thing) with the Simmons & Company International view that Saudi Arabia may be running out of steam and may not be able to perform the role of global swing producer (country that can produce extra in case oil cannot be produced from another place) for many more years, despite being credited (documented) with oil reserves in the order of 260 billion barrels. The Centre for Global Energy Studies hinted at the beginning of the year that the kingdom appeared to be heading for difficulties. Now one of its analysts has said that having reserves does not equate (equal) to production capacity. Citing the Haradh field, he said “it required 500,000 barrels per day of water injection to get out 300,000 bpd of oil. Moreover the problem is even more serious in the Khurais field.” With 100 billion bbl of crude oil produced so far, Saudi Arabia should not be far from the midway point of its proved reserves of 260 billion bbl-that means just 10 years at the going rate of roughly 3 billion bbl/year. Bearing in mind the [spurious revision] (higher new numbers) of 1990 that boosted proved Saudi reserves to 257 billion bbl from 170 billion bbl, the midway point could happen even sooner than that." “Doubts grow about Saudi as Global Swing Producer,” Aberdeen Press & Journal Energy, April 5, 2004, p.15
"Furthermore, the 35 billion bbl produced during 1990-2002 has not been accounted for (subtracted from the total yet), as Saudi "proved reserves" were still being reported at 260 billion bbl by the close of 2001." [Original Saudi reserves at 170 Billion barrels, they pumped 100 Billion so we have left 35 billion. Do the math using original estimate, not revised estimate of 257.] A. M. Samsam Bakhtiari, "Middle East Oil Production to Peak within next decade." Oil and Gas Journal, July 7, 2003, p. 24
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Ghawar - SAUDI ARABIA
Monday, 16 August 2004
By G.R. Morton
From: http://home.entouch.net/dmd/ghawar.htm
There are four oil fields in the world which produce over one million barrels per day. Ghawar in Saudi Arabia, which produces 4.5 million barrels per day, Cantarell in Mexico, which produces nearly 2 million barrels per day, Burgan in Kuwait which produces 1 million barrels per day and Da Qing in China which produces 1 million barrels per day. Ghawar is, therefore, extremely (very) important to the world's economy and well being. Today the world produces 82.5 million barrels per day (2004) which means that Ghawar produces 5.5 percent of the world's daily production. Should it decline, there would be major problems. Its production was restricted (limited) during the 1980s but by 1996 with the addition of two other areas to the south of Ghawar brought on production, Hawiyah and Haradh, the production went back up above 5 million per day. In 2001 it was producing around 4.5 million barrels per day. There have been 3400 wells drilled into this reservoir (the pool of oil underground).
Others have noted how the percentage (%) of water brought up with the oil has been growing (increasing) on Ghawar. There are published reports that Ghawar has from 30-55% water cut. This means that about half the fluids brought up the well are water. Today the decline rate is 8%. “At Ghawar, they have to inject water (put in by pressure) into the field to force the oil out. By contrast, Shayba's oil contained only trace (very small amounts) amounts of water. At Ghawar, the engineer said, the 'water cut' was 30%." Most new oilfields produce almost pure oil (almost 100%) or oil mixed with natural gas--with little water. Over time, however, as the oil is drawn (taken) out, operators (company pumping the oil out of the ground) must replace it with water to keep the oil flowing until eventually (finally) what flows is almost pure water and the field is no longer worth operating (it turns into an energy sink, remember EROEI)
Saudi Aramco is injecting (putting into) a staggering 7 million barrels of sea water per day back into Ghawar, the world's largest oilfield, in order to prop up pressure (continue same pressure). It accounts for 30% of Saudi oil reserves and up to 70% of daily output. It seems a growing number of analysts are falling into line (saying the same thing) with the Simmons & Company International view that Saudi Arabia may be running out of steam and may not be able to perform the role of global swing producer (country that can produce extra in case oil cannot be produced from another place) for many more years, despite being credited (documented) with oil reserves in the order of 260 billion barrels. The Centre for Global Energy Studies hinted at the beginning of the year that the kingdom appeared to be heading for difficulties. Now one of its analysts has said that having reserves does not equate (equal) to production capacity. Citing the Haradh field, he said “it required 500,000 barrels per day of water injection to get out 300,000 bpd of oil. Moreover the problem is even more serious in the Khurais field.” With 100 billion bbl of crude oil produced so far, Saudi Arabia should not be far from the midway point of its proved reserves of 260 billion bbl-that means just 10 years at the going rate of roughly 3 billion bbl/year. Bearing in mind the [spurious revision] (higher new numbers) of 1990 that boosted proved Saudi reserves to 257 billion bbl from 170 billion bbl, the midway point could happen even sooner than that." “Doubts grow about Saudi as Global Swing Producer,” Aberdeen Press & Journal Energy, April 5, 2004, p.15
"Furthermore, the 35 billion bbl produced during 1990-2002 has not been accounted for (subtracted from the total yet), as Saudi "proved reserves" were still being reported at 260 billion bbl by the close of 2001." [Original Saudi reserves at 170 Billion barrels, they pumped 100 Billion so we have left 35 billion. Do the math using original estimate, not revised estimate of 257.] A. M. Samsam Bakhtiari, "Middle East Oil Production to Peak within next decade." Oil and Gas Journal, July 7, 2003, p. 24
Continue to: Saudi Aramco boosts drilling efforts to offset declining fields
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