A Nosedive In The Desert- Saudi Oil Production Dropping

[Jcrowley]

Summary

In this post, I extend my analysis of Saudi Arabian production backwards four years earlier than my post of last week. (Saudi Arabian Oil Declines 8% in 2006- http://www.theoildrum.com/node/2325/) I explain in detail how the evidence strongly suggests that since late 2004, the Kingdom of Saudi Arabia (KSA) has entered rapid decline of their oil production, at least for the time being.
The headline graph summarizes my conclusions, which are as follows.

<snip>

Since late 2004, KSA have entered a new era where they cannot raise production in response to demand side needs, and instead the major features of the production curve correspond to supply side events.
During 2002, KSA was increasing production to accomodate increasing demand as the world recovered from the recession of 2001.

<snip>

Oil prices increased due to increasing US, Chinese, etc demand in the strong economy of 2003 and early 2004. Once it became clear that oil prices had risen pronouncedly above OPECs desired $22-$28 price band, KSA initiated a large voluntary increase in production in the spring of 2004 in an attempt to bring prices back into the band. They were not able to raise production by more than 1 million barrels per day (mbpd), however, and this was not sufficient to stabilize prices, which have never returned to the price band. The band was abandoned a year later.

After continuing to increase production very slightly for several more months, Saudi production began to decline in late 2004. This was only arrested by the arrival of the first KSA oil "megaproject", the 800 thousand barrel/day (kbpd) output from the combined Qatif/Abu Sa'fah fields (690kbpd of new crude and condensate production). This 690kbpd arrested declines during early 2005, but never sufficed to raise production above the peak achieved in 2004. There was no sign of Saudi increases in production in response to the high prices of 2005 and since, nor to the loss of production from the Gulf of Mexico hurricanes in 2005.

http://www.theoildrum.com/node/2331

[KittyWampus]

1. overall, you do some interesting reading Jcrowley

thanks, :)

[roamer65]

2. I read that the Saudis have to pump 2.5 mbpd of seawater into Ghawar to get it to produce.

If that is truly the case, their massive Ghawar oilfield is nearing its end.

[Jcrowley]

3. You are correct

Ghawar is Fading

G.R. Morton

There are four oil fields in the world which produce over one million barrels per day. Ghawar, 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 important to the world's economy and well being. Today the world produces 82.5 million barrels per day which means that Ghawar produces 5.5 percent of the world's daily production. Should it decline, there would be major problems. As Ghawar goes, so goes Saudi Arabia.

The field was brought on line in 1951. By 1981 it was producing 5.7 million barrels per day. Its production was restricted during the 1980s but by 1996 with the addition of two other areas in the southern area 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.

I have noted elsewhere that the data I am being told by engineers who have actually worked on Ghawar, that this decade will see it's peak. (Morton, 2004 PSCF in press). Others have noted how the percentage of water brought up with the oil has been growing 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%. Thousands of barrels per day of production must be added each year.

http://solutions.synearth.net/2004/08/23?print-friendly=true

Now what we have is a situation where, in the long view, what is possibly the most relevant story to our everyday lives is largely obscured and ignored.

Cantarell is in steep decline too.

[IDemo]

4. I read it was seven million bpd of seawater injection

And they apparently aren't done with water injection just yet: http://www.ameinfo.com/106551.html

[Jcrowley]

6. My understanding of this

is that how much oil they want to pump will determine the amount/rate of seawater they will inject so as to increase the pressure. As the oil field diminishes the need for greater water injection increases which also damages the oil fields.

Nifty entreprenurial venture you link to.

:hi:

[LaPera]

5. Less oil on the market...the higher they charge for it...it's about controlling the flow

to a minimum.

[Auntie Bush]

7. That's why bush* invaded Iraq. The Saudi Prince let it slip.

[Theduckno2]

8. Declining North Sea oil production may explain Blair's involvement.

Of course we know the REAL reason; to rid the world of the threat of Iraqi WMDs.

:sarcasm:

[Jonathan50]

9. I was under the impression

That Iraqi oil production is depressed by about 2 mbpd since the invasion.

Is this correct?

[Jcrowley]

10. No

The Iraqi oil production has been barely reduced since the invasion excepting the last few months. For further information I recommend the writings of Antonia Juhasz.

Iraq has at present the world's largest number of large untapped oil fields. Of the eighty or so documented oil fields in Iraq only 17 having been developed leaving the other 60+ with at-surface oil that is estimated to cost a mere $1 per barrel to extract leaving a hefty profit margin. Close to the surface light-sweet crude. Wet dreams for these people. Irresistible.

[Rosemary2205]

11. This thread is gold to the uneducated like me. Thanks

K and R

[Jcrowley]

12. Iceberg Dead Ahead Captain

Iceberg Dead Ahead Captain
by Chuck Willis

“Iceburg Dead Ahead, Captain!” — Saudi’s 8% Oil Decline is the Iceburg in the Titanic Disaster

Over the last couple of weeks, I have been reading a trickle of articles, that more and more are being backed up with fact, about the declining oil production in Saudi Arabia over the past 8 months, long before the OPEC cuts took hold. I began to understand what the last hours of the Titanic may have been like, because I began to feel like someone who was on that great ship some 95 years ago. I started pondering what I was to do in light of this troubling discovery happening a half a world away in an almost featureless part of the planet. I began to see this with many similarities to the Titanic disaster nearly a century ago. I can’t think of a better term for peak oil than “Titanic Disaster.”

So what similarities can we draw from the Titanic’s voyage? First of all, the Captain was warned well in advance that icebergs lay in their path of travel a half a day before they met up with them. Even though the peak oil theory has been around for 50 years, it has only been in the last 6 or 7 years that petroleum geologists have stepped up and said there’s an “iceberg” in our future with enough volume that we could hear. Still there was time to start taking evasive action…… The Titanic’s radio room had received reports of large icebergs directly in their path a couple of hours ahead, but they were too busy sending and receiving commercial radio messages for the wealthy passengers aboard, and failed to pass what was a critical message to the officers of the ship. Ships that had shut down in the ice field as darkness approached tried to warn the Titanic, only to be told by the Titanic’s radio room to quit bothering them, they were interfering with the “paying” traffic. Similarly, the voice of those warning of peak oil has been ignored by the media, lest it interfere with the paying traffic concerned with where Anna Nicole Smith was to be buried, or what Britney Spears was doing. Another opportunity lost……..

The Titanic’s captain posted the watch in the crow’s nest to watch for icebergs, but a dark night on the ocean makes them difficult to spot until you are very close to them. After all 9/10 of them are underwater and unseen. The part you see isn’t as worrisome as what you don’t see. Sort of like us trying to guess what is ahead with peak oil, when the darkness of the lack of data out of some of the largest oil producers, hides the magnitude of what is ahead, and underground.

The lookouts are vigilant, but there are only two of them to warn of impending disaster in the crow’s nest. Like the brave few who have stood up to let us know of what is about to appear in our path on the sea of fossil fuels. There were conflicting priorities that the Captain and crew had, his company and shareholders wanted to make sure the Titanic was a success, and what better way to do that than making the Atlantic crossing in record time. Slowing down to safely navigate the icepack was at odds with the orders from the people who didn’t know, and frankly were more concerned with the large profits to be made from a ship that could beat everything else on the seas. Our government and President are really like the crew on board the Titanic. They are sort of in charge, but their orders are conflicting with the reality that is quickly coming upon them. The politician that doesn’t keep pouring on the coal, delivering more growth, keeping more people employed, more profits to the companies, more comforts to the masses, will soon be a forgotten part of history. No person likes to be considered useless and worthless. So lets keep the economy speeding along as fast as we can possibly push it, throwing a little more money in the boiler to keep up a full head of steam, lest we be called ineffective. The opposing political party can always find ways to distract the leader, pushing their own agenda. Of course they don’t want to slow things down, they just want a slightly different compass heading. Still peril is ahead……..

http://www.energybulletin.net/27373.html

[nadinbrzezinski]

13. Two words folks

They peaked

The implications are severe, including their strategic starngle hold will go down, or nose dive

[Jcrowley]

14. Comments to the National Petroleum Council

The NPC has a wonderful opportunity to reframe the discussion around peak oil. After thoroughly studying the evidence, I hope that you conclude, as many of us have, that peak oil is
near. If that is your conclusion, I urge you to communicate that finding in succinct, sober language. It's time to speak truth to power. Likewise, if you conclude that peak oil is a chimera, and those of us that were on the last call are grievously mistaken, chronic pessimists, nervous Nellies, please say that, loud and clear.

Personally, I would much rather you say, "Heed Not Chicken Little," than have you try to please both sides with the kind of waffling language that is found in so many reports. Whatever your results, an imaginative communication strategy will be necessary to disseminate them.
A few specific points. You write that "production from several countries has peaked." In this case, "several" means almost 60. Yes, most of these were no-account wonders, petroleum beggars like Germany, Peru, Guatemala, and Romania. Oil production in these countries was clearly constrained by geology.

More importantly, production has also peaked in ten of the twenty nations that today produce 85% of the world's oil. In some of these nations, including the UK, US, Norway, and Indonesia, geological constraints are clearly the primary cause. In other post-peak countries, including Mexico, Iran, Libya, Venezuela, and Iraq, causation is more complicated. To confuse the calculus, production in some post-peak countries could increase; in Iraq and Venezuela it could, some day, in a safer world, perhaps exceed their earlier highs.

Oil production is increasing in places like Brazil and Angola due to deepwater technology, falling in places like Nigeria, restrained in the UAE due to governmental decisions, close to a re-peak in Russia, at the cusp of peak in China and, Stuart Staniford would argue, in Saudi Arabia. The future course of production in these countries is governed by a complex mix of geology, investment, access, politics, manpower, rigs, war, etc. I would like to stress that, in the last five years, a large number of very competent, analytical people, linked together by the Internet, have brought serious intellectual horsepower to bear on the true state of world oil production. Yes, peak oil has attracted its share of conspiracy theorists and Birkenstockers, but some of the work that is being published at the Oil Drum, Energy Bulletin, in books and blogs, and by consulting groups like PFC Energy and John S. Herold Inc., is more seminal than anything found in World Energy Outlook.

http://www.energybulletin.net/27424.html