Posted: Thu Feb 21, 2008 6:38 pm Post subject: Re: Is Opec at Peak Production
In his statement he says Saudi can still reach the level they mentioned but that there is some risk. There is always risk and you see that to some extent from the few month delay that has occurred at Khusaniyah. I can't speak to how aggressive the SA view is on production from the fields coming on stream over the next while other than to say they have full field models and have spent billions of investment so I suspect the risk is relatively low.
When he says the world is peaking he may be speaking to production from non-Opec sources much of which will come on stream but maybe later than expected.
I disagree with his statement about geology controlling it. If he is correct that SA can reach their target then he is mistaken since the other production coming on that could reach beyond current global production is from projects that are waiting to come on stream, not from yet to be discovered. If he were to say that costs, lack of manpower, lack of rigs, lack of steel etc are delaying projects to the point where we may be a peak then I agree it is a possibility. Of course I haven't looked at my previous peak production profiles to see how various project delays might affect it. The other issue is that if places like SA are still sitting with spare capacity due to lack of percieved market and demand and supply stay in balance for a long time we could be at a long, long plateau.
Joined: Feb 19, 2007 Posts: 94 Location: British Virgins
Posted: Thu Feb 21, 2008 8:05 pm Post subject: Re: Is Opec at Peak Production
FreddyH wrote:
As my chart shows, their target for 2008 is 9.5-mbd and 10.5 for 2012. The latter is a revision from 11.2-mbd and was a public acknowledgement that Underlying Decline must be factored into their future Outlooks.
Actually, the underlying decline had mostly been discounted. Background to the reduction of the long term targets from 11.2 to 10.5 mb/d is the temporary cancellation of the 2010 neutral zone and Shaybah2 projects. When and if rescheduled, they will add 0.5 mb/d to Saudi crude capacity.
The present all time all liquids record for KSA is 11.3 mb/d set post Katrina (Feb-2007). The ramping up we are witnessing guarantees that it shall be smashed this Summer.
Joined: Jan 14, 2008 Posts: 321 Location: The Yukon
Posted: Thu Feb 21, 2008 8:33 pm Post subject: Re: Is Opec at Peak Production
rockdoc123 wrote:
In his statement he says Saudi can still reach the level they mentioned but that there is some risk. There is always risk and you see that to some extent from the few month delay that has occurred at Khusaniyah. I can't speak to how aggressive the SA view is on production from the fields coming on stream over the next while other than to say they have full field models and have spent billions of investment so I suspect the risk is relatively low.
When he says the world is peaking he may be speaking to production from non-Opec sources much of which will come on stream but maybe later than expected.
I disagree with his statement about geology controlling it. If he is correct that SA can reach their target then he is mistaken since the other production coming on that could reach beyond current global production is from projects that are waiting to come on stream, not from yet to be discovered. If he were to say that costs, lack of manpower, lack of rigs, lack of steel etc are delaying projects to the point where we may be a peak then I agree it is a possibility. Of course I haven't looked at my previous peak production profiles to see how various project delays might affect it. The other issue is that if places like SA are still sitting with spare capacity due to lack of percieved market and demand and supply stay in balance for a long time we could be at a long, long plateau.
I agree that he has inconsistencies. His forecast peak is 86.7-mbd in 2011. He will no doubt be revising up in his next Update. _________________ www.TrendLines.ca/scenarios.htm Home of the Real Peak Date ... set by geologists (not pundits)
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Tue Mar 04, 2008 11:05 am Post subject: Re: Is Opec at Peak Production
I found this old 1981 article out of Saudi Arabia very interesting for a couple of reasons: it states SA proved reserves as being less than what they state now and also, says Saudi Arabia needs to develop solar now before the oil runs out. Here is is in its entirety:
Quote:
Saudi Arabia and Solar Energy – A Special Section
To some observers, Saudi Arabia's effort to develop solar energy is decidedly a coals-to-Newcastle situation. With close to 113.5 billion barrels of proved oil reserves, Saudi Arabia hardly requires more energy. To put it another way, who needs it?
The kingdom, nevertheless, is sponsoring a variety of experiments in solar energy with particular emphasis on the use of the photovoltaic cell-to power a desalination plant in Jiddah, fend off corrosion in underground pipelines, heat a school in Tabuk and provide a full megawatt of electricity to a village north of Riyadh. That total is, no doubt, a drop in the bucket compared to the 292.8 megawatts being generated by traditional means in the Eastern Province, but is important, nonetheless, with regard to the future.
Solar energy has been discussed, in theoretical terms, for years, and some countries have even undertaken large experiments. France, for example, built a massive array of solar collectors in the Pyrenees, and Switzerland has done the same in the Alps. Until the energy crisis of the early 1970's, however, the industrialized countries of the world had not paid serious attention to solar energy - or other alternatives to conventional sources of power except nuclear power; with both petroleum and coal still cheap, there seemed to be no need.
But then, realizing that petroleum was running out in some areas, that coal contributed heavily to pollution and that nuclear power might be expensive and dangerous, the industrialized world began to look more closely at alternatives and especially at developments in solar energy - what one man has termed "the next revolution in technology."
As a result, breakthroughs are already being recorded. One California firm, for example, has developed a solar powered microwave repeater costing 75 percent less than existing equipment, a new skyscraper in New York has included a giant solar collector on its roof and, in July, an airplane powered by 16,128 solar cells flew from France to England in five and a half hours.
There are, certainly, enormous problems to be solved before solar power is economically acceptable and technically satisfactory and there are doubts as to the amounts of energy that present technology can provide. Nevertheless, it is already obvious that solar energy is a clean and inexhaustible source of energy.
It is ironic, of course, that countries like Saudi Arabia, Kuwait and Mexico - and regions like Texas - are as rich in sunlight as they are in petroleum. As one wit summed it up, "them what has - has." But the response, in the case of Saudi Arabia, is also an impressive example of national foresight. Years ago, for example, Saudi Arab officials, learning that U.S. government agencies had refused to fund an experiment in solar energy at the Gerraset Elementary School in Reston, Virginia, put up $625,000 to install solar collectors.
This foresight continues to guide Saudi policy. Though the kingdom will neither need nor benefit from solar energy for decades, it is committing vast sums to its development now while there is still time, and for reasons that were summed up crisply by Shaikh Ahmed Zaki Yamani, Minister of Petroleum and Mineral Resources: "The oil won't last forever."
We all know that the known oil reserves, and what might be discovered in the future, won't be enough to satisfy all our energy demands, except for a few decades, and will be depleted by the mid-21st century," Yamani said. "In order to save our civilization there should be a substitute for this energy, and there is no answer to our demand except solar energy. Though we have a huge reserve of oil in this country, we very much encourage scientific research to establish and find other sources of energy supplies. We do this because we believe that humanity cannot be saved except through this route..."
Or this other 1981 article:
Quote:
"Oil is a finite resource. With the lesson of the industrial West in mind it is easy to recognize that. We saw this whole thing coming-the rate of oil consumption exceeding the rate of discovery of new resources in the U.S. It's a lesson that is abundantly clear."
This 2008 article stating SA looks to become solar power house.
Quote:
"For a country like Saudi Arabia... one of the most important sources of energy to look at and to develop is solar energy," Ali Al-Nuaimi told French oil newsletter Petrostrategies.
He added: "One of the research efforts that we are going to undertake is to see how we make Saudi Arabia a centre for solar energy research and hopefully over the next 30 to 50 years we will be a major megawatt exporter.
So, it is clear that as early as 1981, SA saw that one day its oil production would peak just like it did for the United States. It also said its provable reserves were 113 billion barrels. The Saudis then, very smartly, began a solar program which continues to this day. The problem with that is, as the oil industry, IEA and EIA have all forecast, solar is a long way away from replacing oil. So, what will the Saudi's do? how about build coal plants and import the coal just like everyone else-
Quote:
Arab energy giants eye coal imports
by Reuters on Thursday, 28 June 2007 They hold over 30 % of global oil and nearly 8 % of gas reserves, but at least four Gulf Arab states are considering importing coal for power generation as they struggle to meet domestic demand.
Saudi Arabia, the United Arab Emirates, Oman and Bahrain are all looking at the possibility of building coal-fired power plants, analysts and industry sources said. The region's electricity needs are soaring as petrodollars feed rapid economic expansion.
"It's absurd in a way but there is not enough gas," said Mark Lewis, Managing Director of Energy Market Consultants.
"They have a serious problem in power generation and are having difficulties balancing their systems. Coal is a well known technology and could be built fairly quickly. It's probably quicker than the lead times for importing gas."
Coal was unlikely ever to make up a large part of power generation capacity in the Gulf, but it may help meet some of the rocketing demand, analysts said.
It would also make commercial sense if producers can export the oil they might otherwise burn for power and import coal more cheaply, analyst said.
"This merely reflects the existing commercial realities," said one analyst. "Oil is more expensive than coal. It's a kind of carbon-arbitrage."
The Middle East's coal reserves are negligible, according to the BP Statistical Review. Coal traders and producers said South Africa was the most economic source of coal for the Gulf.
According to data from the World Coal Institute, benchmark London Brent light crude cost five times more than coal last year. Gas was about four times the price of coal. Even adjusting for the lower amount of energy in coal, coal is still far cheaper a fuel source than oil.
Gulf countries have other motives for limiting the burning of gas in power plants. In their drive to diversify economies and create jobs, the region's oil and gas producers have encouraged the growth of energy-intensive industries such as petrochemicals and aluminium.
PLANTS OUTSIDE THE GULF
The high cost of bringing shipping into the Gulf, due to the war-risk premium for insurance in the volatile region, would make coal plants outside the Gulf more economic than any inside it, industry sources said.
Oman was the most likely of the four countries to actually build a coal-fired plant, they said. It is mulling a plant at Raysut, on the Gulf of Oman and outside of the Strait of Hormuz.
The emirate of Fujairah would be the top site for a UAE coal-fired power plant, as it too lies outside the Strait, sources said.
The Paris-based International Energy Agency, adviser to 26 oil consuming countries, said in a report earlier this month that Saudi Arabia was looking at building a plant on its west coast, on the Red Sea.
Saudi Electricity discounted coal as one of the fuels it would use to boost generation capacity in the world's largest oil exporter to 54,000 megawatts by 2015, up from 36,000 MW at the end of last year.
Still, industry sources said the Saudi government, like its neighbours, would consider all options including coal to avoid a power supply crunch. Saudi Electricity has asked industrial users to change working shifts to non-peak power demand hours as it looks to avoid a repeat of last year's blackouts.
The Gulf states' move to coal-fired generation echoes a process already underway in Russia.
Russia is a major exporter of oil, gas and coal to the Atlantic and Pacific markets. Russia has for many years relied on gas for the bulk of its power generation but this year the government announced that it would shift to predominantly coal-fired generation over the next several years.
This will enable Russia to increase its generation capacity substantially and maximise exports of gas which is more expensive than coal.
Tight gas supplies have already led some of the Middle East's cement producers to turn to coal to fire furnaces.
In the UAE's northern emirates of Fujairah and Ras al-Khaimah, cement makers are expected to import around 500,000 tonnes of South African coal during the next six months, up from almost nothing during the past several years.
One can't help but read these articles and question the Saudi Arabian ability to continue to meet the oil and natural gas expectations of the optimists.
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Tue Mar 04, 2008 11:22 am Post subject: Re: Is Opec at Peak Production
Here is an interesting post and observation made at LATOC.
Quote:
TAQA North is Abu Dhabi's tar sands investment - to the tune of $2billion...That should be warning enough for PO - why would the UAE invest in tar sands if they weren't peaking?
Quote
Beginning today, Abu Dhabi National Energy Company (ADSM: TAQA) will own and operate TAQA North Ltd, following the completion of the acquisition of Northrock Resources Ltd, a subsidiary of the US firm Pogo Producing Company (NYSE: PPP) for US$2 billion. T
he new entity, TAQA North, is set to provide TAQA with an additional 142 million barrels of proven oil and gas reserves, over 37,000 boe/d (gross) and a best-in-class exploration and production team.
As a Calgary-based oil and gas exploration production company, TAQA North has access to significant development and exploration opportunities in Saskatchewan and Alberta, with key exploration plays in Canada's Northwest Territories, British Columbia and the Alberta Foothills.
Posted: Fri Mar 14, 2008 12:29 am Post subject: Re: Is Opec at Peak Production
Well that's a no brainer. It's due to the fact that we went into peal ack in '05 and it's SA's desparate attempt to keep the money train going.........Within a few years SA won't have any light sweet crude left. HAHAHA.
Posted: Fri Mar 28, 2008 1:51 pm Post subject: Re: Is Opec at Peak Production
March 27, 2008 video interview with Sadad Al Husseini on CNBC. We've used 1/2 of global reserves, balance left is in expensive areas to find and produce, deep water, older pools, etc. Rate of discovery is slower than rate of consumption and we are digging into proven reserves. We are at peak capacity in refineries. Finding and producing is becoming a challenge in its own right. We are at a plateau, working harder and harder to stay where we are. The biggest future for oil for the US is conservation (sounds like Matt Simmons). Cost of oil is about $20 barrel too high for "speculative" reasons. $85 - $90 is a pretty fair price.
Joined: Feb 19, 2007 Posts: 94 Location: British Virgins
Posted: Fri Mar 28, 2008 5:40 pm Post subject: Re: Is Opec at Peak Production
seahorse2 wrote:
March 27, 2008 video interview with Sadad Al Husseini on CNBC. We've used 1/2 of global reserves, balance left is in expensive areas to find and produce, deep water, older pools, etc. Rate of discovery is slower than rate of consumption and we are digging into proven reserves. We are at peak capacity in refineries. Finding and producing is becoming a challenge in its own right. We are at a plateau, working harder and harder to stay where we are. The biggest future for oil for the US is conservation (sounds like Matt Simmons). Cost of oil is about $20 barrel too high for "speculative" reasons. $85 - $90 is a pretty fair price.
To be more accurate, Husseini was asked about Peak Oil in the final moments of the interview. He answered that present refining capacity is 85 and it will rise to 90 mb/d within five to ten years.
Yesterday's comments are an increase over his Peak Oil forecast of 86.7 mb/d of Supply for 2011 made last November in London.
Way too much ambiguity in this interview...
Last edited by LastViking on Fri Mar 28, 2008 7:01 pm; edited 1 time in total
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Fri Mar 28, 2008 5:57 pm Post subject: Re: Is Opec at Peak Production
My comments are accurate. But, that's why I included the linked video. Watch for yourselves and see if this sounds more like the Cera camp, Lynch Camp, or ASPO camp.
And, as former head of SA exploration, he knows the difference between supply and capacity, a lot better than you and I will ever know it.
Joined: Feb 19, 2007 Posts: 94 Location: British Virgins
Posted: Fri Mar 28, 2008 6:58 pm Post subject: Re: Is Opec at Peak Production
seahorse wrote:
My comments are accurate. But, that's why I included the linked video. Watch for yourselves and see if this sounds more like the Cera camp, Lynch Camp, or ASPO camp.
And, as former head of SA exploration, he knows the difference between supply and capacity, a lot better than you and I will ever know it.
Refining capacity is currently 75 mb/d, not the 85 he states. The current refining utilization is 90%, thus mirroring the 10% operating factor that he caveats. His statement that refining capacity will rise from 85 to a peak high of 90 mb/d illustrates his misunderstanding of downstream vocabulary.
Regardless, if you consider an increase in Supply of 5 mb/d a plateau ... then yes he is forecasting a plateau. But, it is not a scenario description to which non neophytes would agree.
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Sun Apr 20, 2008 8:22 am Post subject: Re: Is Opec at Peak Production
seahorse wrote:
Saudi Arabia will not be expanding production capacity after 2009 (its target to get to 12.5 mbpd).
Quote:
Saudi Arabia to Pause Adding New Oil Capacity After 2009
By Spencer Swartz and Natalie Obiko Pearson Dow Jones
ROME -- In another bullish signal to global oil markets, Saudi Arabia, the world's biggest oil exporter, says it has no plans to beef up its oil production capacity beyond the amount it is already pursuing for several years until it gets clearer signs about future crude consumption.
Saudi Arabia is in the midst of a more-than-$50 billion, multiyear oil production expansion plan to meet growing demand in Asia and other emerging markets. The kingdom is expected to boost its pumping capacity to a total of 12.5 million barrels per day by 2009, up about 11% from current capacity of ...
This ties in well with the recent quote from Saudia Arabia that they would leave, untapped, new finds for future generations.
Twilight wrote:
Reuters wrote:
Saudi Arabia - RIYADH, April 13 (Reuters) - Saudi Arabia's King Abdullah said he had ordered some new oil discoveries left untapped to preserve oil wealth in the world's top exporter for future generations, the official Saudi Press Agency (SPA) reported.
"I keep no secret from you that when there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'," King Abdullah said in remarks made late on Saturday, SPA said.
Posted: Tue Apr 22, 2008 2:51 pm Post subject: Re: Is Opec at Peak Production
Wallstreet Journal article discussing the increased complexity and cost of recent moves by Saudi Arabia to increase their production capacity, suggesting that the "easy pickens" are over even for Saudi Arabia.
Quote:
Saudis Face Hurdle
In New Oil Drilling
Big, Complex Field
Seems to Mark End
Of Easy Pickings
By NEIL KING JR.
April 22, 2008; Page A1
Next year, if all goes well, Saudi Arabia will turn the spigots on the largest oil field to come online anywhere in the world since the late 1970s.
The Khurais complex, sprawling across a swath of red dunes and rocky plains half the size of Connecticut, is expected to add 1.2 million barrels a day to an oil market caught between growing demand and a paucity of significant new discoveries. The twin forces have led to historically high prices for crude oil, which settled at a record $117.48 on Monday.
But the project also illustrates a darker point: Even in Saudi Arabia, home to more than a quarter of the world's known recoverable reserves, the age of cheap and easily pumped oil is over.
To tap Khurais, Saudi Arabian Oil Co., known as Aramco, has embarked on the most complex earth- and water-moving project in its history. It is spending up to $15 billion on a vast network of pipes, oil-treatment facilities, deep horizontal wells and water-injection systems that it calls "one of the largest industrial projects being executed in the world today."
Moreover, with the project, Aramco is dipping into one of its last big basins of oil. After Khurais, Saudi Arabia will have only one known mega-field left to fully develop, the even more challenging Manifa field, offshore in the Persian Gulf. Much of the kingdom's reserves beyond these lie either in aging fields or smaller pockets.
"Khurais and Manifa are the last two giants in Saudi Arabia," says Sadad al-Husseini, a former Aramco vice president for oil exploration. "Sure, we will discover dozens of other smaller fields, but after these, we are chasing after smaller and smaller fish."
The Khurais project is at the heart of an all-out effort by Saudi Arabia to keep abreast of natural declines in older fields while trying to preserve its status as the oil world's lone safety valve. To do that, Aramco is scrambling to boost its overall production capacity, currently just over 11 million barrels a day, to 12.5 million.
Saudi officials said a few years ago that they could push production to 15 million barrels a day if necessary and sustain that for decades. But for some time they've been indicating they would level out at about 12.5 million barrels of capacity. Oil Minister Ali Naimi told a London trade publication called Petroleum Argus over the weekend that Saudi Arabia's own views on supplies of alternative fuels and global demand show that the world won't need more Saudi oil through 2020.
Under Pressure
But Saudi Arabia is under pressure to ramp up its output as the world scrambles to keep pace with rising oil demand, which the International Energy Agency predicts could hit 99 million barrels a day by 2015, up from 87 million barrels a day this year. With output declining or flat in Mexico, Venezuela, the North Sea and Russia, all eyes are on the Saudis to fill much of the gap, even as oil demand soars within Saudi Arabia itself.
Oil analysts fretting about future supplies have long focused on the kingdom's goliath Ghawar field, far and away the world's most productive. Since its discovery in 1948, Ghawar has provided the bulk of Saudi oil. Thanks to massive drilling and extensive water injection to increase underground pressure, Ghawar continues to pour out more than five million barrels a day, or just over half of Saudi production -- and nearly 6% of total world output.
[map]
But for a contingent of skeptics, the Khurais field has become the ultimate test of the health, or sickness, of the world's oil patch. Skepticism runs deep in oil quarters over whether Saudi Arabia can overcome a slew of challenges, both geological and economic, to turn the Khurais field into what Saudi officials hope will become the fourth most productive oil field in the world, after Ghawar and fields in Kuwait and Mexico.
"This is the big one," says Matthew Simmons, a Houston energy investment banker whose 2005 book "Twilight in the Desert" challenged Aramco's petroleum prowess. "If Khurais falls short of its advance billing, then Saudi Arabia is going to struggle to fulfill its promises."
Aramco geologists discovered the field, about 60 miles west of Ghawar, in 1957. Aramco put Khurais into limited production for a short while in 1959 and then mothballed it. Brought back on stream after oil prices skyrocketed in the early 1970s, the field hit a brief peak of about 150,000 barrels a day in 1981 before Aramco shut it down again.
"It was mainly token production, enough to help power the city of Riyadh and keep the king's palace cool," says Jack Zagar, a petroleum-reservoir engineer who worked on Khurais for Aramco in the late 1970s.
Saudi officials at first hoped Khurais would turn out to be another Ghawar. Years of assessment proved otherwise. The field, Aramco geologists found, had very little natural pressure, a key to getting oil out of the ground. Its oil-bearing rock is deep underground and much tougher to tap than Ghawar's.
"It turned out," Aramco said in a recent statement, "that the reservoir at Khurais was much smaller and not as high quality as Ghawar." Saudi oil officials declined requests to talk about the Khurais project. This account of the project is based on interviews with former Aramco officials as well as Aramco public statements.
Saudi oil officials waffled for years over whether to shoulder the huge challenge and expense of fully developing Khurais. Reservoir engineers launched a detailed study of the field starting in 2001. Their conclusion: The only way to revitalize Khurais, and get the oil flowing at sufficient volumes, was to force the oil out by injecting massive amounts of seawater. Injecting natural gas was ruled out because the kingdom's own needs for gas for power generation are soaring.
The need for water injection raised a slew of complications. The Khurais complex, which includes the smaller satellite fields of Abu Jifan and Mazalij to the south, lies far from most of the kingdom's oil infrastructure. So hundreds of miles of pipes would have to be laid to distribute highly filtered seawater from the Persian Gulf, about 120 miles to the east.
Complex Geology
A massive water-injection program would require Aramco to ring the complex with more than 100 injection wells. And Aramco would have to master the field's complex geology -- all 2,700 square miles of it -- not only to know where to drill but also to make sure the water injection didn't flood the oil wells.
"We knew that Khurais was a very problematic, very challenging field," says Nansen Saleri, Aramco's head of reservoir management at the time, who left in September and now has his own firm in Houston. "The trick was to understand Khurais down to its smallest detail."
To do that, Aramco seismologists spent 20 months shooting 2.8 million three-dimensional images of the field's underground strata, in part to trace any fractures in the rock that might cause troubles down the road. It was Aramco's most ambitious underground mapping program ever. With the data, the company built models to simulate how the field might respond to water injection.
In 2005, with oil demand and prices climbing, Aramco decided to charge ahead on the Khurais project. It hired Halliburton Co. to drill the wells. Canada's SNC Lavalin Group Inc. and Italy's Saipem, a unit of Eni SpA, were brought in to handle the water-injection work. New Jersey-based Foster Wheeler Ltd. took over as project manager. Dozens of other companies were hired to lay the pipe and build what amounted to a small oil city in the middle of the desert. The total estimated cost at the time was $6 billion.
For Mr. Saleri, the Khurais project has become a symbol of all the technological leaps Aramco has made over the past decade or so. "This will be the biggest smart field the world has ever seen," he says.
Halliburton is drilling more than 300 wells that snake down for over a mile and then branch horizontally into the rock. Each can be guided electronically to within a couple of feet of where the oil lies, using a technology known as geosteering. To flush the oil out, Halliburton is drilling 125 water-injection wells and installing dozens of electric submersible pumps.
Mr. Saleri says he also insisted that dozens of observation wells be drilled, so that sophisticated sensors could monitor what was happening below ground. Once the field is operational, reservoir engineers will be able to track it second by second from Aramco's huge command center in Dhahran, about 150 miles to the northeast.
But all this wizardry also underscores Khurais's many quirks and foibles. To counter the field's lack of internal pressure, Aramco plans to inject 2.4 million barrels of seawater a day into its underground structures, around two barrels of water for every barrel of oil it hopes to extract. By comparison, Aramco first put the mighty Ghawar under limited water injection in the 1960s before turning to large-scale seawater injection in the late 1970s.
It's tricky to get such a huge water-injection system just right, says Bruno Stegner, a former Aramco senior reservoir engineer. The water has to be filtered down to extremely tiny particles to avoid plugging the pores of the rock it's supposed to flow through. The main challenge, Mr. Stegner says, will be sustaining sufficient water pressure to push oil to the producing wells through two miles or more of Khurais's tough rock layers, far less porous than Ghawar's.
Many experts are surprised that Aramco is using submersible pumps in a field that is still young, measured by its years of actual production. Aramco began installing similar pumps to boost production at its huge offshore Safaniyah field in 2005, but only after the field had been pumping oil for decades.
"The big Middle East fields used to go on for 30 or 40 years without blinking," says Chris Skrebowski, a former Aramco oil analyst who now works for the London-based Energy Institute. Khurais's geology is different. "If Ghawar is like a big wet sponge, then Khurais is like one of those hardened sponges that are very hard to wring out," he says.
Mr. Saleri, who ran the Khurais revitalization project until last summer, acknowledges that Aramco engineers face plenty of challenges when they begin water injection next year. "When you're injecting water into the periphery" of a field, he says, "if you hit fissures in the rock and aren't managing it well, you can have water flow in and kill a well. And a dead well doesn't flow."
Mr. Saleri says the strategy is to coax as much oil as possible from Khurais over the longest possible period. Aramco now boasts some of the highest recovery rates of any oil company. In the U.S. and elsewhere, companies typically manage to extract less than 40% of the oil from a field. Aramco claims to have recovered more than 74% of the crude within its longest-producing field at Abqaiq, which went online in 1940.
A Big 'If'
"If you do things right from Day One, there's no reason to expect Aramco won't get the same from Khurais," Mr. Saleri says.
That's a big if. Aramco has suffered lately from soaring costs and increasing project delays. Through most of the 1990s, it cost Aramco around $4,000 to add one barrel of daily production capacity. A huge project called Shaybah, finished in 1997, required Aramco to run roads and pipelines deep into the country's forbidding Empty Quarter and cost around $2 billion. For that, Aramco got 500,000 barrels a day in oil-production capacity.
Some experts estimate that it now costs the company closer to $16,000 to add one additional barrel of daily production capacity. Several big projects are running behind schedule because of a shortage of steel and manpower. A project called Khursaniyah was meant to bring on 500,000 barrels of daily capacity by the end of last year, but Saudi officials now say it may not hit that target until the end of the year.
Some doubt that Khurais will reach the promised 1.2 million barrels a day of oil production or be able to sustain that level if it does. Mr. Husseini, the former Aramco head of oil exploration, who retired five years ago, says he doesn't doubt the company can extract that much at least briefly. "The question," he says, "is how long you can sustain it and at what price."
Joined: Nov 13, 2005 Posts: 11 Location: The Ozarks
Posted: Wed Apr 23, 2008 3:42 pm Post subject: Re: Is Opec at Peak Production
In depth analysis of Saudi or Russia production is important, but you just don't see many charts or analysis in peak oil discourse (and none in the broad media) of the single most important thing in real life oil pricing - the amount of exported oil. This is peaking before the production peak, will decline faster, and controls oil prices with the bidding war it induces amongst the importing nations.
Posted: Wed Jun 11, 2008 12:56 pm Post subject: Re: Is Opec at Peak Production
I think the article I'm linking is a good indicator that the world has reached or close to reaching the infamous "crossover" event which is that point in time when oil pricing power shifts back to Opec. Technically, the "crossover" event is when Opec production exceeds nonopec, but the real power is pricing power. So, when Opec realizes it has the rest of the world by their economic nuts, that's real power.
This article shows some in Saudi are realizing they have the rest of the world by their economic nuts. The only question is, how hard will they squeeze.
Quote:
Saudi Arabia might soon be just plain old Arabia. When that comes to pass, $150 oil will look cheap indeed.
Influential members of the nation's political ranks are calling for cuts in oil production, not increases as the U.S. has asked for.
"The price of oil under ground is actually higher than its current market price because it will become a unique commodity by time and demand will continue to rise because of a steady growth in the world's population," Marri told Alriyadh.
"The level of oil production in Saudi Arabia must be linked to the country's actual development and financial needs not to market prices and the need of foreign consumer. It is not wise to sap this resource just to satisfy the demand of foreign markets. Therefore, we need to revise our oil production policy before it is too late. Preserving our oil reserves is better than investing our financial surpluses which could lead to inflation."
You see, some Saudi's are smart enough to prefer to hold their oil in the ground, rather than worthless paper currencies in the bank. If the Crown Prince does not handle this astutely, he might meet his own end at the wrong end of a sword. For years, no soul living in the Kingdom, or the Oil dependent West, was willing to state the obvious - "The Emporer Has No Clothes" - THERE IS NO REPLACEMENT FOR OIL. That the West's silly claim - "if Oil went too high the efficient markets would bring on alternatives to Oil" - was some EXCELLENT propaganda but when put to the test failed quickly and utterly.
(The funny thing is, I will STILL get 3 calls this week from friends and clients about something they saw on T.V. proclaiming a car that runs on water and gets 35 miles to gallon and goes from 0 to 60 in 6.3 seconds and has a chick magnet bigger than yours... and then I have to pop their bubble with: "Well, if that's true, why didn't oil fall to ZERO in the markets today?")
Sorry, I am back. Saudi Arabia, perhaps soon just Arabia, holds the world's economy in its hands. When, not if, the House of Saud falls, no one will hold what is left of the world's economy in its hands.
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