[Graeme]

Fatih Birol Offers the World an Oil Health Check, and the prognosis isn’t good.

Every year the IEA publish their ‘World Economic Outlook’, which gives their assessment of where the world is in terms of oil and other energy supplies. Last year’s talked of a ’supply crunch’ in 2012. This years has been based on their going back to the data and reassessing the state of the world’s supply. What they have found has clearly shocked them, and already IEA Chief Economist Fatih Birol, a man with the perfect hang-dog glum expression to be breaking this news, is doing the rounds preparing people for the forthcoming report.

What follows is an interview he gave recently in International Politik, the Journal of the German Council on foreign Relations. If ever there was an example of a man with bad news to break breaking it in the most straightforward way possible and not mincing his words, this is it. Essential reading.

Schneider: So what is your conclusion?

Birol: I would be very surprised if the oil productions would effortlessly increase during the next 20 to 25 years to meet, lets say, 120 mb a day without any problems. Even if the potential should be there, we will not get this oil to the markets. The conclusion is that we have to be prepared to see very turbulent, tight and high prices oil markets - this will not be good for the economy.


Schneider: You already did ring the bell? When?

Birol: With the World Energy Outlook 2007. It was a clear signal to the governments of all our member countries. They take energy and oil security much more important than before, now. And when we present the WEO 2008 this November, I think it possible that the sirens will shrill even louder.

transitionculture

[TheDude]

5.4 trillion dollars to meet oil demand!

[Peakoilpost]

Still remember this quote from Birol, made in an interview with a British newspaper in march...

"We are on the brink of a new energy order. Over the next few decades, our reserves of oil will start to run out and it is imperative that governments in both producing and consuming nations prepare now for that time. We should not cling to crude down to the last drop – we should leave oil before it leaves us."

[Graeme]

Saudi Arabia Plans Increase in Oil Output

Saudi Arabia, the world’s biggest oil exporter, is planning to increase its output next month by about a half-million barrels a day, according to analysts and oil traders who have been briefed by Saudi officials.

The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom’s highest ever. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have sparked demonstrations and protests from Italy to Indonesia.

Saudi Arabia is currently pumping 9.45 million barrels a day, which is an increase of about 300,000 barrels from last month.


Saudi Arabia is completing a huge expansion program in its oil industry that is expected to bring its production capacity to 12.5 million barrels a day by 2009. As part of that expansion, Saudi Aramco, the country’s national oil company, is planning to start up soon a new oil field, called Khursaniyah, with a daily production rate of 500,000 barrels.

The production increase could be made public next week at the energy meeting, which is expected to bring together a large number of consuming and producing countries, including the United States, Russia, Britain, China, India and Japan.

nytimes

[DantesPeak]

It's still not clear when the Khursaniyah field will be ready to come on line. Apparently this is where the extra 500,000 bpd will come from.

According to industry reports within the last two weeks, only a portion of the gas processing that goes with the Khursaniyah field is near completion. While I am not an expert on the technical aspects of refining oil and seperating gas, it appears doubtful the Saudis could ramp up production at the new field very fast - although they probably could start up at a slow rate if they have not already done so.

Please also note that the much proclaimed 'announcement' the other day that the Saudis will produce 9.45 mbpd in June was actually previously announced on May 22.

They are getting a lot of mileage out of announcing the same thing over and over. Hands off to their Ministry of Propaganda.

5/22/08 Platt's Oilgram Price Rep. 13

Platts Oilgram Price Report

May 22, 2008

Volume 86; Issue 99




The Saudi minister, who is now serving his fourth term in office, said last week that the kingdom had raised its production by 300,000 b/d from May 10 in response to customer demands for additional oil (ON 5/19). In June, Saudi Arabia would be producing 9.45 million b/d.

The figure would put Saudi production above its OPEC target of 8.943 million b/d and confirms the oil giant's role as unofficial swing producer, able to step in and use its spare production capacity to make up for any shortfall on global oil markets.

Saudi Arabia has put its current crude capacity at 11.3 million b/d with an additional 500,000 b/d due to come on stream later this year from the Khursaniyah oil field development. It was not immediately clear if the OPEC kingpin would seek a higher output target when the cartel's ministers meet in Vienna September 9 and a Saudi source said it was too early to predict the outcome of the ministerial gathering.

"It is too early to talk about what we are going to do in the September meeting. All options are open. We will decide when we meet," the source said. "It all depends on what is happening in the market."

He added: "Our policy in Saudi Arabia for almost a year now is to give our customers whatever they want, to satisfy their need, provided they ask for the right type of crude."

Saudi Arabia had ramped up production during the first two months of the year to above 9.2 million b/d and expected output to rise again in the third quarter in response to higher demand for its crude after a small dip in March, he said.

[no link]

[KillTheHumans]

Saudi Arabia Plans Increase in Oil Output

Saudi Arabia, the world’s biggest oil exporter, is planning to increase its output next month by about a half-million barrels a day, according to analysts and oil traders who have been briefed by Saudi officials.

Saudi Arabia is completing a huge expansion program in its oil industry that is expected to bring its production capacity to 12.5 million barrels a day by 2009. As part of that expansion, Saudi Aramco, the country’s national oil company, is planning to start up soon a new oil field, called Khursaniyah, with a daily production rate of 500,000 barrels.

Impossible! We have respected, high credentially and incredibly bright web experts with no professional experience dealing with reserves, field operations or standard production practices, drilling practices, water handling, reservoir simulation, dynamics or engineering, phase behavior, lease or landowner issues declaring that Saudi Arabia is declining more than a year ago.

Stuart Hisself Said So!

I can only assume that the propaganda experts working for Saudi ARAMCO are at it again, all proof of ANOTHER peak in 1st Qtr 2008 aside.

PS: Those who don't understand sarcasm or appreciate the irony in yet ANOTHER peak date going down the tubes should immediately interpret my above statement as:

KTH with a grim face, studiously shaking his head in agreement with the obvious McDoom soon to arrive which this indication of the Saudi's doing EXACTLY what they said they would years ago will not forestall.

There...any better?

[DantesPeak]

Hey KTH, we were discussing what the Saudis were up to, in a much more civilized manner, in much greater detail, before you ever showed up here.


Saudi Production: Collecting the Data
http://www.peakoil.com/fortopic10918-0.html

Tue Aug 09, 2005 7:05 pm

You'll see my last post on March 5, the Saudis were still saying they'd bring Khursaniyah soon, but it wouldn't be ready in the first half of 2008.

Being you are telling us that you are more of an industry expert than all of us here, why don't you explain the techincal and infrastucture problems the Saudis have with this field, and when they will bring it on line.

[kjmclark]

SINGAPORE: Saudi Arabia may find itself unable to fully serve its crude oil customers in Asia, the most important market for Middle East producers, as refiners are reluctant to accept the grades being offered.

Asian refiners want increased supplies of the lighter grades of crude to produce more expensive cleaner-burning fuels while Saudi Arabia is offering more of the heavy, high-sulphur grades.

Gulf Times

Didn't they play that game last year as well?
"Here! Here is more crude!"

"But wait - this is sour heavy crude. We want light crude, not this sludge!"

"See? There is no demand for more crude on the markets! The markets are amply supplied! These prices are due to American speculators."

[DantesPeak]

SINGAPORE: Saudi Arabia may find itself unable to fully serve its crude oil customers in Asia, the most important market for Middle East producers, as refiners are reluctant to accept the grades being offered.

Asian refiners want increased supplies of the lighter grades of crude to produce more expensive cleaner-burning fuels while Saudi Arabia is offering more of the heavy, high-sulphur grades.

Gulf Times

Didn't they play that game last year as well?
"Here! Here is more crude!"

"But wait - this is sour heavy crude. We want light crude, not this sludge!"

"See? There is no demand for more crude on the markets! The markets are amply supplied! These prices are due to American speculators."

Last January, an increase in 'production' was actually just taking oil already produced from inventory.

As I said, only the Saudis can get away with calling draining down storage tanks as production. Again, hats off to them for getting the world to count the same output twice:

January 29, 2008
DJ OPEC Jan Output Trickles Up To 33M B/D, Enough For 2Q -Tracker


DUBAI, Jan 29, 2008 (Dow Jones Commodities News via Comtex) -- Crude oil production from the Organization of Petroleum Exporting Countries trickled higher in January, with the group's present output sufficient to meet its share of global oil demand in the seasonally weaker April-June period, tanker tracker Petrologistics said Tuesday.

Production from the group's 13 members was expected at 32.9 million barrels a day, 100,000 barrels a day higher than seen in December, the Geneva-based consultancy firm said.

Revised figures for Saudi Arabia show that OPEC's largest producer pumped 9.4 million barrels a day in January, 100,000 barrels a day below a revised December figure, Gerber said.

Saudi Arabia's sharply increased output since November is largely the result of the release of crude oil from stocks rather than an increase in production, he added.

"The Saudis have a lot of crude that's already been produced. December was the first time last year where they actually redirected from stocks," Gerber said.

[Cashmere]

They are getting a lot of mileage out of announcing the same thing over and over. Hands off to their Ministry of Propaganda.

That is the creepiest and freakiest Freudian slip I have ever read or heard.

[copious.abundance]

SINGAPORE: Saudi Arabia may find itself unable to fully serve its crude oil customers in Asia, the most important market for Middle East producers, as refiners are reluctant to accept the grades being offered.

Asian refiners want increased supplies of the lighter grades of crude to produce more expensive cleaner-burning fuels while Saudi Arabia is offering more of the heavy, high-sulphur grades.

Gulf Times

Didn't they play that game last year as well?
"Here! Here is more crude!"

"But wait - this is sour heavy crude. We want light crude, not this sludge!"

"See? There is no demand for more crude on the markets! The markets are amply supplied! These prices are due to American speculators."

The API of Khursaniyah is actually around 28-29, which is on the border between light and medium grade. So it's not really "heavy" oil. The sulfur content is about 2.8%, which is moderately high, but not the highest (source). So overall, this sounds like about "average" grade oil.

[KillTheHumans]

Being you are telling us that you are more of an industry expert than all of us here, why don't you explain the techincal and infrastucture problems the Saudis have with this field, and when they will bring it on line.

Are you kidding me? For starters, conventional oil is obsolete in a sense ( except for reserve growth, Laptev and perhaps the Arctic), its all about unconventionals baby...its where the technology will have maximum effect, its where lack of light/sweet drives capital investment, the sheer SIZE, its deep water and SAGD and horizontal wells and new stimulation technologies and making old borderline plays into new booms ( Bakken anyone? ).

I'll let you guys play "expert" in the conventionals, plus, its fun to watch when two experts, both misunderstanding the basics slam into each other and generate a new particle, like a nice "dieoff because" or a "it must all be about EROEI" or some such.

RocDoc seems to have geologic information pretty well covered in the ME, so I would defer to him, my concerns are much more domestic and international unconventional.

To be more explicit, I don't know diddly about the specifics of individual Saudi fields beyond minor items. But reservoir dynamics and behavior are the same on either side of the planet, all things being equal, so if you have specific reservoir engineering type questions, I'd be more than happy to chime in. The lower the permeability the better of course.

[DantesPeak]

If I understand this correctly, to put this bluntly, you are basically saying you don't have a clue as to what's going to happen with Khursaniyah.

[copious.abundance]

Some more info. More on the way.

--> Bloomberg <--

Saudi Arabia pumped 9.134 million barrels of crude a day last month, according to a monthly report from OPEC today, which cited ``secondary sources'' that include analysts and news agencies. The country's crude output was 9.25 million barrels a day in May, according to Bloomberg estimates.

The kingdom plans to increase its output capacity to 12.5 million barrels a day by 2009 to help meet global demand.

Aramco is seeking to add 1.2 million barrels a day of Arabian Light from the Khurais field by 2009 and 250,000 barrels a day from Shaybah, it said in its annual report last month. The Shaybah increase is expected this year.

The Manifa project will add 900,000 barrels a day of heavy crude from onshore and offshore fields in the Persian Gulf from mid-2011. The Nuayyim field in central Saudi Arabia is scheduled to add 100,000 barrels a day of Arabian Super Light by 2008, according to Aramco.

[bkwillia]

Saudi Aramco does not talking about natural decline in its older wells. Adding new production is only half the story. At 3-5% natural decline, SA needs to bring online 300-500 thousand bbl/day just to maintain even production this year.

[KevO]

Praise be to Allah!

SA will save the day. They are the masters.
The rest of us their puppets.

Shame there going to give it all to China though

[kjmclark]

The API of Khursaniyah is actually around 28-29, which is on the border between light and medium grade. So it's not really "heavy" oil. The sulfur content is about 2.8%, which is moderately high, but not the highest (source). So overall, this sounds like about "average" grade oil.

Sure, but I don't see any announcements that all of the 500,000 bpd increase will be solely from Khursaniyah's average crude. Do you?

Is there anything stopping the Saudi's from adding 50,000 bpd of Khursaniyah oil and 450,000 of existing heavy crude that refiners have already said they don't have the capacity to deal with and calling it a 500,000 bpd increase?

My hat's off to you if you really know the profile of this "new" Saudi production before it comes on the market. I'd just as soon be skeptical until it gets to customers.

[Niagara]

What happens if KSA actually does increase production by 500,000/day but the markets aren't calmed?

Then what?

[KevO]

What happens if KSA actually does increase production by 500,000/day but the markets aren't calmed?

Then what?

It's like aging. We can go the gym, run about parks like twats, bo tox, liposuction- whatever inevitability staving off one does and you still get old.

We're fucked, we just don't know it yet

[EnergyUnlimited]

We're Fark, we just don't know it yet

You mean Farked, I suppose.