[Mavrkamag]

Hi all,

I have a question concerning the adjustment of oil production/extraction. How fast can the amount of extracted oil / day be adjusted? Say, the company sees unfavorable demand/volatility or whatever and wants to reduce or increase production. How long would it take to change the production rate? I mean what would be reasonable to assume from a technical viewpoint (1 month lead time maybe?).
I am asking because I really couldn't find anything related on the web and wanted to do some regressions of oil production on some other variables. Maybe you can help me out.

Best regards,

[Pops]

Mave, I'm no expert but looking at a plot of KSA production should give you some idea.

[SeaGypsy]

Scaling up to signals is another world to scaling down. The way most primary industry contracts are written amounts to- you help us make money and while we are making money you will make money; we stop making money, it's shut down, lights off, time to look for another job. Extractive set ups are always built around assumed price parameters, primarily likely fetch price, then likely inputs, with a range of tolerances built in. When prices exceed expectation and costs are within budget, everyone is happy, when the reverse happens- shut down operations ensue.

(Pops is teasing you perhaps the bot seeming name? Just overlay a given commodity price with a given production 'response' and there's your answer.)

[Pops]

KSA regularly "turns on/off" 1-2.5Mbl/d and it doesn't necessarily relate to well numbers - or at least rigs in this chart from Staniford.

Or am I answering the wrong question?

[Ron Patterson]

Last summer Saudi along with every other OPEC country, was producing flat out. Then they began a gradual decline of about 200 kb/d over four months. Then they, I believe, cut production by about about half a million barrels per day. They were not producing flat out so there was no way to tell how much they were actually declining.

Then early this year, they brought Manifa on line. Production has increased almost half a million barrels per day since January. They are now at 9,575,000 barrels per day. Their actual production capacity, if any, is a closely guarded secret. Everyone, including the IEA and the EIA, are just guessing as to what Saudi could actually produce if they were to ramp up to full capacity. My guess is they are within half a million barrels per day of full capacity.

All other nations, and all major oil companies, are producing flat out though there are some political restrictions in a few places like Iran, Libya and a few other places. So no one, with the possible exception of Saudi Arabia, could adjust their production rate upward. http://peakoilbarrel.com/

[John_A]

Last summer Saudi along with every other OPEC country, was producing flat out. Then they began a gradual decline of about 200 kb/d over four months. Then they, I believe, cut production by about about half a million barrels per day. They were not producing flat out so there was no way to tell how much they were actually declining.

Then early this year, they brought Manifa on line. Production has increased almost half a million barrels per day since January. They are now at 9,575,000 barrels per day. Their actual production capacity, if any, is a closely guarded secret.

Then how do we know that last summer they were producing flat out? Without knowing the production capacity, it doesn't seem likely anyone can say "flat out" at all?

[Ron Patterson]

Then how do we know that last summer they were producing flat out? Without knowing the production capacity, it doesn't seem likely anyone can say "flat out" at all?

If everything is a state secret, like it is in most OPEC countries, then there is no way we can know anything. All we can do is observe their actions. They are increasing their rig count. Their rig count is set to hit 200 this year, up from 133 at the end of last year. They are trying to inject CO2 into Ghawar to enhance production. They are sounding in the Red Sea, under deep water and 7,000 feet of salt.

However every once in a long while, a Saudi official slips up and tells the truth:
http://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growing-again.html?_r=2&
On page two of this New York Times article we get:

“This is strictly, totally business,” said Sadad Al Husseini, a former executive at Saudi Aramco, the state oil company.
“Saudi production is flat out. Where you send it is a matter of where you make the best profit.”

And that statement was made... drum roll please... last summer.

[TheDude]

Sadad doesn't toe the party line, to say the least. Good for him.

Official definition of what the OP's talking about: "EIA defines spare capacity as the volume of production that can be brought on within 30 days and sustained for at least 90 days. Saudi Arabia, the largest oil producer within OPEC and the world's largest oil exporter, historically has had the greatest spare capacity. Saudi Arabia has usually kept more than 1.5 - 2 million barrels per day of spare capacity on hand for market management."

U.S. Energy Information Administration (EIA) on OPEC/Market Prices.