[M_B_S]

http://www.arabtimesonline.com/NewsDeta ... fault.aspx

Saudi oil min says US shale oil helps keep markets stable
Kingdom welcomes new source of energy supplies

KHOBAR, Saudi Arabia, Jan 19, (RTRS): Top oil exporter Saudi Arabia welcomes the surge in US shale oil production for its stabilizing effect on crude prices, Saudi oil minister Ali al-Naimi was quoted as saying on Sunday after a meeting with US Energy Secretary Ernest Moniz.....


Naimi was quoted by Saudi state news agency SPA as saying after their meeting in Riyadh. “The kingdom welcomes this new source of energy supplies that contribute to meeting rising global energy demand and also contribute to the stability of the oil markets.”
*************************************************

So if its true, the Saudis declare that they are pumping @ limit (Peak) and could not feed the future oil demand.

The swing producer is dead.
q.e.d.

PEAK OIL

M_B_S

[rollin]

Pushing a field too hard for increased production can ruin it. The Saudis are experts in petroleum and are quite happy to extend the life of their fields. They are also shifting away from oil for internal use so I think BP has it's head in the sand. If the Saudi's say they can reach 12 million bpd, they probably can but there is no gain for them, they can wait for higher prices.

I would also like to know where that BP prediction of 109 million bpd is going to come from. That is four or more Saudi Arabia's coming on line to counteract declining fields and add more flow. Pie in the sky.

The article is good for one thing, lining the bottom of a bird cage.

Regular gas at $3.159 in my area today.

[Ron Patterson]

If the Saudi's say they can reach 12 million bpd, they probably can but there is no gain for them, they can wait for higher prices.

Whatever gave you the idea that the Saudis "probably" are telling the truth. Occasionally they do tell the truth but it is usually a slip of the tongue when they do. On the second page of this article they make such a slip:
From the New York Times
http://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growing-again.html?_r=1

“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.”

That was a year and a half ago. Saudi was producing flat out then and they are today. Their old super-giant fields are in steep decline but they have managed to keep production up by bringing one new field, Shaybah, and two old mothballed fields, Khurais and Manifa. And they are trying desperately to squeeze more oil out of Ghawar:
Saudi Aramco to use CO2 to boost Ghawar oil field output by 2013
http://www.arabianbusiness.com/saudi-aramco-use-co2-boost-ghawar-oil-field-output-by-2013-383900.html

Saudi Aramco plans to start by 2013 injecting carbon dioxide to boost production at its Ghawar oil field, the world’s largest, the company said.

And if that plan fails they have a back-up plan:
Aramco boosts drilling in seismically tough Red Sea
http://gulfnews.com/business/oil-gas/aramco-boosts-drilling-in-seismically-tough-red-sea-1.537285

Aramco is seeking reserves in anticipation of global economic growth and increasing demand for oil. The Red Sea is two kilometres deep in places with a 7,000-foot thick salt sequence which can distort seismic images, according to the magazine.

They are looking for more oil under two kilometers of water and 7,000 feet of salt. That has to be extremely expensive. Sounds to me like they are getting desperate.

[ROCKMAN]

Interesting that one man’s “oil glut” can be looked upon as another man’s “gap filler”. I’m referencing today’s
Peak Oil News lead story. As I commented there:

Let’s imagine an excess of production capability by the KSA (whatever it might true be…or not) beyond which there are no buyers at the current price. That doesn’t automatically translate to a coming “glut” or lower oil prices. A glut is when there aren’t enough buyers for the oil OFFERED to the market place. With the exception of the KSA all the oil exporters are currently selling every bbl the can produce. Maybe the KSA has some spare capacity…maybe not. If the new shale trends in the US and elsewhere did add significant volumes to the global market the KSA wouldn’t have to reduce their price to maintain market share. For every bbl of “glut oil” they only need to withdraw one bbl of their oil from the market place. That would obviously mean a decrease in their cash flow. Which is exactly what they didn’t do in 1986 when they flooded the world with their oil.

But this isn’t 1986. The KSA oil income has increased from $60 billion/year to almost $350 billion/year in recent times. They could pull 10% of their production off the market if they had to in order to keep prices where they are today. So their income would drop to $315 billion/year…still 500%+ more than they were pulling in 10 years ago. Drop production 30% (almost 3 million bbl/day) and they would still be collecting 400% more than just 10 years ago. And at the same time keeping oil in the ground that will obviously have significant future value in a PO world. But it wouldn’t be a complete net loss in revenue: the KSA currently has hundreds of $billions earmarked for efforts to help maintain current production levels. Choke their wells back and at least some of those new projects can be delayed. Bottom line: I think the kingdom’s message about price stability is the important take away: even if they gave up a bit of cash flow I’m pretty sure they’ll be happy if the can continue making several hundred % more than they were not too long. That’s an attractive stability IMHO. I doubt the KSA would be content to see oil back down in the $20-$30 per bbl range.

And folks should remember that every year the KSA is pulling an increasing amount of their oil from the global market place. Remember the ELM: Export Land Model…the internal consumption of their own oil. Consider the Chinese/KSA refinery JV on the Red Sea. That plant will crack 600,000 bopd. That’s 600,000 bopd of KSA oil. That’s 600,000 bopd of KSA oil that will be withdrawn from the market place the day that refinery goes on line. How many new Eagle Ford well will have to be drilled every year for the NEXT 30+ YEARS to just replace this oil let alone increase the net supply in the market place? And the Red Sea refinery JV isn’t the only project that will remove a certain amount of current production from the market place.

A glut isn’t defined as more oil production capability then buyers. It’s when there is more oil OFFERED for sale then there are buyers. And that offered volume appears to be completely in the control of the KSA. IMHO the Chinese, the KSA and a few others in the global market place are playing chess while those smiling over the prospect of an “oil glut” are playing checkers.

[mburrow]

There is no entity that will be able to fill the oil gap. Even if the Canadian sands help to delay the inevitable for a handful of years, the reality is that we will be unable to fuel jet aircraft within 50 years. No amount of oil shale, natural gas, biomass, (or the potential access to methane clathrates) will be able to take the place of clean Jet A (or Jet B for that matter). Without clean fuel the world economy will ebb and we will not be able to jump from place to place with the ease to which we have become accustomed.

Many of my colleagues in the oil and gas business hold that we will find a solution within the next 20 years. I sadly have to chuckle at their unbridled optimism. Even the most aggressive projections tend to estimate that we will run out of sweet crudes within 30 years. The rest of the reserves will require the mitigation of asphaltenes, organic resins, unbreakable emulsions and sulfur-bearing molecules just to be amenable to use for heating and power generation.

That said, the Fischer-Tropsch holds some promise. However, the generation of fuel from this process is not favored thermodynamically and must be driven by higher temperatures and/or better catalytic systems. In the long run we would all be best served if we focused the academic and industrial efforts on the development of better catalysts - especially those that are not easily "poisoned" by sulfurous molecular compounds.

Regardless, the era of cheap and easy is over. We can only hope that those with the vision and resources to invest in new processes and chemistries will do so. Unfortunately, those with the resources to do the right thing believe that their money is their's alone and someone else will have to pay. While I don't want to sound petty, our children's children may have raid the wealthiest among us in order to burn their Benjamins just to stay warm...

[ROCKMAN]

burrow – Well said. I’ll just pick on you over one of my perpetual pet peeves: “the era of cheap and easy is over.” I’ve been hunting for oil for almost 4 decades. It has never been easy. A vast number of dry holes were drilled looking for all those big legacy fields we have today. But with the technology we have now it’s never been easier to find and produce hydrocarbons. Success rates today are much higher than when I started in 1975. But THE problem is that there isn’t much left to find.

As far as “cheap” the world should pray it never see oil under $15/bbl again. The last time this happened in the mid 80’s when demand was crushed by a devastating global recession which produced great pain for countless millions on the planet.

But, as I said, very nice post. We need to hear more from such astute folks.

[ROCKMAN]

Good ole Matt had his good days and his bad days. I only met him once and that was just before he slipped into some of his bad day right before the end. Wish I had met him when he was at the top og his game.

[mburrow]

Dear Rockman: I may have understated the reality by my comment of cheap and easy is over. I wholeheartly agree that our earlier efforts were much more trouble-prone and therefore far more difficult than the situation we enjoy today. I come from the hard rock mining environment out in Nevada and we are still limited to drilling holes in order to determine both the viability of the the deposits and direction of the ore "trends". It is not disimilar to the dry holes of which you speak in that much work is done without success. So please don't take my comment as more than a passing comment leading into my closing paragraph.
That said, even with the use ground penetrating radar, evaluation of gravitational annomalies, among other techniques beyond our conversation their use has not improved our overall success rate in finding oil in quantities that will make a meaningful impact in helping us cover the growing "burn" rate. Even if we could, India, China, et al. will continuing to consume it as the attempt to both grow their economy and the living conditions. So even with the most modern techniques, cheap and easy will never be the case.
Finally, I am interested in your input on the F-T synthetic processes. This is one of the few options with promise and yet it is only rarely mentioned in the greater conversations. I know that the use of esterified biological acids with alcohols holds promise, but burning food for energy seems wasteful. If you had your druthers which is the option you would prefer looking ahead. Please include any other options not mentioned herein. Thanks...

[ROCKMAN]

mburrow - I think you understand how I look at the situation. I suspect you drill your pilot holes at least as easy as you've done in the past...maybe even more efficiently now. So It's easier for you to explore for your minerals today. But as you point out it's more difficult to find commercial grade ores. Same with me. But I suspect if you could dig up some old hard rock geologist that trekked by foot through the jungles 60 years ago and told him he had been finding the "easy deposits" in his day he would slap you upside the head. LOL.

What's "F-T"? I guessing synthetic fuels.

[mburrow]

Rockman: The Fischer-Tropsch synthetic process involves using carbon oxide and hydrogen (and/or methane in certain cases) to form gasoline and kerosene-type products. The problem with the process is the heat input involved is relatively high to force the reaction forward. Furthermore the catalytic systems are readily disabled by a number of compounds that would come (especially) from coal gasification. Currently Sasol and Shell have plants in operation - but as far as I know we don't have any meaningful operations. I'm just looking for input from an expert petro man on your interest in this type of operation.

P.S. The ore that we are using in the Nevada mines are in 3-15 ppm range thus requiring about 12-15 tons of raw ore to generate one 80% bar of gold (contamination of silver and other transition metals are a problem). That makes the work more speculative (and expensive) since small variances from the best path can cost millions. Anyway, just a note for your edification...

[ROCKMAN]

Burrowing man - F-T...of course. Haven't chatted about that for a while. Boy are you sniffing around the wrong bush. LOL. I an far away fro those down stream methods. I just deal with Mother Earth's pure products like oil and NG. The way Dog meant us to use hydrocarbons. LOL. But I'm sure we have some smarties here that can weigh in on the subject.

Your low quality ores...just like our Eagle Ford wells. But to just beat that dead horse some more: our Eagle Ford wells are "easy" to drill. So they produce "easy oil". Is it more difficult to grind up your low grade ores then the rich ones? Probably not...so you're mining "easy ore". Just have to grind up more of it which costs more money. Just as we have to spend more money to produce our easy oil.

[Serial_Worrier]

Regardless, the era of cheap and easy is over. We can only hope that those with the vision and resources to invest in new processes and chemistries will do so. Unfortunately, those with the resources to do the right thing believe that their money is their's alone and someone else will have to pay. While I don't want to sound petty, our children's children may have raid the wealthiest among us in order to burn their Benjamins just to stay warm...

So what? Life isn't cheap & easy. It's time to buck and adapt to the new energy realities. It hardly means TEOTWAWKI or other doomsday scenarios. My god, you preppers.