Tag: Saudi Arabia

A Closer Look at Saudi Arabia

Ron Patterson 187 Comments

A press release from The Carbon Capture and Sequestration Technologies Program at MIT,  December 6, 2013, Bold mine.

Uthmaniyah Fact Sheet: Commercial EOR using Anthropogenic Carbon Dioxide
Company/Alliance: Saudi Aramco
Location: Saudi Arabia
Start Date: 2013/2014
Size: 0.8 Mt/yr
CO2 Source: Hawiyah gas plant
Transportation: 70 Km onshore pipeline
Oil Field EOR Storage Site: Ghawar field
Reservoir Type: Jurassic Carbonate limestones
Comments:

The objectives of the project are determination of incremental oil recovery (beyond water flooding), estimation of sequestered CO2, addressing the risks and uncertainties involved (including migration of CO2 within the reservoir), and identifying operational concerns. Specific CO2 monitoring objectives include developing a clear assessment of the CO2 potential (for both EOR and overall storage) and testing new technologies for CO2 monitoring.

Approximately 60–65% of all Saudi oil produced between 1948 and 2000 came from Ghawar. Cumulative production until April 2010 has exceeded 65 billion barrels. It was estimated that Ghawar produced about 5 million barrels of oil a day (6.25% of global production) in 2009. Ghawar also produces approximately 2 billion cubic feet of natural gas per day.

After 60 years of production, the field is depleted and Saudi Aramco is going to start CO2-EOR. The project will consist of 4 injection wells, 2 observation wells and 4 productions wells.

Is there any doubt anymore whether or not Ghawar is depleted? 2009 is likely the year when production began to fall fast in Ghawar. But it was already falling prior to that.

A bit of history. Three oil fields, discovered decades ago, were held offline because of economic and and other problems.

Shaybah: Discovered in 1968 but due to its remote location was not brought online until 1998 at 500,000 bpd. It was upgraded in 2009 and increased production to 750,000 bpd.

Khurais: Discovered in 1957 and brought online in 1959 and shut down in 1961 due to low production and remote location. It was brought back on line in the early 1970s. Khurais produced 144,000 bpd in 1981 but dropped off dramatically in 1982. Gas re-injection attempts to increase production failed and the field was shut down a short time later due to almost no natural pressure. In 2009 a new massive water injection program began with the injection of over 4 million barrels of water per day brought the field up to 1.2 million barrels of crude oil per day.

Manifa: Discovered in 1957 but shut down almost immediately because the oil was extra heavy and contaminated with vanadium. But Aramco built their own refineries to handle the oil. The field was put on line in April 2013 and was producing 500,000 bpd and will be producing 900,000 bpd in 2014.

It is these three fields that has kept Saudi production near 10 million barrels per day. But there are no more old fields to be brought on line. From here on out Saudi must rely on the fields it has.

Saudi Arabia

Okay, we know that Ghawar is depleted and in serious decline. But so is Safaniya, Abqaiq, Berri, Abu-Safah, Qatif, Zuluf, Marjan, and all the smaller fields in Saudi Arabia.

Saudi has three fields with a combined production of 2.8 to 2.9 million barrels per day that are not in decline. Everything else is seriously depleted and in serious decline. Matt Simmons, Twilight in the Desert Stuart Staniford, A Nosedive Toward the Desert and Chip Haynes Ghawar is Dying, were all absolutely correct… they were just all premature with their prognostications. They had not counted on Khurais and Manifa.

Saudi is diversifying, making preparations to increase their finished product income when oil production declines: Change is coming to Saudi Aramco, the state oil company

Time was when Saudi Aramco didn’t need to worry much about its ability to deliver all the oil needed to maintain Saudi Arabia’s share of the global market…

A quick glance at Aramco’s 2013 Annual Review, published last week, is enough to convince anyone that change is in the wind for the flagship Saudi state-owned enterprise.

“We have embarked on ambitious corporate transformation guided by our Strategic Intent, our overall vision for Saudi Aramco through 2020,” the review states.

 “These advancements will not only ensure that Saudi Aramco remains a global leader in crude oil and NGL production and exports, but will also propel us into the top tier of chemicals companies worldwide and reaffirm our commitment to the Kingdom’s future in a rapidly changing world.”
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How Soon Will the World Oil Production Peak?: A Hubbert Linearization Analysis

Ron Patterson 255 Comments

This is a Guest Post By “Political Economist”

In this informal paper, I conduct Hubbert Linearization exercises on the world’s 11 topoil producers as well as the rest of the world. The results are used to project the world oilproduction in the future. The evidence presented in this exercise suggests that the world oil production may peakin 2018 or a few years later.

Hubbert Linearization

Hubbert Linearization (first developed by M. King Hubbert) is a statistical techniqueoften used in the peak oil literature. Hubbert Linearization assumes that oil production rises and falls following a pattern thatcan be described by a logistic function:

Q(t) = URR / [1 + EXP (a(Tpeak-t))]

Q(t) is the cumulative oil production up to year t, URR is the ultimately recoverable oil resources, EXP represents the natural exponential function with the Euler’s number “e” being the base, “a” indicates the intrinsic growth rate of the logistic function, Tpeak is the year of peak oil production, and “t” is the current year.

If one takes the derivative of the above equation with respect to “t”, the above equation can be reduced to: dQ/dt = aQ(1-Q/URR) Replace dQ/dt with P (current annual production) and divide both sides by Q:

P/Q = a – (a/URR) Q

If one uses historical data to conduct a linear regression of P/Q over Q, one can solve the two parameters: “a” and “a/URR”. URR (the ultimately recoverable resources) would be solved accordingly. The peak year could in turn be solved.

If one has historical data, Hubbert Linearization is relatively simple and straightforward. But the method has important limitations. Most importantly, it cannot predict future technical changes that will change the amount of recoverable resources. In many cases, the results of Hubbert Linearization are sensitive to the time period used for regressions. The selection of time period often depends on subjective interpretation of available data.

Nevertheless, Hubbert Linearization does reflect the outcomes of historical interactions of geological, economic, geopolitical, and technical factors as well as their evolving trends. When used carefully in combination with other available information, it can provide useful insights into the future trajectory of world oil production.

The World’s Largest Oil Producers

This paper uses BP’s definition of oil production, which defines “oil” as the sum of crude oil and natural gas liquids. The data are mostly from BP Statistical Review of World Energy, extended to 2013 using EIA’s International Energy Statistics.

By this measure, the world’s eleven largest oil producers in 2013 (ranked by their oil production) were Saudi Arabia, Russia, United States, China, Canada, Iran, Iraq, United Arab Emirates, Kuwait, Mexico, and Venezuela.

In this paper, all oil production statistics are stated in million tons. For a rough conversion, 50 million tons of annual oil production roughly equals 1 million barrels of daily production.

Figure 1
pefig/

Figure 1 shows the oil production of the eleven top producers as well as the rest of the world. From 2005 to 2013, the world’s total oil production increased by 192 million tons. Saudi Arabia’s oil production increased by 19 million tons, the Russian oil production increased by 57 million tons, the US oil production increased by 139 million tons, China’s oil production increased by 28 million tons, Canada’s oil production increased by 52 million tons, Iran’s oil production fell by 40 million tons, Iraq’s oil production increased by 66 million tons, the UAE oil production increased by 19 million tons, Kuwait’s oil production increased by 23 million tons, the Mexican oil production fell by 44 million tons, Venezuela’s oil production fell by 30 million tons, and the entire rest of the world’s oil production fell by 97 million tons.
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OPEC Update, March Crude Production Data

Ron Patterson 23 Comments

The new Opec Monthly Oil Market Report is out with the March OPEC crude only production data. OPEC crude only fell by 626 kb/d and that was after February production was revised up by 121 kb/d. Big changes were Iraq, down 288 kb/d after February was revised up by 84 kb/d. Angola was down 154 kb/d.

OPEC 12

Iraq is back to the same levels it reached in September of 2012. But Iraq is scheduled to increase production. West Qurna-2 is starting to ramp up. It is supposed to be producing 400 kb/d by the end of the year. I really doubt that it will get to those levels by then but it will definitely add to Iraqi production.

Iraq

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Can we depend on a “Call on OPEC”, or has OPEC peaked?

Ron Patterson 278 Comments

Steve Kopits, in his recent presentation at Columbia University, ridiculed the IEA’s often used term a “Call on OPEC“. That is, the IEA looks at the world oil supply and if they see a supply shortage looming on the horizon they then issue a “Call on OPEC” to supply x number of extra barrels and fill that gap. But the next time the IEA issues such a call can OPEC deliver? Or, is OPEC already producing every barrel they possibly can.

One thing for sure, there are eight OPEC countries that are definitely producing every barrel they possibly can, those countries are Algeria, Angola, Ecuador, Iran, Libya, Nigeria, Qatar and Venezuela. The chart below is the combined production of those 8 nations.

All charts in this post are “Crude Only” in kb/d with the last data point Jan. 2014.

OPEC 8

There can be no doubt that all eight of these OPEC countries are producing every barrel they possibly can. While it is true that Iran and Libya have political problems that is holding their production back, but political problems in that part of the world are likely to get worse rather than better.

But what about the other four OPEC nations. The chart below shows the combined production of Iraq, Kuwait, Saudi Arabia and the UAE.

OPEC 4

It is my contention that not only are these four OPEC nations producing every barrel they possibly can but that they have little prospect of producing much more. I will examine each country one by one.

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