The topic of Saudi oil is running on another list with the subject line:
Saudi Arabia Plans to Boost Output Capacity 40% by 2009 - Al Naimi
Which gave me a laugh like I haven't had since.... 1972/73... when the
US became a net importer of oil.
Here's my response, slightly reworded for clarity,
<...>
I posted a while back on Russia's oil fields. I'm away from my
computer, but I'll repost it later.
The article, if you interpolate, leads one to believe the average
water cut of a Russian well is in the 90% range. Stunning if true.
But the Saudis... The Saudis flood the market with oil-in-storage, not
wellhead
production, and the oil-in-storage costs lots of money to keep around,
so it's
another part of the economics of what oil is worth to them at any given
time, and
gives them the ability to control a 'lever' of the world's oil pricing
mechanisms by
flooding the market with the stored oil without affecting production.
However, they are bluffing about a 40% production increase at the wellhead
That'ss not do-able for any nation I can think of, unless OPEC, or
the Saudis unilaterally change the way they calculate bbls of oil at the
wellhead.
That would have an interesting effect on the veracity of the
world's oil markets and make headlines if it occured.
The oil companies tried that trick with their so-called 'proven
reserves' a few years ago... no one believed it, and after a while
they were forced to re- re-state their production.
Iraq's oil production increased about the same amount overnight, on
paper, even as the International community was engaged in a boycott
of Iraqi oil that included *anything* material that could possibly be used
to increase production capacity.
Or the Saudis *could* buck the trend of worldwide depletion that's
continued unabated for decades if you calculate by anything other than
the preliminary exploratory claims on small test drilling voperations.
IOW, I'm saying the Saudis are lying through their teeth.
Leigh
RUSSIA - Damaged Fields.
Date: 8/14/2006;
Publication: APS Review Gas Market Trends;
Over-production in many oilfields has caused reservoir damage in recent
years. In many cases the damage has involved quasi-systematic water
injection systems installed in the 1980s. Employed in western Siberia
since the beginning to boost output to maximum levels quickly, this has
resulted in an increasingly large water cut.
By 1990, the water cut in the whole of Russia had reached 76%, up from
about 50% in 1976. The share of oil produced from free-flowing wells had
dropped from 51.8% in 1970 to only 12% by 1990 and 8.4% by 1999.
Modern tertiary recovery techniques will be required to maximise
reservoir drainage as well as reservoir formations and treatment in less
permeable reservoirs.
The maturity of the Russian basins has been reflected in the low average
flow rate of wells: 7 tons/day in Russia versus 243 tons/day in the
Middle East and 143 tons/day in the North Sea. This has raised two
questions: how much of the recent oil production increases have been a
"low-hanging fruit", and will this strong growth be sustainable?
A new oil basin with reserves similar in size to those of western
Siberia does not seem to be on the horizon. In the short term,
therefore, Russian oil output hinges mainly on how long western
Siberia's current plateau of 200-220 tons/year can be maintained. Better
reservoir management and development of small and difficult fields could
attenuate the depletion factor. Production costs and international crude
oil prices are crucial in this respect.
The medium-term outlook will depend on how fast new reserves can be put
into production in less mature provinces, such as Timan-Pechora in the
far north and Sakhalin in the far east. In the long term, new provinces
such as east Siberia, the Pechora Sea or the Russian sector of the
Caspian Sea could make sizeable contributions to the overall production
profile.
Thus the medium-term outlook will depend on Russia's ability to attract
longer-term investments. This means there should be credible fiscal and
legal reforms to guarantee and attract investments as well as advanced
technology, and not simply ride the wave of higher crude oil prices and
rouble devaluation.
--30--
John Gulick wrote:
Doug said:
"I'd like to see cheap oil again only to shut up the peak oil types!"
Gulick sez:
Indeed, many a peak oil type is a wingnut, or a gun nut, or a
Malthusian misanthrope, or some other odious and undesirable
species... but IMO, you lean too heavily toward the "denialist" side
of things.
Please explain the many decade trend of a worsening reserve/discovery
ratio. I'm all ears.
The sober peak oil types -- not the ones who are frontmen for the
Houston energy industry set (like Matt Simmons?), and not the types
adumbrated above -- that is, the eminent energy economist types
(there's a really reliable chap by the name of Alfred Cavallo at
Princeton), foresee non-OPEC peak in about five years' time, and
global peak in about ten. Is that unreasonable?
[Incidentally, that's when we're due to cross the 300ppm thresshold
for CO2 in this atmosphere... unless this freaky winter (including
here in northwestern Honshu) is telling us that said moment will
arrive a little sooner that previously thought.]
Balls to the wall pumping in Saudi Arabia, in order to undercut Iran
(and possibly Russia and Venezuela per the US State Department's
wishes), is only going to radically hasten the day of peak production
in the kingdom, since it will damage the underground reservoirs to a
degree that a go slow approach would not.
Anyway Doug, on the one hand you get that gleam in your eye at the
prospect of peak oil creeps getting their comeuppance... but I've
seen you make the "the sooner the better" case in other contexts, in
the interest of keeping us from drowning or frying. Your wishful
thinking one way, then the other, is giving me whiplash! :)
John Gulick Akita, Japan
PS BTW, your playing of Sonic Youth's "Expressway to Yr Skull" on
your show recently had me downloading the track within five minutes,
and repeating it, oh, a dozen times in a row. KILLER tune. Your Voice
plaudits are well-earned!
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