Saudi Production Profile
Guest post by David Archibald
World conventional oil production peaked in 2005 and has been on a plateau at about that level ever since. This graph suggests that the market changed from inherent over-supply to inherent tightness in June 2004:
Figure 1: World Oil Production and Oil Price 1994 – 2011
World conventional oil production will at some stage tip over into decline. That may be this year or it may be as late as 2015. The decline in US production began over four decades ago in 1970, as predicted by King Hubbert in 1956.
The next big one to tip over into decline will be Saudi Arabia. In determining what that will look like and its consequences, the first thing to do is a logistic decline plot of Saudi production history. Figure 2 shows the result:
Figure 2: Saudi Arabia Logistic Decline Plot
Figure 2 shows that the Saudis have produced about half of their ultimate recoverable reserves. When half of a nation’s oil has been depleted, production rate decline is inexorable. From this plot, total ultimate recoverable reserves for Saudi Arabia are estimated to be 275 billion barrels. From this plot, Saudi Arabia is on the cusp of decline. So what will that decline look like?
Figure 3: Saudi Arabia Conceptual Crude, Condensate and Natural Gas Liquids Forecast
This figure was produced by Euan Mearns in 2008. The red volume on the bottom right is the Ghawar Field and the green is the rest of the heritage super giants. The steep fall in projected Ghawar production from about 2012 would be due to an expectation that the field is watering out on its crest as shown in this figure:
Figure 4: Two cross sections of a reservoir simulation of the northern part of the ‘Ain Dar region of the Ghawar Field
Figure 4 shows the progressive displacement of oil by water over the sixty years from 1940 to 2004. SW is water saturation. The reds are high oil saturation and the green shows where oil saturation is now down to about 50%. To recover further oil from the green areas requires enhanced oil recovery (EOR) tehniques such as carbon dioxide injection.
Figure 5: Regional cross section through the Ghawar Field
This figure is from the American Association of Petroleum Geologists. The Ghawar Field is developed from a north-south trending horst block. It is 174 miles long by 16 miles wide. The producing horizon is the Arab D reservoir at about 7,000 feet.
Figure 6: Saudi Arabia Production Profile 1938 – 2040
From the foregoing, Figure 6 shows the production profile generated for Saudi Arabia. The production decline is 3% per annum which amounts to about 300,000 bopd per annum from the current level. The world can cope with that, but will the Saudis?
Figure 7: Saudi Arabia Population 1960 – 2040
Back in 1960, there were only about 4 million Saudis, now there are 27 million with population growth at 2.4% per annum compound. So, if the current trend continues, there will be 50 million of them by 2040. With population rising at 2.4% per annum and production falling at 3% per annum, we are starting with a net 5.4% per annum contraction in per capital oil production. The effect of that is captured by Figure 8 following.
Figure 8: Saudi Arabia cash available per capita
The forecast in Figure 8 is based on the oil price running up to $200 per barrel by 2018 and then plateauing at that level. The Saudi Govt increased social welfare payments in response to the Arab Spring. As a consequence, their budget is just about break even at the current oil price. If social outlays aren’t increased further, they pontentially have a lot of cash to play with for the next eight years or so, though they are also propping up Yemen with whom they share a land border. The crunch point is reached about 2026 when income falls below constant per capita outlays. As a society and as individuals, Saudis will then find their standard of living falling by 7% per annum compound. None shall weep for them.
Why would the Saudis explore when they don’t have to? If information leaked about them finding more reserves that would negatively influence their profits. Being just at the cusp of not being able to meet oil demand is the sweet spot for crude pricing after all.
Peak Oil proponents always bring up the domestic (USA) oil production peak in the 1970’s but they conveniently overlook the energy policies in place at the time. Remember the Carter Administration? Remember the windfall profits tax? Remember the heavy regulation of the oil industry?
Besides, we’ve advanced technologically in the last 40 years. We can extract oil now that we couldn’t extract then.
Jimmy Haigh. says:
May 31, 2012 at 6:16 am
I was going to leave this alone – life’s too short – but I can’t. Absolute rubbish. Sorry.
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Water + Iron + Heat ===> Hydrogen
Limestone + Heat ====> Carbon
The earth has an iron core. Iron being the stable waste product of fusion. We know that water and limestone are being continually subducted into the earth along the plate boundaries. We know that the interior of the earth is hot. It would appear that all the materials necessary to make hydrocarbons are at hand, using limestone, water, iron, and heat.
This doesn’t mean hydrocarbons must be produced in this fashion. Rather that it is possible that they are, and being lighter than water and rock, they float up to the surface of the earth and are consumed by microorganisms unless trapped by rock formations. The sort of formations created by sedimentation. The sort of formation that also traps fossils.
The earth has been running out of cheap oil for quite a long time. I’ve never seen any evidence that it is running out of expensive oil. Whatever the source of oil, the limiting factor appears more the existence of suitable rock formations to trap the hydrocarbons, and our ability to exploit them. Not the source materials. Carbon and Hydrogen we have plenty of. It is everywhere around us.
Much of the problem in modern science is the “certainty” folks have that things are one way or the other, when history shows repeatedly that for the most part the theories of the day turn out to be rubbish. Five hundred years from now people will look back at this time in history and laugh at how primitive we are and how superstitious our beliefs. Exactly as we do looking back at folks 500 years ago.
Oh for heavens sake! David, as we find more and more conventional oil, and more and more non-conventional, Saudi is becoming less and less relevant. The U.S., Canada, and Mexico, have enough to supply N.A. and export some. More will be found. Finding the oil is no longer a concern. And, so, extracting the oil will only be a matter of when.
It’s a whole new ballgame. Once the eco-nuts get out of the way, our societies can, once again, start thriving.
For many of the oil giants, particularly, Venezuela and Iran, they have been so violent toward their oil companies–expropriating assets, arresting employees–that foreign companies don’t want to work there. Much of their declining output is due to lack of investment and use of old technology. It is already pinching severely in Iran.
Unconventional oil (from shale especially) is booming. Right now the US has gone from importing 60% of its oil to only 42% (as of last month) in just 4 yrs. Drilling in shale accounts for most of it, and in many regions 100% of drilled wells hit oil (one can pretty much guarantee where the shale deposits lie).
Canada’s oil sands likewise are gushing oil.
First off the very idea of abiotic oil is so far flung and completely without either experimental, empirical or theoretical sense that to even spout such nonsense on what is supposed to be a science blog is contemptible. I speak from knowledge, I have an organic geochemistry background and have worked in the oil industry for some 30+ years.
More specifically to the Saudi production. You have to remember that SA had pretty much stopped exploration and/or development up until 2005/06 at which point world demand increased and the Saudis were caught short with not enough spare capacity. They embarked on the megaprojects with a goal to increasing spare capacity to 12 MMb/d which they achieved as of a year or so ago.There is a lot of bad information available in the blogosphere on Saudi production and reserves. Twilight in the Desert contributed to this misinformation considerably as it was pretty clear that the author either did not read the articles he quoted properly or did not really understand what it was he was reading. The Saudis have been quite effective in controlling water coning and hence improving recovery from many of their fields through application of MRC (maximum reservoir contact) wells, SMART completions and expandable liner applications. They have probably done more for advancing full field simulation than any major oil international company. As a consequence their recovery factors have improved. That being said they have not discovered large amounts of new oil. The hope that is still there for them is in liquids and oil trapped in the shale source rocks. They are just starting to look at this. There is also importance in the potential for unconventional shale gas in these same rocks given that currently the Saudis burn a lot of fuel oil which could be offset by gas which would leave additional liquids available for export. It isn’t a bottomless well and until such time as the unconventional story is understood it is premature to herald the collapse of the Saudi oil industry.
There can absolutely be no discussion of peak oil, conventional or unconventional, as long as large areas of known and potential oil reserves are off limits. It’s like telling the divorce court judge that the cash in your bank accounts are off limits to your spouse.
USA oil production reached its low in 2005 and has risen by 30% since.
http://www.indexmundi.com/g/g.aspx?c=us&v=88
So much for peak oil. The USA technology will spread to the rest of the world and push peak oil out by decades at minimum.
Hubert was wrong.
http://s14.postimage.org/7niod3tpd/exhibit4_21.png
Saudi Arabia oil is of marginal relevance to the USA today.
In a crisis, the US could make up Saudi shortfall from elsewhere.
SteveE says:
May 31, 2012 at 6:52 am
The depths at which oil is being drilled clearly puts the ‘fossil fuel’ label to bed.
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If natural gas is created from fossils, then discoveries should fall off exponentially the deeper you drill. However, this is not what has been observed. Costs go up the deeper you drill, but discovery rates do not decrease.
http://www.gasresources.net/AlkaneGenesis.htm
Abstract:
For experimental verification of the predictions of the theoretical analysis, special high-pressure apparatus has been designed which permits investigations at pressures to 50 kbar and temperatures to 1500°C, and which also allows rapid cooling while maintaining high pressures. The high-pressure genesis of petroleum hydrocarbons has been demonstrated using only the solid reagents solid iron oxide, FeO, and marble, CaCO3, 99.9% pure, wet with triple-distilled water.
LazyTeenager says:
May 31, 2012 at 4:52 am
Neanderthals
Romans
Greeks
Macedonians
Persians
Egyptians
Mayans
Incas
Chinese dynasties many
Toltecs
Byzantines
Ottomans
Islam
British Empire
Amerindians
Zulus
I was referring to ‘doomsday predictions’. Even the Mayan’s calendar goes to 2012.
Who predicted the downfall of these civilizations, and for what reasons? References/sources please.
Gerard says:
May 31, 2012 at 6:31 am
Malthus was wrong for two reasons, resources are never limited, and demand is never geometric.
Both may appear that way over short periods of time, but over longer periods of times, other things always intervene.
For resources, as supplies run lower, prices go up, this causes people to be more carefull in their use of that resource, which lowers demand, it also cause producers to produce more, and to search for alternatives.
On the demand side, changing prices always reduces use.
State Geologist of Pennsylvania said in 1885 that “The amazing exhibition of oil is a temporary and vanishing phenomenon.”
Thus spoke the first Peak Oil prediction.
This author ignores the fact that the 1970 peak in US production had little to do with the amount of oil available to drill. US oil production went lower because of restrictions placed on oil by those who want to cause Peak Oil so that we have to find an alternative.
Don’t forget the Utica Shale Formation, just west of the Appalachians:
http://money.msn.com/top-stocks/post.aspx?post=df529b8f-7bab-4ec3-8b99-b1fed491339b
Andrew Newberg says:
May 31, 2012 at 6:37 am
North Dakota is producing more oil than Alaska
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That could easily change if the Feds would allow production at ANWR.
jbird says:
May 31, 2012 at 7:00 am
The production curve assumes that technology remains constant.
It doesn’t.
The Universe is packed with hydrocarbons – it is among the Universe’s most abundant molecules.
And our world is awash in oil – we couldn’t run out of it in thousands of years.
There is no “Peak Oil”.
There is “Peak Cheap Oil”.
The proper question should be:
“What oil … at what price?”
Malthusian-linear. The underlying shales contain more than the conventional reservoirs. Even UK is believed to have a few centuries worth. Resources from a formation 400 km across are presently being produced from a Texas shale formation. Leave these dire predictions for the linear thinker, alarm raisers. It reflects a hapless view of human capabilities held by central planning types. Other topics you have covered here have been great.
About 2 1/2 yrs ago the Saudi’s released information to the industry that they had mapped a massive natural gas reserve that covers the peninsula all the way up to Israel. The reserve is below 5500 M and temperatures/pressures, at the time, were at the extreme limit of drilling capabilities. I have been told that Saudi’s intentions are, once this gas becomes recoverable, to replace all internal oil consumption, about 1/3 of production, w/ natural gas, thus releasing this production for sales. This will certainly be well underway before 2026.
It is game changers like this discovery, horizontal drilling w/ fraking+propends, et al that have repeatedly pushed peak oil off into the future since the 70’s and they will continue to do so,… unless market forces are restrained by centrally planned governments in their attempt to “do good”.
harrywr2 says:
May 31, 2012 at 7:03 am
Are you claiming that the reason we aren’t drilling in ANWR, off the Florida and California coasts, is because oil costs too much, and not that the politicians won’t let us?
No, that is political decisions – which DO increase the costs of oil.
By political denying of “less expensive” oil reserves, the only outlet left is to extract from “more expensive” oil reserves – raising the price.
Steven Kopits says:
May 31, 2012 at 6:40 am
“I think WUWT is a bit off the reservation here. It’s like The Oil Drum writing about global warming.”
“The Oil Drum” seems to be about hockey! WUWT has been there too:
http://wattsupwiththat.com/2012/03/06/climate-hockey-stick-threatens-pond-hockey/
Perhaps you have not noticed that WUWT is a blog with a list of topics that begin “Commentary on puzzling things in life, . . .”
Both “peak oil” and “David Archibald” are puzzling things and so for you to think this post is somehow misplaced is a mystery to me.
Your insights are appreciated. I do wish for you to further explain these issues, however:
“ Since late 2004, the global oil supply has been unable to keep up with demand. EIA forecasts suggest a massive shortfall again in the coming 12 months.”
Since “late 2004” I have purchased gasoline at least once a week and cannot recall a single time that it was not available at local stations. Thus, it is hard for me to notice the effect of your statement with regard to the facts that I find locally. Am I supposed to believe you and not my own “lying eyes?” [Groucho Marx quote; I think.]
So, during the “coming 12 months” when can I expect the local stations to not have gasoline? Based on you comments, I should buy a Chevy Volt or a fully battery-only auto — but it gets mighty cold here and the nearest grocery store is 15 miles away. I do have a big Tennessee Walking mare and she goes in snow deep enough to stop a 4X4 and doesn’t use gasoline. So while not really worried, I am curious.
http://www.eskimo.com/~billb/supress1.html
Cognitive Processes and the Suppression of Sound Scientific Ideas
Galileo was branded as a heretic and sent to prison for declaring that the earth traveled around the sun (Manning 1996)..
The Experts Speak (1984)
“Louis Pasteur’s theory of germs is ridiculous fiction.” -Pierre Pachet, Professor of Physiology France, 1872 (p.30)
“Fooling around with alternating current in just a waste of time. Nobody will use it, ever.” -Thomas Edison, 1889 (p.207)
“I laughed till. . . my sides were sore.” -Adam Sedgwick, British geologist in a letter to Darwin in regards to his theory of evolution, 1857 (p.9)
“If the whole of the English language could be condensed into one word, it would not suffice to express the utter contempt those invite who are so deluded as to be disciples of such an imposture as Darwinism.” -Francis Orpen Morris, British ornithologist 1877 (p.10)
“Airplanes are interesting toys, but of no military value.” – Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre (p.245)
“To affirm that the aeroplane is going to ‘revolutionize’ naval warfare of the future is to be guilty of the wildest exaggeration.” -Scientific American, 1910 (p.246)
“Who the hell wants to hear actors talk?” – H. M. Warner, Warner Brothers Studios, 1927 (p.72)
“The whole procedure of shooting rockets into space. . . presents difficulties of so fundamental a nature, that we are forced to dismiss the notion as essentially impracticable, in spite of the author’s insistent appeal to put aside prejudice and to recollect the supposed impossibility of heavier-than-air flight before it was actually accomplished.” -Richard van der Riet Wooley, British astronomer (p.257)
“The energy produced by the atom is a very poor kind of thing. Anyone who expects a source of power from the transformation of these atoms is talking moonshine.” Ernst Rutherford, 1933 (p.215)
“Space travel is bunk” – Sir Harold Spencer Jones, Astronomer Royal of Britain, 1957, two weeks before the launch of Sputnik (p.258)
“But what hell is it good for?” -Engineer Robert Lloyd, IBM 1968, commenting on the microchip (p.209)
“There is no reason anyone would want a computer in their home.” -Ken Olson, president of Digital Equipment Corp. 1977 (p.209)
SteveE says:
May 31, 2012 at 6:52 am “. . . it is a fossil fuel.
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Mervyn says:
May 31, 2012 at 5:57 am
“. . . fossil fuel” derived from decaying ancient forests and dead dinosaurs.”
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SteveE,
It sounds to me like you have the knowledge to correct Mervyn’s (and others) trees and dinosaurs notion as to the source of “fossil” fuel.
The Peak Oil curves only predict outcome assuming a given technological approach.
One way to look at this is human life expectancy. A graph in 1850 would show 35 years whereas one now shows 80 years. The same goes for agricultural yield.
The debate as to whether oil is a fossil fuel or an abiotic geological product ignores a sensible middle possibility. The theory of oil as a biological product always seems to be portrayed as biomass getting buried, compressed, heated and–after unbearably long periods of time, converting into oil. The abiotic theory has deep heat and pressure working on simple chemicals to produce constant streams of oil. Why can’t organic mater be pulled down at subduction faults, broken down quickly due to the high depth it gets pulled to, and forming oil in a process which looks abiotic but is fed via biomass for the raw carbon and hydrogen?
Anyway. It doesn’t really matter. It is becoming obvious that there is a lot more oil (and coal and gas) than we thought and any increase in price from slightly increased expense of extraction merely fuels demand for nuclear, hydro and other power sources as well as efficiency gains from new tech and investment. Also, while the many criticisms of solar power, biomass and other alternative technologies are true, they are also only applicable to today’s level of technology combined with a socialist economic model. It is possible to develop new ways to store energy, convert energy and harness energy. It just requires an absence of bureaucratic “support”, a genuine financial benefit (not from subsidies that are where if you succeed or not) and some time and effort.
No peak oil soon; if it does peak we will have plenty of time to adapt; you can never successfully predict populations by extrapolating from current and past fertility rates. It always fails.