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.
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We don’t actually need oil if things come down to the crunch. Natural gas is a viable substitute for gasoline and diesel. The conversion cost for an existing vehicle is a bit stiff but will become economic if the price of gasoline doubles.
T. Boone Pickens is promoting natural gas for heavy trucks. It looks like natural gas is viable right now for applications where fuel price is important.
http://www.bloomberg.com/news/2012-02-29/trucks-run-on-natural-gas-in-pickens-clean-energy-drive.html
Data and new technologies top Malthusian doomsday predictions every time. Peak oil? Population bomb? Limited resources? All predicted made with the current knowledge and technology of the time, even now those “problems” have been, or are quickly, being relegated to the dustbin of history. These Malthusians encourage knee-jerk reactions so they can gain political advantage. That’s why these demagogues offer the same solutions to completely different problems. (wars/global cooling/global warming/sustainable development,etc..) That solution is a big centralized authoritarian government with little individual freedom. When they burn through their credibility they just change names, or issues, or both, and continue on. Read the history of the progressive movement, Malthusian through CAGW scam, it’s a real eye opener.
Friends:
The above article is the latest in the series on WUWT by David Archibald which make the false assertion of ‘Peak Oil’.
One of his previous articles in the series is at
http://wattsupwiththat.com/2011/10/27/peak-oil-now-for-the-downslope/
I gave my view on why ‘Peak Oil’ is nonsense in that discussion. I copy it here to save need for me to write it again or others to find it.
Richard
Footnote:
The incidental fact that since 1994 it has been economically possible to produce synthetic crude from coal at competitive price with natural crude is because the Liquid Solvent Extraction (LSE) process exists. I was part of the team which developed LSE then built and operated a demonstration plant. UNESCO commissioned a paper on it from me.
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Richard S Courtney says:
October 28, 2011 at 5:26 am
Andrew McRae:
At October 28, 2011 at 1:45 am you assert:
“The oil optimists commenting here should remember one important logical and practical conclusion:
There is a world of difference between saying that peak oil has not happened versus saying peak oil will never happen. Peak oil is inevitable due to both physical and economic limits. The only question is when.”
Your mistaken assertion is supported by some others. For example, Mike Bromley the Kurd says at October 28, 2011 at 2:21 am;
“The truth? It’s a finite resource. It will run out at some day in the future. And the years approaching that time will be some frikkin’ ugly. Then we will adapt.”
Sorry, but no. The assertion is an error. In the real world, for all practical purposes there are no “physical” limits to natural resources so every natural resource can be considered to be infinite. This a matter of basic economics which I explain as follows.
Humans do not run out of anything. The usage of a resource may “peak” then decline, but the usage does not peak because of exhaustion of the resource (e.g. flint, antler bone and bronze each “peaked” long ago but still exist in large amounts).
A resource is cheap (in time, money and effort) to obtain when it is in abundant supply. But “low-hanging fruit are picked first”, so the cost of obtaining the resource increases with time. Nobody bothers to seek an alternative to the resource when it is cheap.
But the cost of obtaining an adequate supply of a resource increases with time and, eventually, it becomes worthwhile to look for
(a) alternative sources of the resource
and
(b) alternatives to the resource.
And alternatives to the resource often prove to have advantages.
Both (a) and (b) apply in the case of crude oil.
Many alternative sources have been found. These include opening of new oil fields by use of new technologies (e.g. to obtain oil from beneath sea bed) and synthesising crude oil from other substances (e.g. tar sands, natural gas and coal). Indeed, since 1994 it has been possible to provide synthetic crude oil from coal at competitive cost with natural crude oil and this constrains the maximum true cost of crude.
Alternatives to oil as a transport fuel are possible. Oil was the transport fuel of military submarines for decades but uranium is now their fuel of choice.
There is sufficient coal to provide synthetic crude oil for at least the next 300 years. Hay to feed horses was the major transport fuel 300 years ago and ‘peak hay’ was feared in the nineteenth century, but availability of hay is not significant a significant consideration for transportation today. Nobody can know what – if any – demand for crude oil will exist 300 years in the future.
But you assert;
“There is a world of difference between saying that peak oil has not happened versus saying peak oil will never happen. Peak oil is inevitable due to both physical and economic limits. The only question is when.”
That is similar to a neolithic man asserting;
“There is a world of difference between saying that peak flint has not happened versus saying peak flint will never happen. Peak flint is inevitable due to both physical and economic limits. The only question is when.”
Your assertion is devoid of any worth.
Richard
Oh no the sky is falling!!!!! Should I grovel in fear now? Maybe buy some carbon credits? Invest in Solyndra?
Why crouch in fear worrying about how long oil will last and what its price will be in a few decades. As one comment above said: “the stone age did not end because we ran out of stones”.
If I really want to be concerned about global warming and the end of all life on earth, how about we talk about what’s going to happen in 1 billion years when the sun’s energy output increases enough to end all life and boil off all water on earth, or a few billion later when it goes red dwarf and swallows the earth? Assuming of course that we manage to beat the odds and that are still here when this happens. Maybe those windmills and carbon credits will come in handy then, right?
Peak oil? I don’t think so but just in case:
Canada to the rescue = 2000 + years of oil sands available = Plenty of time to tinker with wind ,solar and alien technology’s yet to come.
And don’t forget The UN 1PPC Ice Age conference scheduled for 2100.
Long live the force and government grants!!!!
roger says: @ur momisugly May 31, 2012 at 9:07 am
….. but I could be convinced about the demise of neanderthals were it not for the AGW supporters…………
_______________________
I can’t let that pass.
Neanderthals are alive and well and they are we. New DNA test will reveal if you’re part Neanderthal
(I KNEW my P-Chem Prof. was a Neanderthal he could have posed for the picture.)
No. Mathus looked at humanity. His failure to account for normal human behaviour when formulating his ridiculous hypotheses makes him wrong. The insistence of his adherents to cling to his absurdly wrong tenets makes them either stupid or evil.
What about the Abqaiq, Safaniyah, Zuluf, Berri and Shaybah oil fields in Saudi Arabia. I spent five years developing the huge Shaybah site and it is still growing. Yep, I was in the pay of the King, now I’m like a lot of the alarmists, a civil servant!
“And btw humankind is not very good at the moment at switching to other energy sources or be more careful in the use of oil. The search for alternatives isn’t going to good either.”
Wrong on both counts.
The error your average Malthusian makes is assuming that they can track one item, and from it predict gloom, despair, and misery.
Yes, the ability to switch from one item to another, doesn’t increase the supply of the first, but true wisdom will occur when you finally realize why that so called limit is meaningless.
Oil, in and of itself is meaningless. What matters is energy. The form that the energy takes doesn’t matter, as long as it is inexpensive and readily available.
The fact that we are able to switch from one product to another means that limitations in one product are meaningless.
I like charts. They tell the story at a glance. See here.
To paraphrase the late, great economist Julian Simmons: The greatest natural resource is the human mind. And we aren’t going to run out of that resource anytime soon.
Of course the resources available from liberal minds peaked about a hundred years ago and have been in decline ever since…
Andrew Russell says:
May 31, 2012 at 12:08 pm
To paraphrase the late, great economist Julian Simmons: The greatest natural resource is the human mind. And we aren’t going to run out of that resource anytime soon.
Of course the resources available from liberal minds peaked about a hundred years ago and have been in decline ever since…
_____________________________
I thought the only “resource” from the liberal mind was brakes?
Steven,
I appreciate that you know very much more regarding the details of the oil business than I do; however, I need not know the same level of detail you know to know that alarmist declarations regarding alleged scarce resources have almost always been false – history tells me this. And the examples are there for all to see – some have been recounted in this post.
I realize we may make a number clarifications regarding what is a shortage of a resource versus the introduction of a better substitute.
The facts as commonly understood are that peak oil advocates have been making the rounds since Ehrlich started the alarmist biz, perhaps earlier than that. The charts in this post are proof that they have always been wrong – every year our known reserves seem to increase. So are we to believe that the charts finally are right? That is a tough argument to make.
I grant you we may come to a point where the cost of extraction cannot be overcome by technology versus the demand for the product. But at that point – which there is no reason to suggest is imminent because there are no statistics currently saying known reserves are decreasing – as has always happened, new technologies may become comparatively cheaper and will replace oil.
Anyone inside the industry has an understandable bias – they see things through the industry lens and by definition struggle to see an alternate reality outside their own. That is why the alarmists have almost universally been wrong – and why peak oil advocates today will also be wrong – as peak oil advocates in the 70s were proven wrong.
The notion that all these new discoveries of oil are based on an increased price of oil is somewhat offbase. While the nominal price has risen, if you look at the price of a barrel of oil denominated in gold the present price is well below the average of the last 40 yrs
http://mjperry.blogspot.com/2012/03/measured-in-gold-price-of-oil-is-below.html
That post is from early Mach and showed oil at .0602 ounce of gold per barrel versus an average since 1971 of .0732oz./bbl. As of a few minutes ago the price today is at .0554oz/bbl. While our President is wandering about the country railing against evil speculators driving the price of oil threw the roof, the real villains have have been he and his buddy Bernanke who with massive borrowing and money printing have driven the dollar into the tank. His acolytes will probably say, well look at the great job he has done at reducing the real price of oil. Except of course that he famously announced back in 2008 his intention to do the exact opposite and the huge increases in U.S. production have been accomplished in the face of adamant opposition from nearly every element of his administration.
Steven Kopits says:
May 31, 2012 at 9:28 am
Steven,
You mentioned ‘The Oil Drum’ blog. I am providing the url here, as others may be interested in the articles posted there.
http://www.theoildrum.com/
The Oil Drum Mission Statement:
Conventional political, economic, and media institutions have yet to recognize energy’s role as a key contributor to society, and its importance as a driver for all of our physical processes and economic transactions. The Oil Drum seeks to facilitate civil, evidence-based discussions about energy and its impacts on the future of humanity, as well as serve as a leading online knowledge-base for energy-related topics.
MtK
Another interesting bit of info on this topic although I’m not really sure what it means to the big picture
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=a103600001&f=m
U.S. Total Gasoline Retail Sales by Refiner
I have been watching this metric since last Oct when the first big drop occurred, assuming that it was probably a statistical anomaly. The next update is due out tomorrow for Mar ’12. It will be interesting to see what it says.
Is it possible the human subspecies Neanderthals died out because they were simply LazyTeenagers? Perhaps the ‘biggest enemy’ is just laziness, combined with a ‘know it all’ attitude…
James Sexton says:
May 31, 2012 at 7:11 am
Non-conventional oil in the US will peak out at about 2.0 million barrels/day. I wrote this piece on Saudi supply in response to Fred Singer’s call for the Romney campaign to promise $2.50/gallon gasoline, a price target slightly less deranged than Michelle Bachman’s $2.00/gallon promise.
DirkH says:
May 31, 2012 at 4:32 am
jim says:
May 31, 2012 at 3:35 am
“BTW: increasing world population provides more Eiensteins to solve problems.”
Saudis?
You’d be surprised. I work for a company exporting imaging equipment for biomedical and other research. Sales to SA have rocketed in the last 5 years, I have already been on 4 training visits there.
Whole new Universities are going up like mushrooms, as the Saudis themselves look to a future where they will not rely on oil economically. They are investing hugely in a technological knowledge base with a biomedical focus. Already there are centers of excellence emerging in several fields such as dental research, where the usual young researcher traffic is slowly being reversed – people are coming to SA from Europe and USA.
Being SA, of course, some of these Universities are ladies-only, still trying to line up a training visit to one of them…
richardscourtney says:
May 31, 2012 at 10:41 am
“peak hay”
ROTFL
In regard to the linked data in my post above about “U.S. Total Gasoline Retail Sales by Refiner’, it would seem that the numbers would be a pretty direct reflection of consumption, but I’ve wondered if there is something else going on that is distorting the data. Since there seems to be a number of commenters around with experience in this area, can anyone enlighten me about what I may be missing in this seeming downturn?
rockdoc says:
May 31, 2012 at 7:21 am
The abiotic people are just noise – every oil sample has the signature of its biological origin. Whatever the current Saudi capacity, they have a significant ongoing capex to replace declining production. The mature fields are said to be declining at 5% per annum. As you see from Figure 3 above, replacing the Ghawar decline will need a host of smaller fields to be developed. In developing that graph, Euan Mearns seems to have taken the view that the crestal wells will water out in the next few years. I could have put in a creaming curve but that may have been a difficult concept for people. Saudi geology looks very simple with big, gentle anticlines – so the big fields were easy to find back in the 1960s. The logistic decline plot is supposed to capture the effect of future discovery anyway. One reason for the post was to counter the Fred Singer idiocy of a call for a promise of $2.50/gallon gasoline. The other was to calibrate the clock on the Saudi regime. There is about half a generation to go before this country implodes and is no longer able to bother other people.
richardscourtney says:
May 31, 2012 at 10:41 am
There are none so blind as those who will not see. The oil price has been rising ever since the oil market tightened in 2004. If there is a superfluity of oil as you claim, why has the oil price risen in the face of that, and why can’t Exxon and a host of others bring on more production despite their profit margins ballooning?
“The depths at which oil is being drilled clearly puts the ‘fossil fuel’ label to bed.
======
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.”
This statement makes no sense at all in terms of the theory or the experimental work. Hydrocarbon genesis is a product of temperature and time of burial (but mainly temperature) with respect to source rocks which are composed of organic matter generally referred to as kerogens. The greater temperature and time these source rocks are exposed to the more bonds are broken and hence hydrocarbons created and expelled. So the deeper a source rock is buried the greater the maturity so you go from heavier unbiodegraded oils through medium oils to light oils and condensates through to wet gas and finally dry gas. As far as I am aware no one has drilled to a depth where you are beyond the dry gas window.
“Careful, this sounds like a “man-will-never-fly” statement – which was also made by experts of the day. I don’t have a position on abiotic oil one way or the other, but I caution you, “solid” experts are prisoners of their education and yours was 30yrs ago.”
The science has not changed much on this subject other than to become further refined. I may have completed my doctorate work 30 years or so ago but I have continued to read in the science as is required in my line of work. If you pulled out a recent journal of Oganic Geochemistry you would find articles replicating work done twenty or more years ago. This is science that has stood the test of time.
“I am a scientist in life sciences, and have come to realize that abiogenic oil has the science on its side. It is a misstatement, to the extreme, that there is no science behind Abiogenic oil. The Ukrainians actually made oil in high yield (3-4%) in a very short time from carbonate, water, and iron/cobalt catalysis. Not only that, but they clearly explained that “dinosaurs” could not be buried as deeply as oil is found, and proved that the thermodynamics for reduction of organic detritus was totally wrong. Organic matter has a high oxygen content, and all of these compounds must be completely reduced, going energetically uphill!”
Your assertion that dinosaurs have anything whatsoever to do with oil only points to your ignorance on the subject matter. The organic precursors to oil are a combination of algae, bacteria and plant remains…..”dinosaurs” are a figment in the imagination of those without a proper scientific education. As a “life scientist” I would have thought you at least casually ran across this simple fact in your studies. As to dinosaurs clearly not have being buried as deeply as oil forms that is so wrong as to be laughable. One of the main source rocks around the world is mid-Cretaceous in age, it accounts for much of the oil in Africa and Latin America and is younger than many of the dinosaurs. I suggest you venture to Alberta or Montana sometime where you can find dinosaur bones in the same outcrops as shales which form source rocks not far to the west where they are buried. Again not related as dinosaurs do not become oil.
You also have no clue on the evidence at hand. We have been able to create hydrocarbons in the laboratory through pyrolysis experiments conducted on source rocks for at least fifty years. Oil companies regularly do this work in order to understand how rich a particular source rock is, there are very large companies who make a lot of money doing this work. The conversion of organic matter under temperature is not only proven in the laboratory but it is backed theoretically through equations that are perfectly in accordance with the laws of thermodynamics which has been established in the literature for about half a century. Perhaps you can explain how it isn’t? We also have been able to type reservoired oils through carbon fingerprinting to source rocks which are in communication….this is commonly done and I have yet to see an instance where it has seemed impossible. ON the other hand the Russians have not created anything other than methane and ethane in the laboratory which means they have no way of explaining pentane, propane, hexane etc. Also they fail to point out that for liquids to form at great depth in the crust and then travel to shallow depths to be stored in reservoirs requires that this liquid has to first form in disequilibrium and then continue to remain in disequilibrium until it reaches a pressure and temperature compatible with liquids which pretty much requires throwing physical science knowledge out the window. Also what is completely lacking in evidence is the fact that for abiotic oil to work as a theory you should expect to find oil everywhere in metamorphic and igneous rocks. You do not. In fact the only places that you do find oil in such rocks is where they are immediately adjacent sedimentary source rocks that have been typed to those oils.