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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flow rate is what it is all about and large reserves do not mean high flow rates or high leverage quality product
The tar sands mining operation for example has taken a long time to produce what one mediocre conventional crude oil field can do in just a few years. The asphalt like tar deposits in the Orinoco belt are huge too but the flow rate is low and the product is lousy.
finding more reserves does not invalidate peak oil, just illustrates a misunderstanding of peak oil
other fallacies seen posted all over this thread include: mistaking all liquid fuels as conventional crude, claiming other liquids are equal subtitutes for conventional crude oil, the effects of technology on production, and the very nature of how oil production is done and works
Then there’s the “economically recoverable” fallacy, that one is quite prevalent it seems. Flow rate and quality in a business that is pumping liquid fuels at the scale we are doing is everything. Claims of huge new reserves mean little if they can’t be extracted quickly enough and produce a far inferior product which in turn requires even more production to cover the quality shortfall.
Peak oil isn’t about running out either, in fact under a exponential decline rate the flow never actually stops but you run into trouble long before you ever get close to running out. Every oil field reaches a point where no amount of technology or brute force can increase its flow rate and production. Applying this to the whole world is just straight logic. These traits of oil fields are based on physics which can’t be bargained with or cheated. Hubberts equations and methods which are still in use today are simply based on porosity, pressure, density, depth, and volume.
Smokey says:
May 31, 2012 at 11:26 am
Agreed on coal liquefaction potential, but anyone promoting Green River oil shale should do the sums on how much rock you want to move on a daily basis. And where you want to put it because it will swell 30% on processing. Digging up the Green River Formation will create a new mountain range, not that there is anything wrong with that.
Aye.
Until it comes to practically fueling say, a Cessna 150 (small trainer aircraft).
On that note, maybe liquid fuels (with higher energy content and workable storage/transport in use) have a future after all …
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@ur momisugly Dave Wendt
demand destruction and exports
US domestic gasoline consumption is down, and down to like year 2000 levels and we are also exporting more gasoline than ever while the total amount of gasoline produced is down to like 2002 levels. Refineries all over especially on the east cost are for sale. They can’t refine high sulfur or heavy oils which are gradually dominating the available oil market while at the same time the refining profit margins are being crushed. People without money can’t buy your product. Oil is fungible up to a point but it is hardly interchangeable. Refineries like a nice steady diet of the same quality crude as they can get if possible. They can be built to handle a range but for them handling all grades and weights of crude simply doesn’t work. The downstream oil operations like refining here in the US got caught unprepared for the economy falling apart and their diet of imported crude changing.
David Archibald says:
May 31, 2012 at 1:47 pm
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?
See my comment above
Dave Wendt says:
May 31, 2012 at 12:43 pm
In real terms the price of oil has dropped significantly since 2005.
Vying for blog-listing under: “Transcendent Rant and way out there theory” ;^)
Seriously, there are a number of counter-arguments by posters above that would seem to place a quantity of your posted material, sans further support, as out-dated (literally: ‘dated’), incorrect, narrow-in-view wrt to actual observations, and out-of-the-loop as regards recent studies/experiments/results in both direct and direct fields.
I’m sure there are others here what would like to see more than one of these counter-arguments addressed, too.
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Stark Dickflüssig says:
May 31, 2012 at 10:51 am
Malthus looked at nature. He was just observing and formulating a law. That we humans are able to control birth rate or switch to another resource doesn’t make the law faulty.
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.
Which normal human behaviour? It turns out psycologists have been wrong to think that US undergraduates are typical of humans worldwide in basic psycology. This from the latest Economist:
Most researchers used to think the punishment of freeloaders was a universal human instinct that had evolved to promote co-operation. Studies in the West supported this belief. They showed that people band together to reward co-operative behaviour and to punish those who refuse to contribute to the common good. These experiments, which employed what are known as public-goods games to test individual choices, gave players money they could either contribute to the group, raising the value of everyone’s stake, or hold for themselves, ultimately harming everyone if others refuse to co-operate. But they were lacking in two ways. One was their WEIRD [western, educated, industrial, rich, democratic] participants. The other was more subtle. It did not occur to the experimenters to allow participants to punish co-operators as well as freeloaders, even though those who had been freeloading might wish to do so in revenge for having been punished themselves, in previous rounds of the game.
But that did occur to Benedikt Herrmann of Nottingham university, in Britain. A few years ago Dr Herrmann ran a series of experiments designed to see how public-goods games would play out in 16 countries, not all of them rich and Western. This time, he allowed freeloaders to punish co-operators, a behaviour known as antisocial punishment. His results were striking. Most of the world, the experiments suggested, bears little resemblance to Harvard or, indeed, anywhere else in the West, where antisocial punishment is virtually absent. In places like South Korea, Greece, Russia and Saudi Arabia, antisocial punishment proved to be almost as common as collaboration.
David Archibald:
Thankyou for your answer (at May 31, 2012 at 1:47 pm) to my post at (May 31, 2012 at 10:41 am).
I address each of your points to me in turn.
You say
I agree. My post is (as it says) a copy of my post in October 2011 in response to your then article. You did not answer any of its points then, and you have not now. Perhaps you have failed to see them.
You say
There are many reasons for that and, importantly, lack of available supply is not one of them. Prices fluctuate for several reasons and the recent oil price fluctuation upwards is not unusual. Anyway, it depends on how you define the oil price. As Dave Wendt points out in his post (at May 31, 2012 at 12:43 pm), the $ price of oil has risen but the price of oil has fallen relative to the gold price. The gold price tracks global economic activity because people buy gold as ‘insurance’ when currencies are not stable. Hence, the fall in the price of oil relative to the gold price is very strong evidence that the recent rise in the $ price of oil is a result of economic factors and is not an effect of oil scarcity.
You say
I did not say and I would not say “there is a superfluity” of oil.
The resource of oil is always equivalent to about 40 years supply. It was about 40 years throughout the last century and will be about 40 years supply throughout this century. This is because oil producers have a planning horizon of ~40 years. Therefore, an oil company pays for more oil to be found when it has less than ~40 years supply, but does not pay for more to be found when it has more than ~40 years supply. Of course, in the event that an alternative to crude is found which is cheaper than crude then the resource will increase to be more than ~40 years supply because ‘peak oil’ will have happened (as ‘peak flint’ happened millennia ago).
You say
This is a result of the global economy (see my second answer to you in this post).
You say
Your evidence that they can’t is?
If “their profit margins [are] ballooning” they have a strong disincentive to not “bring on more production”. An increase to supply would reduce the price which they get per barrel (this is economics 101).
Richard
David Archibald says: @ur momisugly May 31, 2012 at 1:33 pm
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.
_______________________________________
David that has a heck of a lot more to do with the doubling of the US money supply than it does with the oil supply. As long as you are talking about fiat money supplies, and most currencies are not backed by gold, then you have to take into account what is happening to money too.
Think of the short term GNP (of the USA) as a unchanging pie divided by N dollars where N= the money supply. N changed to 2N+ in the spring of 2008. So the cost of everything will eventually rise to roughly 2N dollars. Therefore a $2.50/gallon cost (2006) will eventually become $5.00 all else being equal just because of the doubling of the money supply. Last time I was at the pump it was $3.899.
On the 5th of May, 2006 Iran registered its Oil Exchange, all trading will be conducted in Euros. If the Iranian Petroleum Exchange allows the major oil companies to trade on its floor then the dollar seriously risks losing its position in the world market. This is a possibility that many experts already consider very plausible. (Pravda)
Both gold and oil are pretty good indicators of currency “devaluation” and that is why the cost of oil and other goods rise. Currency “devaluation” is also called inflation.
I very strongly suggest you also read On Hyperinflation it explains why the USA has not yet hit hyperinflation.
The following is a “Gasoline Price History” plot over “the past 33 years or so”.
In the first plot the lower curve is the data adjusted for inflation using April, 1979 as the datum.
http://www.randomuseless.info/gasprice/gasprice.html
The second plot (scroll down the page) uses a slightly different ‘adjustment’ mechanism using year 2012 CPI and back-adjusting up the early year gas price … interesting to see a ‘bowl’ shape with the low point between about 1986 and 2005 with that notable peak in price in 2008.
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… discovered awhile back while researching petrol-prices and the change over time …
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Lazy Teenager
Every item on your list died out from either a cooling climate or statism. Every time the world got warmer, civilization prospered. Everywhere in the world freedom was tried, prosperity followed (whatever the climate), and bigger govt always brought ruination (i.e. the Depression & today’s Recession).
Warmistas are doubly wrong, on both climate and economics.
_Jim says:
May 31, 2012 at 2:44 pm
This post has a graph that displays gasoline price in current dollars back to the Twenties
http://mjperry.blogspot.com/2012/02/why-100-oil-is-godsend.html
The 20-25 cent a gallon price then would be about $3.40/gal in our increasing worthless dollars.
_Jim says:
May 31, 2012 at 2:44 pm
Here’s another view from less than a half dozen years ago that indicates that the $3/40/gal current dollar price for 20s gas was only $2.68/gal in then current dollars
http://mjperry.blogspot.com/2006/09/would-you-trade-todays-gas-prices-for.html
The really scary thing about the state of the world is that, although the dollar has been incredibly debased in recent years, it is still rebounding strongly in recent weeks against other world currencies that are even worse.
Oil and gas companies are interested in keeping prices as high as possible; they are not eager, therefore, to publish accurate information about available reserves.
If companies don’t publish best effort estimates, its highly likely they will find themselves in court and going to jail. However, this is not the case with OPEC countries who are notorious for not publishing accurate data.
I hope that the abiotic oil proponents posting here realize that either they are utterly clueless, or over 100 years worth of petroleum geologists were/are. I know where I’ll put my money. And I’d like to know the odds on all the significant oil finds always conforming to the (biological source) rock, migration pathway, reservoir + trap model, if all you really need is the reservoir + trap stage. (and please, no guff about oil from granite in Vietnam. Have a look at where it occurs, i.e directly hydraulically connected to classic biologenic oil fields).
phlogiston says:
May 31, 2012 at 1:23 pm
“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.”
I didn’t know that, thanks. Very good news.
Abiotic vs Biological source of “oil”
I guess the latter group needs to explain the methane lakes on Titan and the Gas Planetary Giants within the scope of their theory … 🙂
Is all this talk just a pre-cursor to hop-along-the-capacity to re-introduce the need to invest in nuclear as a form of insurance against sudden energy shortfalls either caused by shortage (peak anything) of oil, gas, or hard cash in some form of inventive marshalling of free enterprise to provide a safe and clean/cleaner alternative before limitation of choice is forced upon us by ‘circumstance”. If it is, then this is where you for once embrace the warmists precautionary principle and build millions of small fusion reactors in at least a competitive environment to prevent monopolistic control of energy sources in the future.
Cut the cackle and get on with it, distributed energy sources will solve many problems we have inherited if done well, for the “good of humanity” of course, to use a much hackneyed phrase!
Does the use of 2010 US value skew the graph due to inflation? What if you used (e.g.) Gold instead of the US dollar?
http://pricedingold.com/crude-oil/
The abiotic oil believers should know that they harm this site’s scientific credibility when they push their wacko theory. All of the geologists and petroleum engineers must be in on this abiotic stuff or they are just the dumbest people in the world.
Oil is, of course, a finite resource. We are running out of the cheap stuff but we can still exploit more expensive soures. It might mean it costs more to drive your F-150 but that is an inevitability anyway since India and China loom huge in the present and future global oil demand scene.
Several important things are generally left out of the long-term scenarios.
First, market dynamics. When the price of oil hits $300 a barrel, we will need a LOT less of it.
When oil gets expensive enough, it won’t just be mined — it can be manufactured.
In the medium term, we can expect a significant conversion of big rig fleets to convert to natural gas.
In the near to medium term, oil consumption from transportation will be effected by significant increases in the fuel efficiency of passenger cars and trucks. You can get 300hp AND 30 mpg from a medium sized car? Crazy. Diesel promises even better results. Mercedes wrecked the diesel market for everybody with the premature launch of a lousy truck-sounding P.O.S. that turned off consumers for a generation, but VW is on the verge of bringing it back.
Lastly, despite whatever fantasies liberals may have, we’re not leaving any oil in the ground so that we can save the planet from global warming.
1) … and thus the serpentinization processes in the basement rocks have the potential to drive the Lost City system for hundreds of thousands, if not millions, of years.
…The formation of magnetite during the serpentinization process involves the oxidation of ferrous iron (Fe2+) in olivine to form ferric iron (Fe3+) in magnetite and leads to what is called reducing conditions. As a consequence, reduced gas species, such as hydrogen gas (H2), methane (CH4) and hydrogen sulfide (H2S), can be produced during serpentinization.
-NOAA
http://oceanexplorer.noaa.gov/explorations/05lostcity/background/serp/serpentinization.html
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2) Far more natural gas is sequestered on the seafloor—or leaking from it—than can be drilled from all the existing wells on Earth.
Woods Hole Oceanic Institute
http://www.whoi.edu/page.do?pid=12764&tid=282&cid=2441
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3) Titan’s Methane Not Produced by Life, Scientists Say
“The process is called serpentinisation and is basically the reaction between water and rocks at 100 to 400 degrees Celsius (212 to 752 degrees Fahrenheit), he said.”
http://esse.engin.umich.edu/PSL/PRESS/Titan_Cassini_Huygens/AP_Wire_012705.pdf
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4) The Principle of Parsimony (Ockham’s Razor)
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5) The 2nd thermodynamic law:
QUOTE: […]”The constraints imposed on chemical evolution by the second law of thermodynamics are briefly reviewed, and the effective prohibition of transformation, in the regime of temperatures and pressures characteristic of the near-surface crust of the Earth, of biological molecules into hydrocarbon molecules heavier than methane is recognized.
http://www.pnas.org/content/99/17/10976.long
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As bubbagyro said:
“Organic matter has a high oxygen content, and all of these compounds must be completely reduced, going energetically uphill!”
Instead of countering such arguments with evidence-based reasoning, fossil fools hurl insults in an attempt to enforce to enforce a taboo. But petroleum is rock oil (petra+oleum) – the product of serpentinisation. Insults don’t change the facts.
heh, heh…now this is funny: “Ask the genius “Rockdoc” where the seas of ethane, methane and higher hydrocarbons on Titan come from? Prehistoric dinosaur aliens? Must have been a whole slew of them…”
Seriously though, Erlich, Malthus, DA who wrote this article will all be right eventually. The Sun will destroy our planet some time in the future. So they have that to look forward to. Won’t be any oil after that.
There’s an enormous amount of ‘Heavy, Sour’ oil already discovered and waiting for ‘Upgrade’.
Search “Heavy Oil Upgrade”.