Saudi Arabia's Largest Oil Field Has Entered Inescapable DeclineThe Oil Drum | Jun. 18, 2012
There is a growing impression being given in the discussion of oil and natural gas supplies that the world is moving into a period where there will soon be such a plentiful sufficiency of crude that the US may consider exporting some of its production.
But if one looks behind the headlines, and particularly at the current status of the largest oilfield contributing toward this rosy picture - the Ghawar field in Saudi Arabia - that optimism becomes more evidently built on a very transient set of data that, as this series of posts seeks to show, will not be sustainable for any significant period into the future.
The three major oil producers (i.e. those producing more than 5 mbd each) are currently seeing surges in production as the world moves to an overall production of 90 mbd. The OPEC June Monthly Oil Market Report (MOMR) notes that this has brought Russia to 10.33 mbd in May, some 100 kbd over the same period in 2011; and Saudi Arabia is reported to have averaged 9.917 mbd in May, up 40 kbd over April.
The United States is running at 6.236 Mbd of crude (from the EIA TWIP), while importing 9.117 mbd. The MOMR reports US oil supply at 9.66 mbd on average, but counts more than just crude in this value. The gain over the past year is around 600 kbd. It is interesting to note, in regard to OPEC production the continued difference between the volumes that OPEC reports from direct contact with the suppliers, and that when the numbers are obtained from “secondary sources.”
OPEC production from information provided by secondary sources (OPEC June MOMR).
This surge from the majors has in part led the EIA to project that oil prices will remain relatively stable for the remainder of the year.
In the short term, and leading into a national election, there is no significant event (short of a hurricane or two) that obviously threatens this projection, though the Iranian situation and the questionable stability of nations in the Middle East and North Africa (MENA) has to remain a concern. Sadly, the continued ill health of the global economy, with no evident savior or realistic plan for growth now visible, means that the demand OPEC projects - 1.17 mbd y-o-y on average this year - may continue to be met.
However, I have given my reasons in previous posts for anticipating that the surge in both Russian production and in the United States are at near peak, and will soon decline. Saudi Arabia's fall will be less dramatic and a little later, but the combination does not bode well for the international supply in the next presidential term.
The big question with Saudi Arabian production to date has been more focused on the production from Ghawar, which at 5 mbd has been the rock on which the overall production builds. But that rock is continuously eroding under the long production periods that its different regions have seen.
The final major new effort to bring new production on line in the overall field was the effort at Haradh, down in the South tip of the field.
Joules Burn has written comprehensively on this region, beginning with the first well that came into production. In 1979, as the late Matt Simmons pointed out in “Twilight in the Desert”, the three northern segments of Ghawar, Ain Dar, Shedgum and North Uthmaniyah were producing 4.2 mbd of the 5.3 mbd total Ghawar output, with South Uthmaniyah producing another 400 kbd. By 2006 North Uthmaniyah was running at a 46% water cut.
Joules has taken the historic record for that region of the field and made a short movie presentation included in a post that shows how Uthmaniyah was developed over the years.
The sequence of wells shows how the wells had to move inexorably to the crest of the field as the underlying reservoir became more depleted in oil. Uthmaniyah is the region where the test program to inject carbon dioxide to enhance EOR is under construction, as mentioned earlier, and scheduled for completion in the fourth quarter of 2013. It is worth noting that Aramco is also planning to use more steam injection for enhanced oil recovery (EOR), and that plans have just been signed to increase steam production at the Ju’aymah, Shedgum and Uthmaniyah plants, with completion dates in 2014 and 2015.
Tuesday, June 19, 2012
The world will be a VERY different place when Ghawar is pumped dry. When it comes to evaluating the real economy, the state of Ghawar is arguably the most important story of all.