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Evidenced in
brown,
green &
blue
lines in the chart, the terminal decline
scenarios by Stuart Staniford & Ace at theOilDrum illustrate the
danger of listening to agenda-driven pundits...
Pundits at
theOilDrum, along with forecaster extraordinaire Matt Simmons were
the main
originators/disseminators of the disruptive 2007/2008 rumours that Ghawar & KSA
went into terminal decline in 2006. Their common error was inability to
distinguish real decline from production decline. The latter is not
probable 'til 2024, in large part due to Aramco's unrivalled Surplus
Capacity.
|
Update of legacy Saudi Arabia
Crude Production Forecasts by Husseini & theOilDrum
March 31 2012 delayed FreeVenue
public release of Dec 31st MemberVenue guidance ~ Here's my annual look-see
at how the legacy predictions by Sadad al Husseini and
theOilDrum's Stuart Staniford & Ace (Joker) have performed against facts on
the ground. Admittedly, all efforts have been stymied to some degree
by OPEC mandated quota restrictions. This is exactly why it was decided
back in Feb/2009 to depict my Peak Scenario-2500's as Maximum
Sustainable Capacity ... not Production.
The PS-2500 continues to project 2009 as Peak
Year for MSC. The Kingdom's 3.6% Underlying Decline Rate Observed (UDRO)
for regular conventional oil makes it almost impossible for any future announced megaprojects to have
sufficient
magnitude necessary to breach 2009's 12.5-Mbd high. Based on last week's
Linearization update,
my
estimate of KSA URR nudges up slightly to 211-Gb.
The Husseini Outlook takes a similar view with
its production high (2023) of only 11-Mbd. The Ace (joker?) over @ TOD forecasts
extraction going south after 2011. Meanwhile, the infamous high-case
worst-case scenarios by theOilDrum's Stuart Staniford continue to be emblematic
of the agenda-driven rhetoric, fabrication of data, misinformation and mass
hysteria at that place. Since 2002, McPeakster websites & pundits have
been the best thing to ever have come along for oil sector shareholders & NOCs
since the invention of the automobile.
The dozens of alarmist "news feeds" disseminated by McPeaksters each week
contribute directly to the bottom line of Producers via windfall profits. |
|
 5th Annual
Saudi Arabia
Supply Outlook
Feb 9 2009 ~ Saudi Arabia's Maximum
Sustainable Capacity (MSC) will be a record 13.05-mbd in 2009. Enjoy it. Peak Oil has arrived in the Kingdom. From 2004 to 2007,
Saudi Aramco had bettered its self set targets. It didn't happen in 2008.
Fortunately, the miss was due to outside forces! By June, Saudi supply had
attained last year's goal of 9.5-mbd and was on the verge of busting the nation's
2006 All Liquids record. But within 30 days, Contract Crude was selling at
a record $134/barrel and Demand Destruction was kicking in. By year end,
OPEC members had agreed to pare down global quota by 4.2-mbd.
In compliance, Saudi production
was ratcheted down to 8.5-mbd and the 2008 year-end targets set back in 2004,
2006, 2007 all came up shy. A very similar circumstance occurred in 2006 albeit
not as dramatic. Fortunately, these are merely asterisk events, and not a sign of terminal
production decline.
Saudi Aramco starts 2009 with an awesome 2.7-mbd
of Surplus Capacity, far above the 1.5-mbd allowance in this Outlook. Altho 5 of the G-20 countries are in Recession, it
is probable that most countries will see some decent expansion in 2009Q3 and Q4.
But while healthy Demand may return, OPEC is not entirely giddy about only a $8
rise in Contract Crude Price from its Winter low of $32/barrel. This will
cause OPEC to
slow up its return to September 2008 quota levels. In turn, this may force Saudi Arabia to miss
its 2009 self-set targets as well.
Ironically, the very action of OPEC cutting
quotas has very much to explain the current collapse in crude price.
McPeaksters such as the theOilDrum, PeakOildotcom & forecaster extraordinaire
Matt Simmons are credited for originating/disseminating most of the 2007
disruptive rumours of Saudi Arabia's giant Ghawar field being in terminal
decline. But each time OPEC restricts
quota by 1-mbd, it is another nail in the coffin of the McPeaksters.
Albeit these measures cause a very short term rise in crude prices, as OPEC tightens
Inventories, the market is factoring in an even larger price component by acknowledging that spare capacity
is indeed rising. Since 1989, McPeaksters have made annual
proclamations that worldwide Peak Oil is upon us. With traders'
present recognition that Saudi Arabia alone has 2 to 3-mbd spare capacity, the
issue of Peak Oil is all but dead.
2009 continues Aramco's trend of accelerating its
short term targets. In 2004, we reported that the world's largest
petroleum producer had hoped to breach the 10-mbd threshold in 2015. A
major commitment to MegaProjects may bring this event to fruition in late 2009!
Unfortunately, another trend in play is very troubling. In our 2006
Outlook, Saudi Arabia was poised to see an Extraction Peak of 11.25-mbd in 2012.
Aramco has noticed that Underlying Decline Observed (UDO) is becoming a factor
to be reckoned with, and has been actively increasing its forward allowance for
UDO. When this increasing magnitude of the UDO allowance is coupled with
our recent heavily reduced estimate of their URR, it can be determined that
Saudi Arabia is presently undergoing an effective Peaking of Regular
Conventional Crude (RCC); one that is shielded by its substantial Surplus
Capacity.
TrendLines Research calculates Saudi Arabia's
2008 Underlying Decline Rate Observed for RCC to be 5.3%. UDO is increasing by
100-kbd annually and cause for concern in the long term. The rise may be
the result of major shuttering operations, or perhaps due to significant natural decline.
If be it the latter,
Saudi fields could attain 10% UDRO by 2017.
It is
improbable that there will be a substantial increase in KSA production
in the future. The Kingdom's record extraction of Regular Conventional Crude
was
9.9-mbd in 1980. Within five years, it had shuttered 65% of its
capacity and Russia became the #1 producer with a record 11.5-mbd in
1987. The KSA bounced back in the 90's. If the Kingdom's
URR is indeed only 212-Gb, then it is likely that
the nation passed the half-way crossover of its URR
in Spring 2007.
Unless major
field retirements are again under way, it is almost certain that the
Kingdom is presently undergoing an effectual
Peaking, one that is masked by their unrivalled spare capacity. This is evidenced by
its Underlying Decline
Rate Observed hitting a recent record 5.3% in 2008. Analysis
of the Kingdom's past and future Maximum Sustainable Capacity (MSC)
reveals the 2009 Peaking of its
Regular Conventional Crude. In our 2006 Outlook, RCC was destined to peak
@ 13.75-mbd in 2012 (incl Neutral Zone). Despite accelerated MegaProject
commission dates, larger than expected UDO has both dampened targets to the point where Peak MSC
has
shifted to a reduced 13.05-mbd in 2009. This concurs well with
our position that the KSA URR had a midpoint crossover in 2007. It is also
consistent with the unfolding of Peak RCC on the global scale.
In that context, if our calculation of RCC's URR being 2003-Gb is
correct, then the midpoint was crossed in 2006. Again, within one year
of the RCC production peak of 69-mbd in 2005. It appears that
conventional crude production peaks precisely at the midpoint of
extraction. M King
Hubbert would be proud, eh!
The road to a brighter scenario is
ugly. Let us make two reasonable assumptions: (a) that
projected UDO of 0.75-mbd in 2011 does not increase in the short
term and; (b) that a five year lead time is required for
new MegaProjects. Based on present build schedules, the current 13.05
MSC will decline to 9.55-mbd by 2015. To create a hypothetical MSC high of
13.5-mbd in 2015, Aramco must announce 3.75-mbd of new
capacity that would have to be completed by 2015. In short, three
1.25-mbd MegaProjects must be announced within 24 months to avert
2009 from being declared Peak MSC Year. Alternatively, if 2016 is
targeted for Peak MSC, then 4.5-mbd of commissioning is required in
the form of announcing 4 x 1.1-mbd MegaProjects over the next
36 months. For perspective, be mindful that Aramco's
current MegaProject track record is an average 0.55-mbd/yr.
Despite the negative long
term ramifications, Saudi Aramco has
sufficient Surplus Capacity to set new annual, quarterly & monthly
records over the next five years.
TrendLines Research calculates that if the firm chooses to Peak
early and high, say 11.5-mbd in 2012, Decline will commence no later
than 2020. By choosing to
maintain a more conservative 9.6-mbd plateau, Decline can be
postponed 'til 2025.
~
|
Our Scenario-2200
primarily estimates global & national URR using geologic
and technical data. However, alternative Linearization
analysis of the
Regular Conventional Crude component indicates that Saudi Arabia's
share is a mere 212-Gb.
Saudi officials insist a
more appropriate figure is
900Gb:
|
112 |
Past
2008/12/31 |
|
260 |
1P |
|
39 |
2P |
|
68 |
3P |
|
479 |
|
|
240 |
Contingent |
|
719 |
|
|
181 |
Undiscovered |
|
900 |
Gb
URR |
|
The chart above projects crude exhaustion by mid
century. It is purposely misleading in order to illuminate the harsh effects of
Underlying Decline and the necessity for Aramco to maintain its commitment to
MegaProjects. The 2009 scenario reflects a Saudi URR of only 158-Gb.
With 112-Gb already extracted, implied reserves are a mere 46-Gb. On the contrary, Saudi officials assert that
they have 367-Gb of 1P/2P/3P Reserves and a URR of 900-Gb. Jean Laherrère
adds credibility to a larger figure with his creaming curve analysis
indicating a URR of 400-Gb
or 288-Gb Reserves. Alternatively,
our
own linearization analysis projects a Saudi URR of 212-Gb and 100-Gb
of Reserves. The 2009 projection presented would appear to be far below a
Worst Case Scenario.
Saudi Arabia has recently
commenced to develop the second half of its vast Resource fields. Because
less than 50% of the Kingdom had active fields, Aramco officials assert that many Linearization Estimates of
its URR indicating ultimate crude volume of approx 200-Gb are flawed.
Some post-2002 linearization studies are demonstrating a "dog leg up" anomaly that has been
routinely explained away as EOR activity. With assurance within
the IEA WEO-2008 that Ghawar is indeed not in decline, the proof of the asserted high URR
will not be substantiated by an expected
announcement of a major upward revision of Saudi Reserves this year.
The only proof of a higher-than-212-Gb URR lies in the Kingdom's
ability to maintain or grow production levels after 2015.
The improbable 900-Gb URR implies that Aramco has the potential to
pump at its present rate 'til the end of the Century. To get there,
Saudi Arabian leadership must address their intent and commitment to future MegaProjects.
One can be less than confident that the present 55-kbd/yr trend for new capacity build will
continue in light of recent statements by the House of Saud that they will
moderate their growth program "for the sake of future generations".
Better
guidance would be appreciated.
In the meantime, Saudi Arabia (8.3-mbd) continues
its status as the number two extractor of regular conventional crude (behind Russia's 9.9-mbd) and
remains the numero uno producer
of All Liquids. |
|
|
Alarmists at theOilDrum expected
Saudi Arabia supply to be down to 7.5-Mbd by December
2008.
Instead, production rose
from 8.6 to 9.5-Mbd
Today it's 10.0-Mbd
oops! |
March 1 2007 ~
This graph is the new battle
flag of theOilDrum forum. Yup, all the
marbles on one call. Remember them? They are
the pundit alarmists (Mainstream Media calls them
wacko's) that in October 2004 published that the USA was
entering an economic Recession. Oops.
Well, they're back...
TOD's
March 2 2007
prediction:
The green
line shows that Saudi Arabia crude supply of
8.7-mbd of January 2007 is headed to 6.5-mbd
by Autumn 2011 ... or as low as 4-mbd!
Accompanying comments by
Stuart Staniford:
"It
also suggests that last year's underlying Type II
decline rate, before megaprojects like Haradh III, was
14%.
Overall, I feel this data is clear enough that I'm
willing to go out on a limb and conclude the following:
# Saudi Arabian oil production is now in decline.
# The decline rate during the first year is very high
(8%), akin to decline rates in other places developed
with modern horizontal drilling techniques such as the
North Sea.
# Declines are rather unlikely to be arrested, and may
well accelerate.
They
published it the exact same day that Colin Campbell
published a graph showing Saudi Arabia won't decline
until 2025 & he changed the ASPO Peak Oil Date to 2011
...
So, who
has got it very wrong? TOD or ASPO? Let's
see if TOD can do better than Matt Simmons, eh!
Note -
Saudi Arabia's supply output target for Autumn 2011 is 10.5-mbd
... right off the top of his graph!
(Jan 20
2009 Update: To the chagrin of TheOilDrum
McPeaksters, KSA extraction rose to 9.5-mbd by June
2008, at which time Saudi Aramco was forced to submit to
OPEC quota restrictions. After these production
cuts, KSA is far above
the 7.5-mbd predicted for December 2008 by TOD's Stuart
Staniford.) |
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