[ROCKMAN]

pstarr - Nice cross section but it hurts my eyes. LOL. Oil patch protocol: oil = green; NG = red; water = blue. But even then a bit misleading: the oil water level is all the way to the top of the reservoir. Currently about 35% to 40% of the production coming up the average Ghawar well is water. IOW a well producing 10,000 bbls per day of FLUID is producing around 4,000 bbls of water and 6,000 bbls of oil. IOW a 40% 'water cut". Most of the stripper oil wells in Texas (doing less then 15 bopd) have a water cut of 90% to 98%. thus the term "brown stained water". The 70 year old reservoir the Rockman is currently drilling hz wells in has produced 28 million bbls of oil and 100+ million bbls of water. It was producing 12 bopd from 5 wells when the Rockman's first hz well came in at 200 bopd. BTW that well is still making a lot of oil but has an 85% water cut.

Took the Rockman 10 years (and $90/bbl oil) to convince someone he had a good idea. LOL

[rockdoc123]

The thing is, because they are pumping just as hard as they can right now KSA is demonstrating that their claimed 'spare capacity' is just a claim, and not much more than a claim. In the past they have used that claim to calm the markets when oil supplies were tight at $100/bbl but I am not so sure they will be able to do so in the future now that they have maxed out production.

I don’t see what the evidence is that they have “maxed out production”. They have increased production to secure market share but that doesn’t necessarily require producing everything they can. I would expect that they are producing on a fine balance where they are trying to maintain a price they can work with while not ceding market share….it isn’t working out because the US shale companies have been producing as hard as they can for various reasons. Back years ago we talked about the Saudi mega-projects which had the goal of getting spare capacity to 12.5 MM bbls/d. All of the fields that were planned for improvements in terms of MRC wells, water and gas handling etc were completed with the exception of Manifa which was postponed due to perceived low demand for that type of crude. The fact the billions of dollars planned were spent on these projects (as verified by Western service companies) and SA were adamant back in 2010-11 that the results were better than anticipated suggests that spare capacity should still be somewhere close to 12 MMB/d. Remember that spare capacity refers not to something where the tap can just be turned on but a situation where production can be brought on with a minimal of expenditure and work (i.e. no new drilling or large construction costs).

The red is oil, floating on a sea of water (the blue and green). The Saudis have been pumping these reservoirs for 60 years from the top and have skimmed off all but the last oil sheen on the surface. Now those brilliant engineers have taken up where we started tight-shale, running perforated horizontal well bores along the very top of the reservoir trying desperately to keep production

This is somewhat misleading. The cross sections shown are from a portion of Ghawar and not representative of the whole field. As I pointed out a few years ago the northern part of Ghawar is definitely well past its 50% level of depletion but that being said studies done by Aramco and published in SPE point to the likelihood that there is about 25% recovery still remaining. That’s a fair bit of oil. Also the wells you speak of are called MRC or maximum reservoir contact wells. They were not drilled to “skim off the oil on top” but rather were drilled as a means of dealing with high water cuts from intersected fractures. I spoke to this on a Saudi thread here years ago which seems to have disappeared into ether space. The idea was that with detailed seismic Aramco could identify the faults and major fractures and by drilling the long reach “fish scale” multi-laterals they could avoid the fault zones and produce the wells are lower draw down pressure thus reducing the risk of water coning. When I last looked this had been a very effective strategy limiting water cut to a relatively steady 35%. Most of these fields have a strong water drive so recovery will be high as long as the water cut can be managed. Aramco also has the ability to intervene in MRC wells where one lateral might be pulling more water than they would like. That lateral can be shut-in from the surface and a new lateral can be drilled and completed with the use of expandable liners which avoids decreased production as a consequence of tubing size. Aramco is only recently starting to look at the shale resources in the Rub Al Khali which should be substantive if the rocks are fracable.

[rockdoc123]

The 70 year old reservoir the Rockman is currently drilling hz wells in has produced 28 million bbls of oil and 100+ million bbls of water. It was producing 12 bopd from 5 wells when the Rockman's first hz well came in at 200 bopd. BTW that well is still making a lot of oil but has an 85% water cut.

this is something I've mentioned in the past as well. There are many reservoirs that produce tons of oil at very high water cuts, you just need to know what to do with the produced water. In the Sudan brand new wells drilled into the Cretaceous reservoirs commonly had water cuts at 90% due to the very high vertical permeability in the reservoir. They produced at high rates and the water was disposed of in settling ponds (where it was treated and then used for agriculture where it was badly needed) or reinjected. High water cuts do not mean the death of a reservoir, it is a problem when you have a lower permeability reservoir and you are coning water past hydrocarbons left in the pore space either due to coning along fractures or an adverse mobility ratio.

[ralfy]

I beg to differ. No one is in a position to comment until they experience these daily events and I tend to counter these dismissals for being ignorant and akin to the flat earth mentality. That said and given their sheer magnitude, and the fact that I have yet to fully understand them, I talk very obliquely about them. I have been struggling with them for years in a bid to make them accessible without destroying their commercial value for me.

Stock market transactions have nothing to do with natural selection, which is part of evolution.

Natural Selection

https://en.wikipedia.org/wiki/Natural_selection

Evolution

https://en.wikipedia.org/wiki/Evolution

Stock Market

https://en.wikipedia.org/wiki/Stock_market

[americandream]

More one eyed capitalfeudalism from the land of inshallahs, sports cars, Russian hookers, women in dustbins and refugees:

http://www.truth-out.org/news/item/3512 ... -abundance

[americandream]

I beg to differ. No one is in a position to comment until they experience these daily events and I tend to counter these dismissals for being ignorant and akin to the flat earth mentality. That said and given their sheer magnitude, and the fact that I have yet to fully understand them, I talk very obliquely about them. I have been struggling with them for years in a bid to make them accessible without destroying their commercial value for me.

Stock market transactions have nothing to do with natural selection, which is part of evolution.

Natural Selection

https://en.wikipedia.org/wiki/Natural_selection

Evolution

https://en.wikipedia.org/wiki/Evolution

Stock Market

https://en.wikipedia.org/wiki/Stock_market

The markets merely quantify all activity on this planet via exchange. No great secret to the data. You have sex, buy a lolly, the lions eat an agri cow....all of that appears in that data. The data is rational and ordered for decisiveness, noisy for indecisiveness or volatility. The more ordered, the more they trend, the noisier they are, the more volatile. We are in the midst of major dislocation with Islam/nationalism increasingly seeing to usurp utilitarian capitalist rules...hence more chaos.

[Tanada]

The thing is, because they are pumping just as hard as they can right now KSA is demonstrating that their claimed 'spare capacity' is just a claim, and not much more than a claim. In the past they have used that claim to calm the markets when oil supplies were tight at $100/bbl but I am not so sure they will be able to do so in the future now that they have maxed out production.

I don’t see what the evidence is that they have “maxed out production”. They have increased production to secure market share but that doesn’t necessarily require producing everything they can. I would expect that they are producing on a fine balance where they are trying to maintain a price they can work with while not ceding market share….it isn’t working out because the US shale companies have been producing as hard as they can for various reasons. Back years ago we talked about the Saudi mega-projects which had the goal of getting spare capacity to 12.5 MM bbls/d. All of the fields that were planned for improvements in terms of MRC wells, water and gas handling etc were completed with the exception of Manifa which was postponed due to perceived low demand for that type of crude. The fact the billions of dollars planned were spent on these projects (as verified by Western service companies) and SA were adamant back in 2010-11 that the results were better than anticipated suggests that spare capacity should still be somewhere close to 12 MMB/d. Remember that spare capacity refers not to something where the tap can just be turned on but a situation where production can be brought on with a minimal of expenditure and work (i.e. no new drilling or large construction costs).

Sure, if you take them at their word. On the other hand as someone pointed out over in another of the oil supply threads they are currently losing market share by not increasing their output as world consumption has risen since last year. Perhaps it is just a technicality, but they had something like 10 percent of the share of the world oil market in 2014 when this all started and now they have something like 9.8 percent because consumption has grown more than their exports have grown in the last 18 months or about that long.

[ROCKMAN]

What ever % of recovery remains in Ghawar or any other Saudi field remember PO is about the rate of oil production. The last X% of recovery from such fields will be produced much slower over a much longer time periods the first X%. There is a max rate any well can be produced. One reason hz wells are drilled in high water cut fields like those produced by the KSA and the Rockman: a hz well with an 80% water cut that can produce 7X as much total FLUID as a vert well will produce 7X as much oil. But don't forget it will also deplete the produced area 7X as fast.

[americandream]

What ever % of recovery remains in Ghawar or any other Saudi field remember PO is about the rate of oil production. The last X% of recovery from such fields will be produced much slower over a much longer time periods the first X%. There is a max rate any well can be produced. One reason hz wells are drilled in high water cut fields like those produced by the KSA and the Rockman: a hz well with an 80% water cut that can produce 7X as much total FLUID as a vert well will produce 7X as much oil. But don't forget it will also deplete the produced area 7X as fast.

I am sure allah economics will take care of depletion concerns.

[ROCKMAN]

What the Rockman learned long ago: Mother Earth doesn't give a sh*t as far as what Alla, Dog or geologists want. LOL.

[americandream]

What the Rockman learned long ago: Mother Earth doesn't give a sh*t as far as what Alla, Dog or geologists want. LOL.

Dude how can u say that. I will sic my camels on you!!

[ennui2]

Oh, and by the way, those who have a stomach for the truth visit the http://www.theoildrum.com/node/6248 lots of articles on this subject going back to 2005

That "truth" is 6 years out of date.

[americandream]

These Muslim douchebags brought this on themselves. They ran with Reagans government, helped bring the Soviets down, were invaded straight afterwards with the support of the sports car loving, hooker obsessed Gulf Arab elite.

This was a self induced state of suffering, nothing to do with the kudzus protecting their territory. This ape shot itself in the arse.

[ennui2]

What does your comment even mean?

It means you are clinging to outdated and discredited analysis from a site that shut down due to having egg on its face.

Is the Ghawar field is refilling?

To say oil depletes is meaningless, and not that hard to say. To attempt to time the day of reckoning is what's hard, as TOD found out.

[rockdoc123]

Sure, if you take them at their word. On the other hand as someone pointed out over in another of the oil supply threads they are currently losing market share by not increasing their output as world consumption has risen since last year. Perhaps it is just a technicality, but they had something like 10 percent of the share of the world oil market in 2014 when this all started and now they have something like 9.8 percent because consumption has grown more than their exports have grown in the last 18 months or about that long.

I think my point is SA will only be willing to sell to a limited discount price. We saw last year that to protect market share they were discounting crude prices quite heavily into the far east. With everyone else subsequently going nuts and trying to protect there own market share price drops and then SA would have to discount at an even higher rate to maintain that market share. At some point that doesn't make any sense, higher price winning out over market share.

I tend to believe a lot of what SA claims regarding production capabilities, reserves etc. Several reasons for that belief:

1. everyone points to the jump in OPEC reserves back in the eighties as an example of them "making things up" but in reality it coincided with the actual formation of OPEC regulations regarding production constraints and the idea of "reserves" as they defined them had almost certainly changed (i.e. including P2 with P1). I believe this to be an accounting issue much like most domestic and IOC's went through back in the nineties with the implementation of more stringent regulations on reserve classification and audit.
2. Aramco hires a lot of foreigners. I know a number of professionals who have spent a decade or more working for Aramco (they pay better than anyone else). Aramco hires Schlumberger and Halliburton for much of their wireline and other service work, Baker Hughes is also a big entity in the country. If there were actual problems of the type that the OilDrum and Toilet in the Desert purported to exist it is almost certain they would have leaked out through one of these sources. On the contrary my contacts scratch their heads when people question the numbers coming out of Saudi Arabia.....their comments are why would they and how could they cook the numbers? At the same time they hate working there (other than for the money) given the company has SA nationals in management positions who apparently can't find their backsides with both hands (they count on the workers for success).
3. The investment to increase capacity to 12.5 MM bbl/d involved spending of several hundred billion dollars and the contracts for the vast majority of the work were awarded to Western companies. If it was all a sham you would have heard something from the Western companies other than the press releases that pointed to the amount of money they had made from these projects. Why would SA invest hundreds of billions to improve production (wells, plants, compression, water and gas handling etc) if they thought it wouldn't work? Highly unlikely. To my mind that is a conspiracy theory too far.
4. If SA were actually fibbing about their oil and gas industry you would think that everything would be touted as being an amazing success. That is the sort of nonsense you do see from countries who do not have a robust oil and gas industry but have some hint of success that they hope will attract new punters to the country. On the contrary SA has been forthcoming with the fact their conventional gas exploration push in the Rub Al Khali was a huge bust and that the Manifa expansion project was put on hold. This suggests to me they are just reporting what has happened, of course they aren't opening up the kimono fully as that is not in their nature but I believe the numbers coming out of there are likely not far off.

Certainly it would be ideal if Aramco submitted to third party independent audit of their reserves and production but that isn't going to happen. As a consequence I need more substantive evidence they are "cooking the books" before I go down that rabbit hole.

[ennui2]

Share with us ennui, what is wrong with the analysis?

Rockdock123 said it better than I could with a very detailed rebuttal which includes all the newest data since 2010.

His summary:

I don’t see what the evidence is that they have “maxed out production”.

[ROCKMAN]

How ever accurate the KSA reserve estimates may or may not be isn't of great importance to the global energy dynamic. It is producing around 10% to 12% of global consumption depending on whose numbers we use. A critical metric is the global volume of oil remaining. And the even more critical metric: the global rate of oil production. The rest of the world without the KSA has a declining reserve base...declining about 30 BILLION BBLS per year. Now add the new discoveries that can offset that decline. I'll let others toss out their favorite numbers.

So not only is the global reserve base declining about 300 BILLION BBLS every decade the expense of replacing those reserves has increased to the point that oil had to rise more the 300% above it historic average. And that was primarily in just the US which had the capital access and infrastructure to take advantage of the higher price. But now we've returned to the historic price level. How long will the price hold here? No one can predict. But one can easily predict that the rate of new reserves that we've seen added to the global base won't be seen again until the price of oil increases dramatically. In the mean that decline continues to reduce the reserve base about 30 BILLION BBLS PER YEAR. By comparison the 3.5 BILLION BBL decline per year by the KSA doesn't seem very significant IMHO.