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THE Michael C. Lynch Thread (merged)

General discussions of the systemic, societal and civilisational effects of depletion.

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Re: THE Michael C. Lynch Thread (merged)

Unread postby rockdoc123 » Thu 16 Feb 2017, 23:15:14

I guess if you ignore the facts in Simmon's book then there isn't much evidence there.

But wait! Maybe the facts are important here? Maybe facts have something to do with evidence? Can you comprehend that idea?

If so, then lets examine the question of whether or not KSA is "about to experience a peak" as you put it.

Simmons pointed out in his book that the amount of oil that has already been produced from Ghawar is enormous. The fact that a huge amount of oil has already been produced at Ghawar is indisputable. Are you with me so far on that FACT or do I have to explain it all again for you?


Actually that is not what Simmons mostly wrote about in his book....perhaps you actually didn't read it.
What he did spend a lot of time doing was suggesting a bunch of papers he had supposedly read from SPE indicated that Ghawar was in trouble.
As it turns out (and I pointed to this a number of years back on the Twighlight in the Desert thread) he either didn't actually read anything other than the abstracts (you need a membership to SPE to get anything more than the abstract) or he didn't understand what the papers were actually saying. I actually read all of the papers he referenced (at the time I had a membership with SPE) and as it turns out where he reported the authors had indicated a serious problem and left it at that the authors had actually identified a problem and then spent the majority of the paper indicating how that problem was solved or was being solved.

And as to the reserves in Ghawar we now have two independent audits from Gaffney Cline & Associates and DeGolyer and MacNaughton two of the largest firms involved in reserve audits that indicate agreement with the official numbers Saudi Arabia has been saying for reserves. We don't know if that is P1 or P2 but there weren't a bunch of alarm bells going off and the Saudis wouldn't be listing on exchanges that required the maximum amount of reporting transparency unless they had little to hide.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby spike » Fri 17 Feb 2017, 11:40:19

Thanks, rockdoc, that conforms to my perception. I heard from a reliable source that, indeed, he only read the abstracts. But I pointed out the many of his mistakes and contradictions in my paper https://books.google.com/books/about/Cr ... RFAAAACAAJ (which cites some others who made more technical critiques).
Simmons actually was asked why, if all of the papers he was citing had been presented to the petroleum engineering community, none of them saw the danger he perceived, and he said it was probably because as a banker he was better at seeing the big picture.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby Plantagenet » Fri 17 Feb 2017, 11:54:23

spike wrote:Simmons actually was asked why, if all of the papers he was citing had been presented to the petroleum engineering community, none of them saw the danger he perceived, and he said it was probably because as a banker he was better at seeing the big picture.


How hard is it to see that if Ghawar has already produced most of its reserves, then the remaining oil in Ghawar will eventually be used up as well? Thats really a very simple concept, but a large number of people are quite incapable of facing that inevitable reality.

Cheers!

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The assumption that oil production at the Ghawar oil field in Saudi Arabia is not on a path to peak and then go into decline is a classic example of magical thinking :lol:
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Re: THE Michael C. Lynch Thread (merged)

Unread postby asg70 » Fri 17 Feb 2017, 12:25:02

Note the language. "eventually". "on a path". "not unlimited".

Nobody's disputing the finite nature of oil, not even Michael Lynch. Oil has been finite since drilling first began. We're now about a decade beyond the time that Simmons and company predicted peaks. Hubbert's curve was supposed to form the basis of a prediction methodology. The methodologies failed to the point where while YES, there's reason to be concerned about a post-peak world, there's no longer a way to accurately predict when that will occur.

Not having any way to tease out a prediction via science means the discussion falls back to individual predictions based on little more than hunches and predisposition. It's the equivalent to people betting on college sports.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby rockdoc123 » Fri 17 Feb 2017, 12:35:53

Not having any way to tease out a prediction via science means the discussion falls back to individual predictions based on little more than hunches and predisposition. It's the equivalent to people betting on college sports.


To some extent I agree but the point some are making here is that the failed predictions are important simply from looking at the aspect of why they failed. It instructs as to what might actually be happening. In my view the prediction of what near term future hydrocarbon production looks like is something best handled using a probabilistic approach given there are many variables some that are independent and some that are dependent and each variable has a potential range of impact. My guess is that the range of possible outcomes would be quite large.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby onlooker » Fri 17 Feb 2017, 12:45:39

Obviously, asg, either you give no merit to the Etp modeling or have not even looked into it. The modeling though not strictly intended as a prediction tool nevertheless produces results that logically suggest the timing of a catastrophic fall in oil production and/or cessation of oil industry functions via an scientific analysis of energy inputs and outputs. From there one can surmise devastating consequences
“Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”"Sheikh Ahmed Zaki Yamani,
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Re: THE Michael C. Lynch Thread (merged)

Unread postby Plantagenet » Fri 17 Feb 2017, 13:08:00

asg70 wrote:
Not having any way to tease out a prediction via science means the discussion falls back to individual predictions based on little more than hunches and predisposition. It's the equivalent to people betting on college sports.


???

You and Spike don't understand the nature of the data that producers have on their active oil fields.

While past predictions of a global peak in oil production have proven wrong, the predictions of peaks in individual conventional oil fields are still quite possible. You will agree, I hope, that Oil fields like Ghawar are most definitely finite?

OK. Lets stipulate then that the folks at Aramco are very aware of exactly what the current water cut is in the oil they produce, and what is the exact elevation of the water-oil contact produced by the water flood they have been pumping in at the base of the field for decades and what the thickness of the remaining production zone is. They know exactly what their recovery rate is. They have even recently planned to accelerate the recovery of the remaining oil by redrilling the top of the reservoir using horizontal techniques.

Given that kind of data together with oil production rates from the field it isn't very difficult to predict when Ghawar will peak and then be depleted.

Of course you have to be willing to look at the data instead of relying on "hunches" and the misguided belief that understanding oil reservoirs is like "betting on college sports".

CHEERS!
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Re: THE Michael C. Lynch Thread (merged)

Unread postby Subjectivist » Fri 17 Feb 2017, 13:36:57

onlooker wrote:Obviously, asg, either you give no merit to the Etp modeling or have not even looked into it. The modeling though not strictly intended as a prediction tool nevertheless produces results that logically suggest the timing of a catastrophic fall in oil production and/or cessation of oil industry functions via an scientific analysis of energy inputs and outputs. From there one can surmise devastating consequences


Why would anyone give merit to the ETP when simple economic modeling also matches events of the last three years? Free money from the Federal Reserve created a bubble of fracking investment that created a temporary glut in world oil supply. It is no more complicated than that so why throw away conventional economics with some complicated Doom today theory in its place?
II Chronicles 7:14 if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven, and I will forgive their sin and will heal their land.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby rockdoc123 » Fri 17 Feb 2017, 14:02:03

Obviously, asg, either you give no merit to the Etp modeling or have not even looked into it. The modeling though not strictly intended as a prediction tool nevertheless produces results that logically suggest the timing of a catastrophic fall in oil production and/or cessation of oil industry functions via an scientific analysis of energy inputs and outputs.


Or, alternatively, we could just through a bunch of chicken bones on an old blanket and spit a stream of rum over them. Just as much chance of getting the right answer and likely has fewer holes in the theory. :roll:
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Re: THE Michael C. Lynch Thread (merged)

Unread postby AdamB » Fri 17 Feb 2017, 15:00:58

Plantagenet wrote:Ghawar may be the largest and most prolific conventional oil field on earth, but it isn't infinite. At some point oil production will peak and then fall at Ghawar.


I don't think spike has ever said anything contradicting this in the least. Is a strawman necessary in this case? I haven't even heard spike claim that oil is infinite, and using about the only piece of Hubbert's original idea that still holds water (because it is axiomatic, to whit, finite things, produced, have a beginning of 0, a peak somewhere along the way, and a 0 at some point) to create a strawman is cute...but a strawman nonetheless.

IHS has an estimate of how much oil is in Ghawar. The USGS used those numbers during their global reserve growth update a few years back. The IHS estimate of inplace and recoverable of Ghawar just happens to have changed recently. No one thinks these things are infinite and aren't calculating them that way, so why the need to pretend this is what people are saying? They aren't.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby AdamB » Fri 17 Feb 2017, 15:03:53

onlooker wrote:Obviously, asg, either you give no merit to the Etp modeling or have not even looked into it.


Or, as is quite a bit more logical, asg did as I did. Looked into the Etp model and determined that it has no merit.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby Plantagenet » Fri 17 Feb 2017, 17:07:19

AdamB wrote:
Plantagenet wrote:Ghawar may be the largest and most prolific conventional oil field on earth, but it isn't infinite. At some point oil production will peak and then fall at Ghawar.


I don't think spike has ever said anything contradicting this in the least.


Read higher up the thread. Spike was bashing Mathew Simmons suggestion that Ghawar is going to peak soon. Spike said Simmons had no "evidence" for such a conclusion. I pointed out †hat there is a great deal of evidence, including data indicating †he size of the reservoir, the production rate of oil, the total amount of oil produced since discovery, etc. etc.

The data from Ghawar is the "evidence" that most of the oil in Ghawar has already been produced, and if production continues at the current rate it will soon peak and then oil production will decline.

AdamB wrote:
IHS has an estimate of how much oil is in Ghawar. The USGS used those numbers during their global reserve growth update a few years back. The IHS estimate of inplace and recoverable of Ghawar just happens to have changed recently.


Can you provide a link to the new IHS estimate you are referring to? Those numbers are clearly relevant to the point I'm making that the data from Ghawar constitutes evidence in support of Simmons contention that most of the recoverable oil at Ghawar has already been produced.

Cheers!

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Re: THE Michael C. Lynch Thread (merged)

Unread postby rockdoc123 » Fri 17 Feb 2017, 18:21:38

don't need the IHS estimate given there are now two independent audits on Saudi oil reserves

http://markets.businessinsider.com/news/stocks/r-saudi-aramcos-oil-reserves-confirmed-by-external-audit--sources-2017-1-1001701283

DUBAI/KHOBAR, Saudi Arabia/LONDON, Jan 27 (Reuters) - The first independent audit of Saudi Aramco's oil reserves has confirmed the state oil company's own figures, sources familiar with the situation said, ahead of its planned share market listing next year.
The listing, expected to be the world's biggest initial public offering (IPO), is a centrepiece of a Saudi Arabian government plan to transform the country by enticing investment and diversifying the economy away from oil.
Based on a figure of 265 billion barrels, Aramco's fields contain about 15 percent of the world's proven reserves. Any finding that the reserves are significantly above or below that could affect the company's market value in the listing.
"The independent audit produced no surprises," a source familiar with the situation said on Friday. "Aramco's reserves have always been reported internally in line with international practice."
Aramco had asked two U.S. oil reserve auditing specialists to review its deposits.
These are Gaffney, Cline and Associates, part of Baker Hughes and Dallas-based DeGolyer and MacNaughton. DeGolyer and MacNaughton completed its audit last year, two of the sources said.
Aramco and DeGolyer could not be reached for immediate comment on Friday. Gaffney Cline also could not be reached for immediate comment.
Saudi Arabia's proven oil reserves have been listed at about 265 billion barrels in oil industry reference publications such as the BP Statistical Review of World Energy for many years.
Aramco said its crude oil and condensate reserves were 261.1 billion barrels in its 2015 annual report.
The reserves audit produced figures "definitely not below" those published by Aramco, a second source familiar with the matter said, while a third source said the auditing firm's estimate was higher than Aramco's own.


By no surprises that means that whatever the Saudi story has been on it's fields was verified by the auditors. I've dealt with both of these companies on numerous occassions in the past. In the old days you could get them to tweak the numbers a wee bit but after Sarbane Oxley and a few other changes to SEC and TSX (as well as UK exchange) requirements they became very strict to the point of being pessimistic.

I also want to remind everyone that peak oil refers to the peak of production, it does not refer to the point at which you have produced half of the reserves. There are many, many reasons to see fields and hence countries where the peak production rate is reached well before the half way point on recoverable reserves and in some cases the peak production rate could indeed be reached at a point quite awhile after half of the recoverable reserves have been produced.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby tita » Sat 18 Feb 2017, 10:02:38

rockdoc123 wrote:I also want to remind everyone that peak oil refers to the peak of production, it does not refer to the point at which you have produced half of the reserves. There are many, many reasons to see fields and hence countries where the peak production rate is reached well before the half way point on recoverable reserves and in some cases the peak production rate could indeed be reached at a point quite awhile after half of the recoverable reserves have been produced.

Typically, a tight oil well reach peak production well before the half way point.

Also, 10 years ago, KSA was probably not able to increase his production of oil. Of course, they said that the market was balanced and did not need to supply more oil rather than admit they had a production constrain. But as we know today (and many knew all the time), reserves (or economically recoverable reserves) are not a fixed figure and are subject to changes. Up or down. KSA was finally able to keep and even increase their production.

As you said, there is a lot of possible outcomes. And predicting which scenario will be realised is just impossible. We just know that any well can't produce oil forever, and sooner than later will it affect the whole industry that surround this ressource. It is indeed already affecting it.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby spike » Sat 18 Feb 2017, 10:47:23

Simmons quoted 1975 estimates by the American partners in Aramco that Ghawar was 61.5 billion barrels and the country 108 billion. He made no reference to reserve growth, but thought those numbers might be credible, given the source. Most recently, the field has been said to have produced 65 billion and have 70 billion reserves remaining. http://www.hydrocarbons-technology.com/ ... oil-field/ Matt also repeated the claim that production peaked when half of a fields URR had been produced, which means that Ghawar and Saudi Arabia should have peaked long ago, especially if you believe the 1975 estimates. The ASPO 2002 estimate of 300 Billion URR would also bring us close to a peak now.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby ROCKMAN » Sat 18 Feb 2017, 11:43:59

tita - "Typically a tight oil well reach peak production well before the half way point." Perhaps you meant to say a tight oil play and not a well. Typically a tite oil well reaches its peak rate the first month it begins producing...sometimes the first week. And it recovers half of its ultimate recovery very early in its life...perhaps in Year 2 or 3 of a 10+ year life. This is particularly true of fracture production with it high initial decline rate.

And you make a good point about production constraints. One aspect often not mentioned is a significant constraint that has nothing to do with the wells themselves. It the surface production equipment...especially true for the oil/water separation equipment. A critical factor for all of us producing water-drive reservoirs. As derpletion continues the water cut (% of the stream that's water) can increase from 0% to 98%. Yes: there are wells that can still produce a positive cash flow with a 98% WC even at $30/bbl...or less.

But as WC increases the processing infrastructure has to be expanded and that takes increasing capex. A system designed to handle a 10% WC cannot handle a 30% WC. So one approach to dealing with an increased WC is to reduce the production rate. A well producing 1,000 bbls of fluid per day (bfpd) with a 10% WC (900 bopd) might be handled OK. But increase to a 20% WC (800 bopd) and capex has to be spent on expansion of the oil/water seperation equipment. And if the price of oil doesn't justify that new investment? Simple solution: reduce production to 500 bfpd (400 bopd) and the system can then handle a 20% WC. Revenue decreases but such is life in the oil patch. But what happens if the oil price increases significantly? That operator might invest enough not to just handle 1,000 bfpd at 20% WC (800 bopd) but expand even more to handle 2,000 bfpd at a 20% WC (1,600 bopd).

Unfortunately we never get to see the details of KSA operations but we have seen reports of periodic significant expansion of its SURFACE production facilities. But there's another protocol the entire oil patch uses: selective production: shut in the wells with higher WC's and increase production from the better wells. This allows an increase in oil volume without spending capex to increase "handling capacity"...the general term for the capacity of the surface production equipment.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby Plantagenet » Sat 18 Feb 2017, 12:52:40

spike wrote:Simmons quoted 1975 estimates by the American partners in Aramco that Ghawar was 61.5 billion barrels and the country 108 billion.


Simmons compiled that data and other every bit of data he could find on the oil field at Ghawar etc. You can hardly blame him for quoting published data released by the US partners in ARAMCO when he was compiling all the data he could from every source.

spike wrote: Most recently, the field has been said to have produced 65 billion and have 70 billion reserves remaining. http://www.hydrocarbons-technology.com/ ... oil-field/


Yes. But lets look more closely at those numbers. FIRST, if you track that estimate back to its source, it comes from a single sentence in a speech given by a prominent Saudi in 2008. No technical information has ever been released to support or document that reserve number in any way. Hopefully its right---but we don't know if its right. SECOND, Ghawar is producing about 2.5 BILLION bbls/oil every year so the 65 Billion number you are quoting is bogus. It is 8 years out of date. Lets do the math----2008 was ca. 8 years ago so at 2-2.5 BILLION bbls of oil per year we've got about 15-20 BILLION bbls produced over the last 8 years, bringing the total amount of oil already produced from Ghawar up to ca. 80-85 billion bbls.

--------------------------------------

So the number you quoted for total oil production from Ghawar is bogus. You agree, I hope?

OK...if you agree the number you cited for total oil production was wrong, then now lets look at the technical data that is available more closely for the reserve number.

First, we can begin by using the updated number of 80-85 BILLION bbls I calculate above for oil already produced....we can then subtract 15-20 billion from the number you quoted for reserves right off the top. Based on the 2008 statement by the Saudi at a conference, the remaining reserves would be about 50-55 Billion bbls/oi.

But is even that corrected number accurate?

Hmmm.....

Given the lack of transparency at Aramco, we don't know if that one statement made 8 years ago is actually accurate.

We just don't know much about the condition of the field at this time. The reservoir is a highly porous dolomite about 280 feet thick. The dolomite has been gently folded into a broad anticline. Much of the reservoir is filled with natural gas, so the entire thing isn't an oil reservoir anyway. There have been decades of water flooding, and oil production wells have a significant percentage of water in them already. Normally a significant amount of water in the production is a bad thing. But at Ghawar---who knows?

Image
Does Ghawar contain another 50 BILLION bbls of oil? Who knows?
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Re: THE Michael C. Lynch Thread (merged)

Unread postby pstarr » Sat 18 Feb 2017, 13:07:14

Plant, good sleuthing

Cheers!
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Re: THE Michael C. Lynch Thread (merged)

Unread postby rockdoc123 » Sat 18 Feb 2017, 13:55:46

Does Ghawar contain another 50 BILLION bbls of oil? Who knows?


I posted on this a couple of months ago I believe, not sure what thread. There are a number of ways of coming at it but arriving at the OOIP that Aramco talked about, was repeated by IHS and can be replicated by taking the recorded area of closure and applying what is known about average porosity, water saturation, Boi, net pay and using a trap correction figure given the general shape of the closure you end up with a number somewhere between 190 and 210 GB. A few years ago there was a publication in SPE that looked at wettability in the Arab reservoir in the laboratory. Including the view that wettability changed as production progressed and plugging that into Aramcos huge computer simulation they arrived at somewhere just north of 70% ultimate recovery for Ghawar. This year the oil minister remarked that they now believed that based on performance and the new tools they were applying (intelligent field design) they would recover 70% from all of their reservoirs. At 190 GB OOIP ulitmate recovery would then be around 130 GB.

Again although the details haven't been released the two audits must give confidence to this number given it makes up a large proportion of remaining recoverable.

But as I said before whether it has produced more than half it's reserves and whether it has peaked or not is not the same question. For years Saudi Arabia held back on production and it wasn't until post 2009 that they actually started to increase production from parts of Ghawar through the implementation of MRC wells and investment in gathering systems, water and gas handling. Could they increase production at Ghawar at this point? I would be surprised to see it given what they have accomplished so far but for certain it is not in danger of suddenly shutting down. Aramco had done an admirable job of controlling the water coning issues they had previously and they now have the water handling capacity that additional water cut shouldn't be a problem. It is a complete fallacy that many here have that a high water cut will kill off production...as both Rockman and I have pointed out there are many fields in the world that produce for years and years at water cuts in excess of 90%.
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Re: THE Michael C. Lynch Thread (merged)

Unread postby Synapsid » Sat 18 Feb 2017, 16:01:13

rockdoc,

"...and spit a stream of rum over it."

I didn't know about the rum part. This is exciting! One learns so much at this site.

(yellow smiley face goes up there)
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