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Page added on March 9, 2018

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Aging Oil Fields Defy Gravity to Pump More Crude

Bob Dudley, in his 38 years in the oil industry, has never seen anything like what happened with BP Plc’s old fields last year: They gushed more crude.

“I cannot remember ever in my career having seen a negative decline rate,” the British oil-giant’s chief executive officer said in an interview on the sidelines of the CERAWeek by IHS Markit energy conference in Houston.

Bob Dudley

Bloomberg

The fact that Dudley isn’t alone in seeing mature fields dwindling less than expected — and in BP’s case surprisingly increasing — means the Organization of Petroleum Exporting Countries has one more thing to worry about. As if the shale boom wasn’t enough of a headache.

Better results from legacy fields, also observed by producers like Royal Dutch Shell Plc and countries like Norway, further complicate efforts by petro-states like Saudi Arabia to push prices higher by curbing supplies.

Across the industry, the results weren’t as spectacular as BP’s, but still impressive, executives and officials at CERAWeek said. According to the International Energy Agency, production from mature oil fields dropped last year by about 5.7 percent, the least in data going back one decade.

That comes as a huge surprise because the oil industry cut spending dramatically during the three-year downturn it’s just started to emerge from, and managing deep-water fields to arrest their demise can be a multibillion-dollar affair. So, OPEC was hoping thriftier times would lead to faster declines from mature wells that still account for more than half of the world’s output.

But the need to stretch each dollar spent is exactly why Big Oil is getting more from those fields, according to Wael Sawan, executive vice-president for deep water at Shell. The lower decline rates are part of the response to low oil prices.

Aging Better

Old oil fields dwindled at a much slower pace worldwide last year

Source: International Energy Agency

“Companies are focusing on the basics,” Sawan said in an interview in Houston. “So there was a massive re-focus on existing wells. It’s the cheapest and most profitable barrel that companies can access.”

The Paris-based IEA highlighted two regions for their “remarkable” improvement: The North Sea and Russia. In Norway, decline rates slowed to 9.3 percent last year, compared with 18 percent in the early 2000s. Even at deep-water projects worldwide that traditionally show a faster decline, there was improvement.

Often, the key is simply to make sure the fields pump every day of the year, reducing downtime, executives said. Producers can, for instance, postpone maintenance to keep fields running.

“Oil companies with tighter capex budgets are striving to extract every last drop from mature assets,” the IEA said in a report presenting its oil supply and demand outlook for the next five years. “Small cash injections are in many cases yielding swift returns.”

Divided Industry

The industry is divided, though, about the sudden improvement in decline rates, with Dudley and other executives admitting they can’t guarantee another good year in 2018. Some even question the veracity of the data. Others, however, agree with Shell’s Sawan that the industry now has the incentive it didn’t have when crude was at $100-plus a barrel to work harder on mature fields.

Despite the improvements, it’s still an uphill battle of massive proportions. Fields in decline produced 51 million barrels a day last year, according to the IEA. The ones that are still ramping up production contributed just 16 million to global supplies. Another 30 million came from unconventional sources, including shale and Canada’s tar sands, where production can remain steady for decades once mining operations have been set up.

In countries like Brazil and Mexico, the slowdown at old fields jumped to double-digit rates last year, but things could change there, too, as they lure multibillion-dollar investments from oil majors to help them develop their riches.

bloomberg



16 Comments on "Aging Oil Fields Defy Gravity to Pump More Crude"

  1. CAM on Fri, 9th Mar 2018 8:07 am 

    Not at all surprising. As the rising price of oil spurred increased production from fracking, it would like also incentivize companies to do everything they could to increase oil from current conventional reserves even as they cut back on investment in new finds. And maybe especially as they cut back investment on new finds.

    Yet, depletion continues!

  2. kanon on Fri, 9th Mar 2018 8:15 am 

    This article could lead one to believe that we have encountered a “negative decline rate” and that a 5% decline rate means a 20 year life expectancy. However, I believe the only thing it means is that some enhanced recovery process has resulted in production being a bit higher or only 5% less than last year instead of 10% less. I don’t think it really means that “. . . Dudley isn’t alone in seeing mature fields dwindling less than expected. . .” This article is a great example of positive spin. See Oil_depletion

  3. bobinget on Fri, 9th Mar 2018 10:27 am 

    Reworking old press releases has proven to produce more investor interest.

    Still, Wall St remains the world’s richest oil field.

  4. Cloggie on Sat, 10th Mar 2018 10:27 am 

    Bob Dudley, in his 38 years in the oil industry, has never seen anything like what happened with BP Plc’s old fields last year: They gushed more crude.

    Perhaps the Russians were right after all?

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

    Who else could be responsible? Santa? Fairies?

  5. rockman on Sat, 10th Mar 2018 6:56 pm 

    In 40 years of reviewing THOUSANDS of historical declines in fields I don’t recall a single incident of a field’s decline rate NOT DECREASING as it traveled towards completion. Just a simple reality.

    And yes: a sudden increase in oil causes operators to workover wells, increasing production, that were causes economic candidates at lower oil prices. And the converse is true: a significant decrease in oil prices causes companies to shut in wells with high operational costs that are no longer covered by the revenue.

  6. Anonymouse1 on Sat, 10th Mar 2018 11:04 pm 

    Come on narratviman, you know who is refilling those depleted oil fields. Its yawheh. He’s got amerika’s back and there is no way in hell he would ever let a bunch of hippie dippie-potheads all doped up on communism and the Jill Stein manifesto plop their un-godly and goofy wind turbines and stupid solar panels all over the place. Science narrativeman. Gawd isn’t about to let Rexxon-Mobils stock options tank. Not if He(tm), has anything to say about it.

    Ask cloggraham. He’ll tell you. He has a direct line to alex jones, the illuminati AND yawheh himself.

  7. Go Speed Racer on Sat, 10th Mar 2018 11:31 pm 

    Anonymouse, God is refilling the oil wells
    as we speak. That’s the miraculous power
    of Jesus. With all this extra oil gushing
    out of those declining fields, its time for
    U and me to go shopping.

    We’re gonna go buy us a Motorhome!

    And then we’ll drive it to the Grand Canyon.
    Eating hamburgers and fries, all the way.

    Here comes a salesman, with a great deal.
    http://www.tininthewind.com/images/new_home_001.jpg

  8. Cloggie on Sun, 11th Mar 2018 5:28 am 

    Here comes a salesman, with a great deal.
    http://www.tininthewind.com/images/new_home_001.jpg

    I like it and might order one.

    Do they come without traffic light shaver?

  9. Cloggie on Sun, 11th Mar 2018 5:29 am 

    Come on narratviman, you know who is refilling those depleted oil fields. Its yawheh. He’s got amerika’s back and there is no way in hell he would ever let a bunch of hippie dippie-potheads all doped up on communism and the Jill Stein manifesto plop their un-godly and goofy wind turbines and stupid solar panels all over the place. Science narrativeman. Gawd isn’t about to let Rexxon-Mobils stock options tank. Not if He(tm), has anything to say about it.

    Ask cloggraham. He’ll tell you. He has a direct line to alex jones, the illuminati AND yawheh himself.

    Anonymouse1 is giving anti-cementheadism a bad name.

  10. Boat on Sun, 11th Mar 2018 1:54 pm 

    Yesterday’s wells left a lot of oil in the ground. They didn’t use multiple wells at different levels. When prices get higher look for old fields to be revisited to get what they missed. Tech folks, tech.

  11. Anonymouse1 on Sun, 11th Mar 2018 2:42 pm 

    Sure, GSR I’ll go on a Grand Canyon road trip in that motorhome. BUT, were going to need to tow a 1973 ford LTD with 460cid to the motorhome. You know, in case we need to go to a Mcdonalds drive-through, or pick up some pork-rinds from Walgreens. And just to make sure we got all our bases covered, we should hook a 1978 chevy blazer to the LTD.
    Well need to bring that along in case we decide to go 4-wheeling in the Grand canyon.

  12. Go Speed Racer on Sun, 11th Mar 2018 4:02 pm 

    Anonymouse, I Like your style.

    IF we are towing behind the RV,
    both my Ford LTD 460 AND your Vintage
    Chevy K5 Blazer,
    I think we’re gonna need a really really
    really big engine for the RV.

    I’ll ask the salesman about that.
    (O;
    http://www.tininthewind.com/images/new_home_001.jpg

    Wow isn’t America great Again!
    Now that Trump is President, Peak Oil is
    cancelled, and Jesus keeps filling up
    those oil wells fuller and fuller.

    Til thine cup runneth over.

    Chevy K5 Blazer, usually has 350 V8
    but maybe we could find one with a big-block.
    https://en.wikipedia.org/wiki/Chevrolet_K5_Blazer#/media/File:1979_Chevrolet_K5_Blazer_Cheyenne.jpg

    Ford LTD, 1977 with 460 V8. Don’t drive
    to the Grand Canyon without it.
    https://barnfinds.com/wp-content/uploads/2017/12/120217-1978-Ford-LTD-1.jpg

    Got an 8-Track player, power seats,
    Freon-11 Air Conditioner that will
    blow snowflakes at ya going down the
    interstate AND punch a hole in the
    ozone layer all at the same time.
    (O;

  13. Anonymouse1 on Sun, 11th Mar 2018 8:36 pm 

    But that is only the 2-door LTD. We should find a 4 door model. We’ll need the extra room store to all the Hank Williams, John Denver, Freddy Fender and Dolly Parton 8 track tapes. Otherwise, we might have have to attach a trailer to the back of the Blazer for those. That’s starting to sound a lot like work.

  14. Go Speed Racer on Mon, 12th Mar 2018 3:26 am 

    Gol dammit Anonymouse. Ya are way ahead of me. Ya got a roadmap of my own
    brains, better than I do.

    How did ya know I was gonna bring Dolly
    Parton 8-track tapes and Hank Williams??

    At least I can still surprise ya with the
    “Frampton Comes Alive” on 8-track. Now that
    one threw ya off balance, didn’t it?
    http://i.ebayimg.com/images/i/400618394643-0-1/s-l1000.jpg

    I can bring something completely iPhone modern
    though. How about the full DVD set collection
    of 6 Million Dollar Man. And the RV
    has got a DVD player, yes it does.
    https://borgdotcom.files.wordpress.com/2011/09/six-million-dollar-man-banner.jpg

    If ya insist, I’ll even bring along the
    DVD set for “UFO”, better than fine wine.
    Specially the girl with the purple hair.

    http://ufoseries.com/videos/usDvdSet1Cover.jpg

    http://iv1.lisimg.com/image/6643111/727full-gabrielle-drake.jpg

    And I’m taping a Farrah Fawcett poster
    onto the wall, in the RV bathroom.

    http://www.caption-of-the-day.com/wp-content/uploads/2012/01/farrah-fawcett-poster.jpg

  15. Boat on Mon, 12th Mar 2018 3:15 pm 

    Well, the 6 million man is ok and all that, but no Grand Crayon road trip would be complete without bring The Bionic Woman (on VHS) along. At least in imo. I’ll bring that, and the VHS player (There should be room in the blazer for that).

    Good find on the UFO series!

    I had a FF poster, but I used it for a tablecloth and it kind of got wrecked as a result.

    I hope there is room for my Lynda Carter Wonder Woman posters in the RV.

    Oh, I was thinking about how hot it might get, so if the freon in the LTD and motorhomes gets a little low, we can always top it up with some R22 coolant made by the fine folks at DuPont.

    https://www.ebay.com/itm/R-22-USA-Made-DuPont-FREON-REFRIGERANT-30-lbs-lb-NEW-SEALED-FULL-CYLINDER-R22-/162936525232

    Better to be safe than sweaty.

  16. Anonymouse1 on Mon, 12th Mar 2018 3:16 pm 

    Well, the 6 million man is ok and all that, but no Grand Crayon road trip would be complete without bring The Bionic Woman (on VHS) along. At least in imo. I’ll bring that, and the VHS player (There should be room in the blazer for that).

    Good find on the UFO series!

    I had a FF poster, but I used it for a tablecloth and it kind of got wrecked as a result.

    I hope there is room for my Lynda Carter Wonder Woman posters in the RV.

    Oh, I was thinking about how hot it might get, so if the freon in the LTD and motorhomes gets a little low, we can always top it up with some R22 coolant made by the fine folks at DuPont.

    https://www.ebay.com/itm/R-22-USA-Made-DuPont-FREON-REFRIGERANT-30-lbs-lb-NEW-SEALED-FULL-CYLINDER-R22-/162936525232

    Better to be safe than sweaty.

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