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Giant Oil Field Decline Rates

Production

Summary of article 1, Cobb’s “Aging Giant Oil Fields” 2013

  • The world’s 507 giant oil fields comprise a little over 1% of all oil fields, but produce 60% of current world supply
  • Of the 331 largest fields, 261, or 79%, are declining at 6.5% per year.
  • Techno-fixes have made matters worse because they’ll increase the decline rate to 10% or more, because we’re getting oil now, faster, with new technology that we would have gotten later.
  • And that will make it harder for unconventional oil (tar sands, deep ocean, tight “fracked” oil, etc.) to replace it

Summary of article 2, Koppelaar’s “… future oil supply”:

Based on 3 studies, average global oil decline rate of 4.5 to 6% assumed. No problems until 2013, and only then if there’s a rapid recovery of the economic system. Otherwise:
2014: in a weak recovery oil starts to tighten
2017: weak recovery, growing demand can’t be met
2020: if there’s another economic downturn, there is ample supply for a decade]

Aging giant oil fields, not new discoveries are the key to future oil supply

April 7, 2013  by Kurt Kobb

With all the talk about new oil discoveries around the world and new techniques for extracting oil in such places as North Dakota and Texas, it would be easy to miss the main action in the oil supply story: Aging giant fields produce more than half of global oil supply and are already declining as a group. Research suggests that their annual production decline rates are likely to accelerate.

Here’s what the authors of “Giant oil field decline rates and their influence on world oil production” concluded:

  1. The world’s 507 giant oil fields comprise a little over 1% of all oil fields, but produce 60% of current world supply (2005). (A giant field is defined as having more than 500 million barrels of ultimately recoverable resources of conventional crude. Heavy oil deposits are not included in the study.)
  2. “[A] majority of the largest giant fields are over 50 years old, and fewer and fewer new giants have been discovered since the decade of the 1960s.” The top 10 fields with their location and the year production began are: Ghawar (Saudi Arabia) 1951, Burgan (Kuwait) 1945, Safaniya (Saudi Arabia) 1957, Rumaila (Iraq) 1955, Bolivar Coastal (Venezuela) 1917, Samotlor (Russia) 1964, Kirkuk (Iraq) 1934, Berri (Saudi Arabia) 1964, Manifa (Saudi Arabia) 1964, and Shaybah (Saudi Arabia) 1998 (discovered 1968). (This list was taken from Fredrik Robelius’s “Giant Oil Fields -The Highway to Oil.”)
  3. The 2009 study focused on 331 giant oil fields from a database previously created for the groundbreaking work of Robelius mentioned above. Of those, 261 or 79 percent are considered past their peak and in decline.
  4. The average annual production decline for those 261 fields has been 6.5 percent. That means, of course, that the number of barrels coming from these fields on average is 6.5 percent less EACH YEAR.
  5. Now, here’s the key insight from the study. An evaluation of giant fields by date of peak shows that new technologies applied to those fields have kept their production higher for longer only to lead to more rapid declines later. As the world’s giant fields continue to age and more start to decline, we can therefore expect the annual decline in their rate of production to worsen. Land-based and offshore giants that went into decline in the last decade showed annual production declines on average above 10 percent.
  6. What this means is that it will become progressively more difficult for new discoveries to replace declining production from existing giants. And, though I may sound like a broken record, it is important to remind readers that the world remains on a bumpy production plateau for crude oil including lease condensate (which is the definition of oil), a plateau which began in 2005.

[rest of article snipped from here on]

1 Mar 2010  Drawing the lower and upper boundaries of future oil supply

By Rembrandt Koppelaar, ASPO Netherlands

The oil supply challenge is often summarized in terms of the production volume equivalent of Saudi-Arabia’s that needs to be replaced.

This popular metric is based on in-depth studies of global decline rates that show a decline range between 4.5 and 6 percent over the current 73 million barrels of crude oil produced per day. By using such literature values for all types of production, it can be shown that:

  • In the next 3 years there’s a sufficient oil supply for world demand under any economic scenario.
  • Supply constraints will arise if OPEC proves to be too slow in turning available capacity into production.
  • Oil supply can no longer meet growing demand beyond 2013 only in the unlikely case of a rapid economic recovery.
  • In case of a fairly weak economic recovery the oil market will begin to tighten in 2014 when production capacity begins to decline and growing demand can no longer be met around 2017.
  • If we suffer another economic downturn, ample oil supply will be available for a period of at least a decade.

Decline rates over current conventional production.
Recent studies have been conducted to date on the global decline rate of total conventional oil production, including fields with rising, declining and plateau production.

1) Cambridge Energy Research Associates in 2007, showed that 2007 average decline of oil fields under production was 4.5% per year (CERA 2007). This study used data from 811 oil fields representing two thirds of global oil production, obtained from the IHS Energy database. The selection was comprised of 400 fields, each with reserves of more than 300 million barrels, that produced half of global production in 2006, and 411 fields with less than 300 million barrels that produced only 8.5% of production in 2006.

2) Höök et al. (2009) estimated that the overall decline rate is 6% globally based on the finding that decline rates in smaller fields are equal or greater than those of giant fields.

Based on these studies, a starting point for current decline lies between 4.5% and 6%. Within this range a decline rate around 5% can be taken as a reasonable number. The value given by CERA (2007) of 4.5% probably over represents giant and super giant fields and hence is likely too low as small fields have bigger decline rates. The value given by Höök et al. (2009a) of 6% is probably too high as the total decline rate is inferred directly from post-peak decline of giant and supergiant fields on the assumption that smaller fields will tend to have an equal and higher decline, ignoring the effect of fields still on a plateau and in build-up.

Although 5% is a good starting point, the catch lies in knowing what will happen in the future. More supergiant and giant fields will go into decline due to depletion as time passes by, causing an increase in the average decline rate that needs to be compensated. This was shown by Höök et al. (2009) who found that the world average decline rate of the 331 giant fields was near zero until 1960, after which the average decline rate increased by around 0.15% per year.  Höök, M., Hirsch, R., Aleklett, K., 2009. Giant oil field decline rates and their influence on world oil production, Energy Policy Vol. 37, pp. 2262-2272

For scenario analysis we can take optimistic and pessimistic boundaries based on the studies describe above. The most optimistic stance is to extrapolate the starting point decline rate, estimated here at 5%, onto the entire forecast horizon up to 2030. The most pessimistic view based on current information would be a rapid increase in decline in the next five to ten years up to 6.7% as the production-weighed decline rate rapidly catches up with the average decline rate. After this a more smooth decline increase of 0.15% per year as historically was the case, up to a value of 8.6% in 2030, is an informed estimate. The real decline will lie somewhere in between these two bounds.

Energy Skeptic



19 Comments on "Giant Oil Field Decline Rates"

  1. Nony on Sun, 23rd Nov 2014 8:17 am 

    Wait, wait. Didn’t Simmons and Staniford promise that SA Ghawar was watering out? Seems to be going strong. SA has been pumping close to 10 MM bpd for the last 10 years. So much for the peaker conspiracy theories.

    Here’s Hamilton. As usual, pushing the peaker case and THRILLED by the peak oil idea. What a joke.

    http://econbrowser.com/archives/2007/05/northern_ghawar

  2. Nony on Sun, 23rd Nov 2014 8:21 am 

    More Hamilton BS. The guy just LOOOOOVES to run with peaker crap.

    http://www.theatlantic.com/magazine/archive/2007/10/running-dry/306173/

    “And if Saudi production continues to decline even as world demand keeps growing, in a few years we will look back at the summer of 2007 as the last of the days when gasoline—even at $3.50 a gallon—was still plentiful and cheap.”

    HEY DUDE! It’s 2014 and not only is gasoline still at 3.50 (not way higher), it’s actually below that!

    What a joke.

  3. Nony on Sun, 23rd Nov 2014 9:44 am 

    I’ve just been reading some of that Staniford stuff from 2006 and 2007. What heady days of peaker blogger silliness.

    “nosedive to the desert”, “8% decline”

    What a freaking joke.

  4. penury on Sun, 23rd Nov 2014 12:06 pm 

    I guess I have been wrong all this time. I will have to join Nony in his “Faith” that oil is a non-finite resource which will be supplied on demand to the deserving humans of the world. Although I must dmit that I am still waiting for the electricity that is too cheap to meter. But as they used to say “Keep the faith baby”.

  5. tahoe1780 on Sun, 23rd Nov 2014 12:34 pm 

    Isn’t Saudi production down? Isn’t most of Europe, Japan, China, in a recession? How’s the U.S. “recovery” affecting Main Street? What’s the U.S.’s Workforce Participation and SNAP(foodstamp)program rates? Millenials buying cars? Miles driven per capita? 7% of our local school district’s kids are now homeless and our district is faring better than others in the state.

  6. rockman on Sun, 23rd Nov 2014 1:06 pm 

    All: Notice that no one is disputing the FACTUAL data in this piece. Of course OPINIONS can vary…but not FACTS. So if they don’t support one’s OPINIONS they must avoid those FACTS.

  7. Northwest Resident on Sun, 23rd Nov 2014 1:17 pm 

    “If we suffer another economic downturn, ample oil supply will be available for a period of at least a decade.”

    Define “ample”. If, through demand destruction, businesses and consumers are unable to purchase what oil is still available, does that mean that there is “ample” oil supply left?

    Ample oil supply is only “ample” for those who have enough money to purchase it. And that subset of the world economic total is growing smaller and smaller. One day we’ll get to a point where nobody can afford to extract or purchase oil. Will we say at that time that we still have “ample” supply left?

    Very good article and full of ominous fact, imo, but just confused about the meaning of “ample”.

  8. Nony on Sun, 23rd Nov 2014 1:29 pm 

    A 2009 study of giant oil fields. Yawn. (Did you even click through and see how FREAKING old the thing was, Rock?)

    http://www.postpeakliving.com/files/shared/Hook-GOF_decline_Article.pdf

    I wonder if it even has the Bakken or EF in there. Oh…great, we can now debate how to call a continuous shale layer with Rock. Trend, field, continuous unconventional reservioir or whatever USGS calls it. Blabla.

  9. Nony on Sun, 23rd Nov 2014 1:41 pm 

    What’s really funny about this decline stuff. Check out Staniford’s article on SA decline in 2006.

    “Saudi Arabian oil declines 8% in 2006”

    http://www.theoildrum.com/node/2325

    And guess what? Now SA production is UP since that article. It sure as HECK has not continued to decline at that rate. Did he write new articles when SA production went up? Went sideways? BZZZT!

    Dude should have titled his article “SA production dips” not “declines”.

    Meh.

  10. GregT on Sun, 23rd Nov 2014 2:14 pm 

    The ship has collided with an iceberg, is listing to starboard, and is taking on water. Some have already manned their lifeboats, others are in line, and many more are talking about doing the same.

    A few continue to sip their cocktails, patting themselves on the back over the technological superiority of modern industrial man. The Titanic is unsinkable they cry. We all know the rest of the story.

    Man your lifeboats people. There isn’t enough space for everyone. Be thankful for the optimists that refuse to listen to reason. They will ultimately sacrifice their wellbeing for the safety and security of others. Feel sad for all of the people that were ill-informed. They didn’t have the chance to make a rational decision.

  11. Nony on Sun, 23rd Nov 2014 2:34 pm 

    Staniford wrote an article called “A nosedive toward the desert” in 2007.

    Here’s what happened to SA production:

    http://www.indexmundi.com/api/charts/energy.aspx?country=sa&product=oil&graph=production

    Yawn.

  12. rockman on Sun, 23rd Nov 2014 2:42 pm 

    “Trend, field, continuous unconventional reservioir or whatever USGS calls it. Blabla.” OK…lets classify the wells in the Balkan and EFS as “fields”. The decline rates of those “fields” is much higher then the legacy fields the report highlights. Of course new wells might be drilled in these “fields” but that doesn’t change the fact that the existing production in these “fields” is rapidly declining. Just as the existing production in the legacy fields is declining… at a much slower rate then the Bakken and EFS “fields”.

  13. jmm on Sun, 23rd Nov 2014 2:50 pm 

    die dalende olie velden kunnen nog vlink voor kiespijn gaan zorgen.

    goed stuk iedereen is blind

  14. Nony on Sun, 23rd Nov 2014 3:07 pm 

    ah…yes. Let’s classify every individidual well as a field. 🙂 Wow. Bunch of 300,000 barrel fields. Moveable even! Dependent on where you drill, rather than the rock itself 🙂

    USGS calls it continuous unconventional oil accumulation.

    http://pubs.usgs.gov/fs/2013/3013/fs2013-3013.pdf

    But I think even if you call something “Sanish” or “Parshall”, we are still talking “giants”.

    Of course, you know I was making fun of the whole terminology thing which is kind of irrelevant when you look at shale. And which I never even got a good firm answer from you for conventional! (of field versus trend)

  15. Nony on Sun, 23rd Nov 2014 3:09 pm 

    P.s. You did realize this post is covering a 2009 article, right? With 2008 data, no? I mean, I’m sure it’s an OK article, but why are we even discussing it now? OK…”fact” fine. I mean analysis, fine. Kind of outdated, though, no?

  16. Nony on Sun, 23rd Nov 2014 3:17 pm 

    Rock:

    Sorry if I’m hard on you. I have a tendency to get personal on the Internet. All the comments are what I think in terms of econ insights, but I wish you the best with work and life.

    Gotta pack up and head out for the week. 3 days of day rate $$. C ya.

  17. energyskeptic on Sun, 23rd Nov 2014 4:38 pm 

    There’s so much information and blips of news about smaller issues like tar sands or fracking, that it’s easy to forget the “Big Picture”, which is really “How are the giant fields doing?” Its easy to forget in the onslaught of news every day that the super giant fields are what keeps the energy flowing. It’s when they start to decline in earnest and tight (fracked) oil and other nonconventional oil production can’t keep up (i.e. Hughes) that things get interesting.

    Also, as the 2013 Kobb article points out, getting oil out NOW with techno-fixes just makes the energy cliff worse later on.

    Hughes “Drilling Deeper”
    http://www.postcarbon.org/wp-content/uploads/2014/10/Drilling-Deeper_FULL.pdf

  18. Norm on Sun, 23rd Nov 2014 8:57 pm 

    Ya. Some corns post they sneer at the article. But the facts are, the wells decline. If you cant refute the facts, then the facts are true.

  19. Norm on Sun, 23rd Nov 2014 9:03 pm 

    Titanic hit iceberg. Scientist says it will sink in 60 minutes. After 90 minutes, it has not sunk. That’s when the cornucopians really start sneering, loud and obnoxious.

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