[NTBKtrader]

It never helps when the information is filtered through the press who have absolutely no idea of the various definitions.

Maybe we should get rid of the media, I'm with you.

[Eli]

Well good for the people of Kuwait.

Neopo has it right, they are the canary in the mine shaft and the first to say "hey maybe those reserve numbers we pulled out of our arse back in the eighties are bunk."

I hope to God I am wrong but we have the North Sea going into terminal decline along with the second largest field in the world namely Cantarell, Nigeria being blown to pieces by rebels same in Iraq. Then it seems that it is very likely that all the ME oil producers decided back in the eighties to double all their reserve numbers so they could all make more money. And many of the biggest players in the oil business believe those numbers or at least pretend to in public.

So the US is going to have to go look for another source of oil besides Mexico and most likely that oil will have to travel half way around the world to get here further driving up the price. The Europeans are getting cut off the teat from Nigeria and the North sea is going dry, so they are going to have to go out looking for oil too.

Both the US and Europe are having to go out and are looking for more oil but as often as not they are finding a Chinaman and Indian have beat them to it.

It really sucks to think that the absolute worse case scenario has a very good chance of being our reality.

[Doly]

Then it seems that it is very likely that all the ME oil producers decided back in the eighties to double all their reserve numbers so they could all make more money.

Not exactly like that. There is a certain logic to the numbers. Colin Campbell said once he believed they all agreed on reporting original reserves, without taking production into account at all. That gives you a clue about what the real numbers might be.

[PWALPOCO]

How will the Kuwaiti actions affect their relationship with OPEC ?

At the moment the OPEC group are acting as a collective to manage their overall outputs onto the market for the common good.

If Kuwait suddenly pulls the rug out so to speak and sets their output according to their own agenda where does it leave the other members ?

Would the others take up the slack from any Kuwaiti shortfalls , could they even do it if they wanted ?

Are we expecting any other nations to have a bout of honesty ?

Paul

[Eli]

Opec is basically dead as an operating body.

The head of OPEC said the other day that they can no longer bring down the price of oil. The purpose of a cartel is to control pricing either for the positive or the negative, which in the past they could most certainly do. They have clearly lost control of the oil market and now they are all pumping as fast as they can.

[PWALPOCO]

Eli ,

I agree , the comments coming from OPEC seem to indicate that they no longer have the control they once had.

I remember posting a quote and news article a while ago where someone from OPEC acknowledged that the quota that had been set equated to "pump as much as you can". Those who have read anything about the history of peak oil would parrallel that to announcements in the US at peak production to allow all production.

I was going to post a reinforcing news article from the rigzone but chose not to , where I think an Iranian Oil official was predicting that the next OPEC meeting in September was likely not to cut production.

I nearly choked when I read that. Like "hey good news , I doubt OPEC will cut production in September , so dont worry". Why any one would consider that a potential strategy in first place I dont know.Increasing production didnt even come into discussion. That more or less said it all in as far as their options go.

Paul

[Quigley]

Just one more piece in the mosaic:

www.kuwaittimes.net

[jato]

Chairman Farouk Al-Zanki told Bloomberg. He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate.

Last week the International Energy Agency's report said output from the Greater Burgan area will be 1.64 million barrels a day in 2020 and 1.53 million barrels per day in 2030. Is this now a realistic scenario?

Math:

Using the numbers provided, they are stating the Burgan field will experience an average 0.1% production drop year over year. BS!

[Quigley]

Math:

Using the numbers provided, they are stating the Burgan field will experience an average 0.1% production drop year over year. BS!

Do you believe in numbers? I don't.
But the statement says: Burgan is past peak.
What they say and what they know about post-peak production rates is two different stories. You, me and all the others here know better. We simply have to wait for news like that about SA oilfields, then take a look at monthly IEA production figures and you know what's happening ...

[Niagara]

Using the numbers provided, they are stating the Burgan field will experience an average 0.1% production drop year over year. BS!

It reminds me of the saying:
"Figures can't lie, but liars can figure" lol

[DantesPeak]

This downturn at Burgan is probably why Kuwait even put off disclosures to its own Parliment for weeks about how the fields were doing.

I'm also inclined to believe that the reason that Kuwait doesn't spend money to further develop Burgan is that the return will not be worth it, although the story below implies the reason is that Kuwait and others are incompetent in the management of oil production.

Oil's Dirty Laundry

Why are oil prices so high? Partly because the industry is dominated by incompetent monopolies.

Many big state oil companies are equally slow to adopt the latest technologies, designed to suck crude out of the cracks and folds of aging shafts. Those in Libya, Venezuela and Russia are badly in need of foreign help to rebuild dilapidated infrastructure and upgrade technology. The result is that while private companies typically recover 50 percent of the oil in a well, national companies recover only 20 percent. "They had no reason to use advanced technology because they were blessed with such ample supplies," says Leonardo Maugeri, a senior vice president for the Italian energy company ENI. For example, the second largest oil well in the Persian Gulf—Kuwait's Burgan—is plumbed by derricks that were first erected by the original Seven Sisters in the 1950s.

Often state oil companies confront nationalist opposition to modernizing, particularly if it means more foreign influence. The Kuwait Petroleum Co. has for years been promoting a $7 billion, 25-year plan to nearly double its capacity but has met resistance from politicians who fear foreigners out to "steal" Kuwaiti oil. So many skilled oilmen have left Iran since the 1979 revolution that President Mahmoud Ahmadinejad was hard pressed to find even one clearly acceptable candidate to become Energy minister last year.

Newsweek

[JustinFrankl]

I'm also inclined to believe that the reason that Kuwait doesn't spend money to further develop Burgan is that the return will not be worth it, although the story below implies the reason is that Kuwait and others are incompetent in the management of oil production.

From history's long-term perspective, this isn't far off. But Kuwait isn't special in this manner, as a species we've been incompetent about the management of oil production. Kuwaitis haven't cornered the market in human arrogance, greed, and shortsightedness, they're just unfortunate enough to have their mistakes made public.

[Ayame]

So have reserves figures been revealed yet? I haven't read anything lately apart from around a month ago when Kuwait officials vowed to reveal reserve figures to the world in a few days or so. Now nothing. Did they discover the worst and just decide to keep it hushed up?

[Leanan]

I haven't heard a thing about this since this article two weeks ago.

[Bleep]

Heinburg mumbled this:

Middle East at a Crossroads (link)

...skip...

Questions about the real size of Kuwait’s oil reserves have emerged in the Kuwaiti National Assembly, leading the opposition party to call for production cuts. Remarkably, Kuwait appears to be groping toward implementation of the Oil Depletion Protocol, without ever having heard of it. However, from the standpoint of nations that want to keep the oil flowing so the global industrial party can continue, this is bad news.

But this mess really started January 2006 when a certain report came out with the true numbers.

Kuwait set to clarify oil reserve figures (link)
Upset by a January report in Petroleum Intelligence Weekly that Kuwait's oil reserves are only 48 billion bbl instead of the claimed figure of 100 billion bbl, the emirate's oil minister, Sheikh Ali Al Jarah Al Sabah, said he has "undertaken to clarify the truth and volume of Kuwaiti oil reserves." As this issue went to press, Sheikh Ali said the issue for lawmakers and ministers "is a very significant matter, and soon the volume and truth of oil reserves will be announced, based on clear, scientific studies, characterized by reality and credibility, and supported by international documents and certificates."

So Jan to Sep means nine months and no baby yet.

[Cobra_Strike]

Step 1. Ignore the issue.
In case of question about the issue, refer to step one.

Look like the sort of standerd stonewalling OPEC is known for, hope that people will forget there even is an issue...now as the price at the pump is in decline, you can bet they will.

[Bleep]

Step 1. Ignore the issue.

This works until they produce their 24 billionth barrel of oil and hit their country's midpoint of depletion and start to go into terminal decline.

According to ASPO
http://www.peakoil.ie/downloads/newslet ... 200402.pdf
They produced over 35 billion barrels of oil and have a 1.1% depletion rate in 2004. The same article says they have total recoverable oil of 96.5 billion barrels

Kuwait also has a tendency to dig horizontally into Iraq and take what oil the can.
http://www.cbsnews.com/stories/2000/09/ ... 3586.shtml

[Bas]

Well, this is the first time I hear about an OPEC member actually getting close to officially revealing that their official reserves are grossly overstated. Interesting.

[bobbyboy]

Kuwait to expand Burgan pumps

By Upstream staff

Kuwait Oil Company (KOC) plans to add output of another 200,000 barrels of oil per day from its giant 1.25 million bpd Burgan field by 2009.

The increase is part of KOC’s $8.5 billion Project Kuwait, which seeks to boost production from northern fields with help from major international energy companies to 3 million bpd by 2010.

Reuters quoted KOC chairman Frouk al-Zanki as saying: “KOC and Kuwait look at increasing production as a strategic action that is not pinned to prices.”

He said that Project Kuwait remained part of the country's energy strategy.

Consortiums led by BP, Exxon Mobil and Chevron are competing for the contract, which would allow them to operate Kuwait's northern fields for a fixed period but would not involve production-sharing, concessions or the booking of reserves.

However, the project faces opposition from powerful parliament doggedly fighting to exclude foreign players from the upstream sector.

Upstream

So Burgan is down to 1.25 mb/d and al-Zanki hopes for 1.45 mb/d (wishfully assuming no decline from existing wells ); less than the 1.7 mb/d 'optimum' rate al-Zanki was claiming they could produce at a year ago:

Nov. 10 (Bloomberg) -- Kuwaiti oil production from the world's second-largest field is ``exhausted'' and falling after almost six decades of pumping, forcing the government to increase spending on new deposits, the chairman of the state oil company said.

The plateau in output from the Burgan field will be about 1.7 million barrels a day, rather than as much as the 2 million a day that engineers had forecast could be maintained for the rest of the field's 30 to 40 years of life, said Farouk al-Zanki, the chairman of state-owned Kuwait Oil Co. Kuwait will spend about $3 billion a year for the next three years to expand output and exports, three times the recent average.

To boost oil supplies, ``Burgan by itself won't be enough because we've exhausted that, with its production capability now much lower than what it used to be,'' al-Zanki said during an interview in his office in Ahmadi, 20 kilometers south of Kuwait City. ``We tried 2 million barrels a day, we tried 1.9 million, but 1.7 million is the optimum rate for the facilities and for economics.''

Energy Bulletin

The reality is that existing wells will almost certainly be watered out by 2010 and production will be under 500 kb/d:

At current rates of production, the four main sands will be swept by water by the end of the decade. This will not be the end of oil production at Burgan; deeper reservoirs in the Lower Cretaceous Ratawi Limestone and Jurassic Marrat Formation contain significant oil reserves. Between the second and third sands there are also a number of thin, discontinuous sands known as the stringers. These formations represent a resource for the future, but production rates will be much less.

Greg Croft

[Jack]

For your reading pleasure:

By Peter J. Cooper
KUWAIT: It was an incredible revelation last week that the second largest oil field in the world is exhausted and past its peak output. Yet that is what the Kuwait Oil Company revealed about its Burgan field. The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al-Zanki told Bloomberg. He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate. Kuwait will now spend some $3 million a year for the next year to boost output and exports from other fields.

LINK TO ARTICLE