[Jack]

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.

This link may add to the discussion:

Article Here

[DantesPeak]

Recently Farouk al-Zanki stated that Kuwait still has potential to expand its oil production:

Oil & Gas Journal
November 27, 2006
Volume 104; Issue 44

Kuwait planning gas production by 2008

Kuwait, which in March announced the discovery of 3 5 tcf of free natural gas and a large quantity of light oil in what it called its "northern oil fields," plans to start commercial production of gas late next year or early January 2008, according to Farouk al-Zanki, head of state-owned Kuwait oil Co. (KOC).

At an oil and gas conference in Kuwait City, al-Zanki said the firm expects an initial output of 180 MMcfd, which it would increase to 600 MMcfd by 2011 and to 1 bcfd by 2014-15.

Al-Zanki said KOC would have a provisional plan for natural gas development by the end of November or in early December.

Al-Zanki also repeated an earlier commitment to increase Kuwait's oil production capacity to 3 million b/d by 2010, to 3.5 million b/d by 2015, and 4 million b/d by 2020 from the current 2.6 million b/d.

In January, Kuwait said it also planned to start exploration for natural gas in what it called undisputed parts of offshore Dorra field, which Iran also claims. At the time, Kuwait's energy ministry undersecretary Issa al-Oun told the Al-Siyassah newspaper: "Talks with Iran are continuing over the continental shelf. But, we have decided to...start exploration in the undisputed part."

Oun said Kuwait would soon invite bids for seismic surveys of part of Dorra field and other Kuwaiti offshore fields. He said he did not expect Iran to object to the measure.

[NO LINK]

However the recent revelation in Bloomberg puts this story above in a different light.

Meanwhile the cost of Kuwait's planned new refineries is much higher than expected. Oil Daily said today that Kuwait is considering dropping plans for the refineries.

Maybe this refinery plan was all a ruse all along to give the appearance of oil to be refined when there was none?

Refinery faces cost overrun
Kuwait: Tuesday, December 26 - 2006 at 08:18

Kuwait National Petroleum Company has received bids to build an oil refinery up to two-and-a-half times the original budget, Middle East Economic Digest reported. KHPC's original budget for the 615,000 bpd Al Zour refinery had been revised up from $6.3bn to $10bn, while the combined size of the lowest bids is more than $15bn. There were four main packages on offer.

AME

[seahorse]

I can't get the linked article to open. Does Kuwait admit Burgan is in decline, or simply that it will maintain production at this new rate? Big difference as Rockdoc once pointed out.

[Jack]

I can't get the linked article to open. Does Kuwait admit Burgan is in decline, or simply that it will maintain production at this new rate? Big difference as Rockdoc once pointed out.

Because of the brief nature of the article I believe I can post it in its entirety under fair use.

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.

However, it is surely a landmark moment when the world's second largest oil field begins to run dry. For Burgan has been pumping oil for almost 60 years and accounts for more than half of Kuwait's proven oil reserves. This is also not what forecasters are currently assuming.

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?

The news about the Burgan oil field also lends credence to the controversial opinions of investment banker and geologist Matthew Simmons. His book 'Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy' claims that ageing Saudi oil fields also face serious production falls.

The implications for the global economy are indeed serious. If the world oil supply begins to run dry then the upward pressure on oil prices will be inexorable. For the oil producers this will come as a compensation for declining output, and cushion them against an economic collapse.

However, the oil consumers then face a major energy crisis. Industrialized economies are still far too dependent on oil. And the pricing mechanism of declining oil reserves will press them into further diversification of energy supplies, particularly nuclear, wind and solar power.

All this was foreshadowed in the energy crisis of the late 1970s when a serious inflection in oil supply by the year 2000 was clearly forecast. How ironic that those earlier forecasts now look correct, while more modern and recent forecasts begin to look over optimistic and out-of-date with geological reality.

Nobody can change the geology, and forces of nature that laid down reserves of oil and gas over millions and millions of years. Could it be that we have been blinded by technological advances into thinking that there is some way to beat nature?
The natural world has an uncanny ability to hit back at the arrogance of man, and perhaps a reassessment of reality at this point is called for, rather than a reliance on oil statistics that may owe more to political manoeuvring than geological facts. - AME Info FZ LLC.

It sounds as if the author is calling peak to me. Furthermore, if you examine paragraph 1, please notice the following quote attributed to Chairman Farouk Al-Zanki: "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."

Although the Chairman did not specify "peak", it surely sounds like it to me. But perhaps someone else sees an alternative interpretation?

[seahorse2]

From memory only, this doesn't seem to be a different position than taken a year or so ago, when Kuwait first announced that Burgan would not produce 1.9 but something closer to the 1.7. Is this new article/statement somehow different?

Keep in mind, though, that optimistically, of the three largest fields in the world, one is in admitted decline (Cantarell), one has plateaued (Burgan) and Ghawar, even if not in decline, is reportedly producing less than it did during its peak production in the 70s.

[JustinFrankl]

It sounds as if the author is calling peak to me. Furthermore, if you examine paragraph 1, please notice the following quote attributed to Chairman Farouk Al-Zanki: "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."

Although the Chairman did not specify "peak", it surely sounds like it to me. But perhaps someone else sees an alternative interpretation?

Well, I am aware that at least one field exists, I think in the former Soviet Union, that double-peaked. I am aware that the vast, overwhelming majority of oil fields experience a single peak in production. I am aware of no fields that peak and plateau.

Why would anyone accept the prediction that any single given oil field will plateau and produce at a steady rate for the next 30-40 years?

I voted "other" because I think we have already passed peak.

[leal]

if I select "All of the Above", does that include "None of the Above"?

[Jack]

if I select "All of the Above", does that include "None of the Above"?

Absolutely! However, it does NOT include other.

How's that for a logical chestnut?

[DantesPeak]

How little things have changed over the last year. Kuwait is still talking big expansion plans - with huge required investment and large initial water cuts - even as Burgan starts what looks like a terminal decline.

APS Review Gas Market Trends
December 25, 2006
Volume 67; Issue 26

The following is a review of the main developments and policy changes among OPEC's member-countries which may have an impact on the market during 2007:

Kuwait Is Yet To Invite IOCs For Northern Fields: Kuwait's crude oil production capacity is to be expanded from 2.7m b/d to more than 4m b/d by 2020. A key to this is expansion of northern and western sets of oilfields, as well as its main central fields. And after a decade of debate and delays, Kuwait is yet to open up its lucrative upstream oil business to international oil companies (IOCs), more than 30 years after they were first expelled from the country.

The move, which is yet to be approved by a hostile National Assembly, would mean that for the first time in decades, one of the top GCC producers would lift some of the limits on sensitive petroleum resources imposed on foreign firms. GCC and other oil producers have come under growing pressure over the past few years to raise their investments and get more oil to the market.

The issue is so politically charged in Kuwait that the $8.5 bn plan, Project Kuwait, has been mired in squabbles since it was first introduced in the 1990s. The opposition, which brought together a band of Islamist and liberal parties in parliament, meant that production growth stalled while demand soared.

Most of the country's production has come from the Greater Burgan set of oilfields, which has accounted for 80% of Kuwait's total crude oil output. That set of fields, the world's second-largest after Saudi Arabia's Ghawar axis of oilfields, is showing signs of fatigue. Officials would like to reduce the pressure on it by pumping out more oil from other fields, including five in the north of the country which Project Kuwait would open to IOCs.

If parliament approves Project Kuwait in 2007, the government will award the bid on the basis of a single criterion: the minimum fee that each of three ICO groups is willing to take for each crude oil barrel it produces. The groups are each led by BP, Chevron and ExxonMobil, which have long been interested in the project. Years of under-investment mean that output has dropped since the 1970s. Officials say they need the help of the global oil giants to deal with difficult oil reservoirs.

In was said last week that, by 2020 Project Kuwait should to account for a third of the country's production. But at more than 4m b/d of crude oil output, Kuwait will also be pumping out 10m b/d of associated water, something which the country's state-owned Kuwait Oil Co. (KOC) cannot do without foreign expertise. There also are non-technical reasons for the invitation to the IOCs.

[no link]

[DantesPeak]

A former Kuwait energy minisiter from the royal Al-Sabah familiy is accussed of aiding a scheme which may have illegally taken 20 million barrels of oil.

In a strange twist, Haliburton and its subsidiary, Kellog, Brown and Roots (KBR), were over charged for fuel.

International Oil Daily (Wednesday, January 10, 2007)

Kuwait's oil sector is heading toward a new controversy amid reports of a discrepancy between the amount of oil produced at the wellhead, as registered by Kuwait Oil Co. (KOC), and the volume recorded at storage tank farms. A government body has estimated the difference at about 19.5 million barrels over the past three fiscal years.

Staff Reporter

KUWAIT: The National Assembly yesterday unanimously approved a report by a probe committee on the suspected irregularities in the fuel sales to the US army in Iraq and called on the government to refer it to the public prosecution.

The report, prepared by the so-called Halliburton committee, makes two main recommendations.

The first holds former Energy Minister Sheikh Ahmad Al-Fahd Al-Sabah and top oil executives responsible for financial, legal and administrative violations in the deal.

The second recommendation calls for referring the report to the public prosecution to launch a judicial inquiry into the issue. The sales, with tens of millions of dinars, were made by the Kuwait Petroleum Corp (KPC) to the US Halliburton's subsidiary Kellog, Brown and Roots (KBR) through the local company Al-Tanmia.
MPs have alleged that the local company with the help of some KPC officials made millions of dollars in illegal profits by overcharging KBR, thus endangering relations with the United States.

Samad said that during the fiscal years 2003/2004, 2004/2005 and 2005/2006, the Audit Bureau reported that some 19.46 million barrels of oil meant for export went missing from the export department of Kuwait Oil Company (KOC).

He said that the value of the missing barrels is estimated at $923.2 million .

Samad said that the report shows that the quantities delivered to foreign tanks were actually higher than those recorded by the KOC. He also said that a number of KOC officials have also destroyed documents that prove the reported missing barrels which raises some suspicion. Samad said the committee needs the new report by the Audit Bureau to decide the next course of action.

Kuwait Times

[gg3]

For the record I'll say I don't trust the Kuwaiti monarchy any further than I could throw any of them. They did after all start the whole stinkypoo with Iraq by slant-drilling across their border and stealing oil from Iraq, after which Iraq invaded them, and the rest as they say is history.

If members of the Kuwaiti ruling classes are stealing from each other, all I can say is "no honor among thieves."

[TorrKing]

Found this through a Norwegian peak oil site. Are Kuwait afraid of being invaded themselves, if they start consuming more of their own oil?
Kuwait looking to natural gas, nuclear options

[joewp]

Sustained oil prices above $60 a barrel will deter global oil demand and harm producers and consumers in the long term, an executive of state-owned Kuwait Petroleum Corporation said Wednesday.

"So far, at least in OECD countries, the price of $60 a barrel has been accepted. I think any increase above that level is damaging," said Jamal A.
---
"A long-term demand roadmap is crucial," al-Zayer said, in order for oil producers to justify greater investment in oil and gas infrastructure. "It would make no sense to channel funds into projects which remain idle," he added.

Oil companies have been squeezed by rising costs of raw materials, equipment and skilled labor and need assurances of future demand to guide investment decisions, al-Zayer said.

Rising costs have also hit Kuwait National Petroleum Corp., KPC's refining subsidiary, which canceled a tender for its 615,000-barrel-a-day Al Zour refinery after bids came in at more than double the original $6.3 billion budget in December.
---
Kuwait produces some 2.5 million barrels a day of crude. The country plans to boost oil production to around 3.5 million barrels a day in 2015, then 4 million barrels a day by 2020, Alnouri said.

An increase over $60 is damaging? Is he signaling a rise in the OPEC quotas? And if $60 is the new $20, why is the costs of new projects an issue? It seems to me that all things are now equal. Costs went up but so did the price of the finished product. No problem, right?

And just for grins, what does anybody think the chances of Kuwait increasing their output from 2.5mb/d to 4mb/d by 2020? The EIA thinks that the US can pump 10mb/d by then too. Are they both smoking the same substance?

[SILENTTODD]

Gasoline at $3.43 a gallon (mid grade, Tustin California) already deters me! But I have 3 bicycles. What the hell!

[Cobra_Strike]

I doubt there is anything that can be smoked that would distort perception that much.

Think IV drip delivery.

Large bore needle.

[Leanan]

Last year, Petroleum Intelligence Weekly published a report saying Kuwait's reserves were half of what they claimed.

Kuwait MPs demanded to know the truth. A report was promised, then delayed. Finally, earlier this month, the oil minister said Kuwait's reserves were a national security issue, and would never be revealed.

But lo, yesterday...the oil minister admitted PIW was right:

Oil minister puts Kuwait's proven oil reserves at 48 billion barrels

Kuwait's Oil Minister Sheikh Ali al-Jarrah al-Sabah confirmed on Saturday that Kuwait's proven oil reserves are 48 billion barrels -- a figure conflicting with the previous official estimates of nearly 100 billion barrels.

Hmm. Kind of makes you wonder if they're preparing the world for a production decline. As someone at TOD pointed out, the same thing happened when Cantarell started to decline. At first, other fields made up the production, but very quickly, they had to admit they were on the back side of Hubbert's peak. Could it be the same thing is happening with Kuwait and Burgan?

[KevO]

I'm going to use the appropriate emoticon



there you go

[Smudger]

not good......really dont want this all to happen now was thinking it could be held together until 2010 - threes years of climate fear that was really helping on the energy front.