[Zardoz]

...Do you really think it will be so easy for us to make the switch to alternatives?...

Remember what Hirsch says about how long we would need to make the transition.

Unfortunately, we seem to be staring his worst-case scenario squarely in the face...

[rockdoc123]

My favorite discrepancy is the rig miscount of +150% by rockdoc... quite a factor of error big fella... I guess the death of a thousand cuts you have been trying to smear Simmons with turns out to have bitten you square on the ass.

don't be an ass. As I said the information came from a presentation from the head of E&P at Aramco not some number I came up with myself. In answer to a question from seahorse asked on the the Saudi Production I checked my notes and what I wrote down was "increase from 40 rigs in 2003 to 120 rigs in 2006". What Aramco could have meant was by end of 2006. In Sept 2005 Abd Al Saif (Aramco)stated that :

Saudi Aramco rig numbers (on & offshore) was to rise from an average of 50 units in 2003, to 90 by the end of 2005 and from 2006-2010 the count will stand at 110.

A bit of digging around shows some discrepency in the rig count which is not surprising. First of all you need to understand the source of the number. Most reports including Opec reference the Baker Hughes rig count. In North America this count is fairly accurate in that it includes all rotary rigs which are "turning to the right" but also has a separate number for rigs which are doing completions. The information is gathered by Hughes Christensen (a bit company and subdivision of Baker Hughes) from the areas where they are active (this is not official information released by Aramco but is gathered through third parties). In North America Hughes supplies services for most drilling companies so it will have pretty decent access to actual numbers of rigs operating. The possible sources of error in the Baker Hughes analysis for Saudi are that they only count rotary rigs that are actively drilling for 15 days that month....they do not have a separate number for rigs that are doing workovers, stimulation and other completion related activities. Given that almost all of the activity in Saudi is production/development related one would expect a fair bit of rig activity related to this. As a comparison in the US from time to time slightly less than half of the total rigs operating are involved in completions related activities. As well how connected Hughes is in the Saudi oil patch comes down to whether or not they are the sole source provider of services. Given that Aramco has it's own drilling company there is a chance they have other sources of services which might mean Hughes is not in the loop with regards to all of the activity.

The discrepency in rig count is also pointed to in a presentation recently made by A. Gould of Schlumberger at the Howard Weil Energy Conference March 20, 2006. Schlumberger is a huge supplier to the Saudi oil and gas business for logging, wellfield and subsurface analysis surfaces. As a consequence they should be fairly in the loop as to activity. Here is a quote:

In the Middle East we are expecting a year of strong growth driven principally by the extraordinary ramp up of activity in Saudi Arabia where average rig count has increased from 49 in 2004 to nearly 70 in 2005. The projected average in 2006 is 100.

Note that the 49 number would correspond with a Baker Hughes number of around 30 and the 70 number corresponds to a Baker Hughes number of around 46 or so. The average 100 for 2006 would correspond to the Aramco presentation number of 120.

And again the actual number of rigs is not necessarily important....it has to do with what they are involved doing and the timing of that activity. Not all of the increased production activity announced by Aramco requires new wells, a lot is related to facilities expansion.

[EnergySpin]

The psychological impact would be of such magnitude that would send everyone dashing for alternatives and the Saudis would be left with almost no customer in less than 10 years.

Spin, what you said makes sense to me except for this. Do you really think it will be so easy for us to make the switch to alternatives? I know you are aware of the comparative energy yields of other liquid fuels...

I meant to say ... "almost no customers"

I am aware of the comparative yields of other liquid fuels, but I'm also aware of the situation for gasoline from craddle to grave (oil field to gas at the gas station), gasoline had an EROEI of about 5-8 (depending on the source of oil).

I never said it will be easy, from a societal standpoint. But the technical means are definitely out there .... Let me use methanol for a change. Are you aware that it is possible to synthesize methanol from water + air+ electricity ? The synthesis is a net energy loser (38% of electricity ends up as chemical energy in the bonds of the methanol molecule). But the composite process consisting of a) powering up the electricity plant and b) using it to power methanol synthesis is a different story
Shunting electricity from a wind farm (EROEI of 30-50) will lead to usable liquid fuels with a significant energy return i.e. 0.38*30 - 0.38*50 = 11.4-19

Now back to the real world ... very few people can deny the fact that the technical means are out there to "solve this". (The most notable exceptions are people frequenting this forum and oil companies executives). It all boils down to the speed that replacements may be deployed, which brings us to the Hirsch Report.

The Hirsch Report does NOT say that all possible mitigation scenarios/plans will take 10-20 years to fix this . It says that it will take 10-20 years to fix this , while maintaining status quo, which is a different thing
Unfortunately for many people, maintenance of the status quo is the difference between starving to death and a decent lifestyle.

The Saudis (and Simmons) have every reason in the world to manipulate the perception of public about the peak and the Saudis also have the means to tinker with the rate the spice flows to reinforce that perception and/or tighten supply. The ones around here with a rudimentary training/understanding of mathematical finance will understand the model I wrote earlier. Rest assured that the Saudis understand it better than the rest of us .. after all they have been applying it for the last 3-4 years

[whereagles]

Let me use methanol for a change. Are you aware that it is possible to synthesize methanol from water + air+ electricity ? The synthesis is a net energy loser (38% of electricity ends up as chemical energy in the bonds of the methanol molecule). But the composite process consisting of a) powering up the electricity plant and b) using it to power methanol synthesis is a different story
Shunting electricity from a wind farm (EROEI of 30-50) will lead to usable liquid fuels with a significant energy return i.e. 0.38*30 - 0.38*50 = 11.4-19

Yo, methanol freak, I got a question for ya

Isn't this methanol synthesis process rather tech-wise complicated and about half as energy efficient as hydrogen from electrolisis?

That might be a problem when you compare methanol with hydrogen in the long run (i.e. after diluting infrastructure-changing costs)... no?

[gary_malcolm]

To repost:

October 04: SA production = 9508 mbpd, Opec = 30228;
November 04: SA = 9450 mbpd, Opec = 29067 mbpd;
November 05: SA = 9.458 mbpd oil, Opec = 29,965 mbpd;
February 06: SA =9.394 mbpd oil, Opec = 29,713 mbpd

I'll repeat that:

October 04: SA production = 9508 mbpd, Opec = 30228;
November 04: SA = 9450 mbpd, Opec = 29067 mbpd;
November 05: SA = 9.458 mbpd oil, Opec = 29,965 mbpd;
February 06: SA =9.394 mbpd oil, Opec = 29,713 mbpd

...During a time when rig count was increasing according to all sources.

Pull the wool from in front of your eyes. I can plot the curve for you if you want but you'll have to rotate it -45 degrees to find the point at which SA will have 10mbdp much less 12.

As the French say, "Un fait accompli".

G

[EnergySpin]

Let me use methanol for a change. Are you aware that it is possible to synthesize methanol from water + air+ electricity ? The synthesis is a net energy loser (38% of electricity ends up as chemical energy in the bonds of the methanol molecule). But the composite process consisting of a) powering up the electricity plant and b) using it to power methanol synthesis is a different story
Shunting electricity from a wind farm (EROEI of 30-50) will lead to usable liquid fuels with a significant energy return i.e. 0.38*30 - 0.38*50 = 11.4-19

Yo, methanol freak, I got a question for ya

Isn't this methanol synthesis process rather tech-wise complicated and about half as energy efficient as hydrogen from electrolisis?

That might be a problem when you compare methanol with hydrogen in the long run (i.e. after diluting infrastructure-changing costs)... no?

Saves the infrastructure problem and the storage problem. And one does not have to build fuel cell cars to use the chemical. But I only offered methanol as an example ...

What do you mean by high tech? If you refer to the fuel cells that Olah is working on, I'd have to agree with you. But the garden variety process involves water splitting + compression of CO2 from air in high temperatures. This is not complicated at all ... check the methanol.org web site; they have a couple of papers about the latter process.

[whereagles]

What do you mean by high tech? If you refer to the fuel cells that Olah is working on, I'd have to agree with you. But the garden variety process involves water splitting + compression of CO2 from air in high temperatures. This is not complicated at all ... check the methanol.org web site; they have a couple of papers about the latter process.

I see. I thought methanol-syntesis was more complicated. Might have a look at that site at some stage. Thx.

[EnergySpin]

What do you mean by high tech? If you refer to the fuel cells that Olah is working on, I'd have to agree with you. But the garden variety process involves water splitting + compression of CO2 from air in high temperatures. This is not complicated at all ... check the methanol.org web site; they have a couple of papers about the latter process.

I see. I thought methanol-syntesis was more complicated. Might have a look at that site at some stage. Thx.

Try this for a nice summary ...
http://www.methanol.org/pdf/ZSWMethanolCycle.pdf
The authors are hard core anti nukers, so they have come up with all sorts of elaborate schemes to power the cycle that does not involve a NPR. But the chemistry is solid ....... the primary reference for the non FC synthesis pathway is a paper from 1999 (ti is listed in the reference section of the link I provided).
Happy reading!!

[linlithgowoil]

it does seem strange that SA are producing moderately less now than a few months ago, even though they have more rigs. and it is even more strange when you take account of the fact that, looking at the price, they should be pumping as fast as they can.

So, ARE they pumping as fast as they can, or do they have 1-2mb per day in reserve?

I thought that they had 1-2mb per day of very low grade sour oil that nobody wants - so, technically speaking, they dont have anything in reserve at all, and their own refinery that can use this stuff will take years to build.

Does this mean that SA has now peak in its 'good oil' - i.e. the stuff that westerners etc. want?

I think this must be the case. iF they had more good oil to pump, they'd pump it.

So, it may be that SA will be able to maintain their 9mb per day for years longer but the part of their production that is heavy, more expensive to refine and poorer quality will rise year on year, whilst the good stuff will dwindle year on year.

That isnt a very good scenario really.

[seahorse2]

linlithgowoil,

I hate to add opinion, without adding new facts, but regarding Saudi "reserve capacity", Rockdoc raised an interesting issue a few post ago, and in fact, it makes complete sense to me and explains a lot.

As you point out, since oil prices really started shooting up in 2004, we've continually heard that Saudi Arabia has about 2mbpd in spare capacity. We are also told now by Saudi Arabia that they are producing at maximum capacity. In Feb 06, SA pumped 9.4 mbpd, which is roughly the same amount the have produced since 2004.

So, if Saudi is producing at maximum capacity right now, where did the 2 mbpd spare capacity go? Rockdoc wondered if that spare capacity was used to offset the 8% depletion in existing fields that SA has admitted. This makes perfect sense. In fact, this position is supported by by al-husseini in an article he wrote for Oil and Gas Journal, in a series called "Revisiting Hubbert's Peak."

New OPEC capacity is scheduled to come online within the second half of 2004 that may reduce the gap between supply and demand.

On the other hand, this is a limited volume from plants and facilities under commissioning and originally was scheduled to replace declining capacity in any case."

Oil and Gas Journal, August 2004

[Newsseeker]

KSA's fifth largest bank forecasts a fall in oil production.

Saudi oil production is expected to fall from an average 9.12 million barrels per day in 2006 to 8.44 million bpd in 2007. "For 2007 ... we forecast oil prices to rise/fall by $3 per barrel," it said.

http://archive.gulfnews.com/articles/07 ... 15135.html

[MD]

Down 7.5%
I certainly hope this is voluntary; at least partly.

[Dajm]

Down 7.5%
I certainly hope this is voluntary; at least partly.

If not, the sword of Damocles are starting to swing on our heads. I thing this could be one of proofs we have been waiting for about SA:s production decline evidence.

I still not say goodnight world - we are close but no cigar.

[pup55]

According to the IEA monthly report, Saudi produced 8.7 mbpd in January and 8.6 mbpd in February, therefore in order to have 8.44 average production for the whole year of 2007 they would have to average 8.39 mbpd for March-December.

[seahorse]

In June of 2006, Simmons gave a presentation where his "educated guess" was by end of 2006, SA would be producing 8kbpd crude oil only (by 2010, this would drop to 5kbpd). See page 44 of slide presentation.

Simmons Presentation PDF

[Eli]

Man thank goodness we are ramping up ethanol production in the US.

If we were not doing that this could be very bad news.

[Jack]

Down 7.5%
I certainly hope this is voluntary; at least partly.

From the article:

Government budget spending has been on a roll ... Our forecast for 2007 is $116 billion, up around 11.5 per cent from the previous year," the bank said in the report received yesterday.

With an increase in spending such as that, I cannot help but wonder if hopes of the reduction being voluntary aren't...shall we say...forlorn?

[MD]

Down 7.5%
I certainly hope this is voluntary; at least partly.

From the article:

Government budget spending has been on a roll ... Our forecast for 2007 is $116 billion, up around 11.5 per cent from the previous year," the bank said in the report received yesterday.

With an increase in spending such as that, I cannot help but wonder if hopes of the reduction being voluntary aren't...shall we say...forlorn?

dammit jack!

I saw that too but was trying to pass it by.

[Twilight]

Voluntary reduction?

Sure, why not? The world is awash with oil. The Chinese can't burn it fast enough.